The Richmond Register

January 13, 2013

It’s time to show Mr. Wentworth the door

McNay's Musings

By Don McNay
Register Columnist

RICHMOND — I’ve spent over 30 years in the structured settlement business. The best way to define structured settlements is setting up a stream of (normally) tax-free payments for injured people instead of turning a lump sum over to them.

I normally arrange for people to get money for their rest of their lives, just like many get from pension plans.

Structured settlements exist to keep people from blowing their money. Such settlements have other advantages, but that is the biggest one.

I also have worked with lottery winners and encourage them to take annual payments instead of the “cash option.” Too many people get a lottery jackpot and blow it.

Too many injured people take cash instead of a structured settlement and blow that too.

If a person runs through lottery winnings, they can go back to their old life. If an injured person runs through their money, they can’t. The money they got was not a lottery jackpot, it was to replace something they lost.

I’ve written extensively about lottery winners and have heard people say, “I hope I can be one of your clients someday.” I tell them, “Pray you are never one of my clients. My clients have gone through hell to get their money.”

They earn every dime they get.

I want money to improve injured people’s lives. That is why I loved structured settlements.  When I set up a structured settlement, a person had a chance at a normal life. I knew they would not run out of money.

Or so I thought.

In 1994, a guy named Mr. Wentworth showed up on television, telling people to sell him their structured settlements. If you watched daytime television, you could not miss him. 

Mr. Wentworth is not Mr. Wentworth at all. He was an actor hired by a company called J.G. Wentworth.

J.G. Wentworth is a leader in what is politely called the settlement-purchaser industry.   Former Kentucky state Rep. Harry Moberly had another term. In 1998, he called them a “sleazy industry” during a Kentucky legislative hearing.

Settlement purchasing is a billion-dollar industry. Moberly called them sleazy, but he did not call them stupid. They know how to make big bucks. All it takes is some slick ads and injured people.

Moberly sponsored model legislation for reigning in some of the industry’s abuses. Almost every state and the federal government followed Kentucky’s lead, and Moberly became nationally known for his consumer-oriented stance.

Kentucky’s legislation made it possible to sell a structured settlement with court approval and for an extreme hardship.

Few people sold their structured settlements after the legislation, and Mr. Wentworth went off the television. Moberly retired from the legislature. No other champion has stepped up to take his place.

Wentworth is back, followed by a host of imitators and competitors. Somehow, someway, they have gotten around the legislation that Moberly and others fought to pass.

Several of us worked very hard to get settlement purchasers regulated around the country.   When almost every state and the federal government passed legislation, I thought we had done the job.

I was wrong. 

Judges were supposed to oversee the settlement purchasing process. World renown bankruptcy judge Joseph Lee takes it seriously, but I am afraid he is a rarity. Too many judges are rubber stamping structured settlement sales. Settlement purchasers have figured out what local lawyers to hire, and few people seem to care.

Until the people selling structured settlements run out of money and wind up on public assistance.

It’s time for legislatures to plugs some of the loopholes. Mr. Wenworth may not be a purchaser, but he plays one on television. He and his friends need more oversight and regulation.

I would like to see a study of how people who sold their structures have done afterwards. Like the lottery winners I write about, I suspect injured people who sold their settlements have done poorly.

When the damage to society is unveiled, Mr. Wentworth won’t be welcomed back after all.