Investor Lawyers Blog
If you invested in what are commonly referred to as future income payments (FIPs, or structured cash flows), through Future Income Payments, LLC (“FIP LLC”), you may be able to recover your losses through securities arbitration before FINRA, or in litigation, based on your particular circumstances. FIPs, or structured cash flows, are a type of investment product that are primarily sold as a growth and income product by insurance agents, as well as through independent marketing organizations.
Formed in April 2011, FIP LLC is structured as a Delaware limited liability company, with its principal place of business in Irvine, CA. Formerly, FIP LLC conducted business as Pensions, Annuities & Settlements, LLC. Additionally, FIP LLC has business relationships with the following marketing affiliates: Cash Flow Investment Partners, LLC, BuySellAnnuity, Inc. and Pension Advance, LLC.
FIP LLC’s business model is predicated on soliciting pensioners through the websites of its marketing affiliates to enter into certain contracts, pursuant to which the pensioner receives a lump sum of money in exchange for some or all of the respective pensioner’s monthly pension payments, for a fixed period of time (typically, 5-10 years). In addition, FIP LLC enters into contracts with investors (primarily retail investors), through which the investors provide money for the lump sum cash payments and subsequently receive some or all of the pensioner’s monthly payments.
Such structured cash flow investments based upon pension or disability income streams — such as those marketed and sold by FIP LLC — are very complicated and fraught with risk. For example, while some investors may actually realize a profit on their FIP investment, in other scenarios a pensioner from whom an investor purchased a FIP may die prematurely, thus ending the income stream the investor had made a lump sum payment on. In other instances, the pensioner may argue that the agreement underlying the FIP is invalid and seek to renege on the contract, thus placing the investor’s anticipated income stream at risk. Additional risks associated with FIPs include the product’s typically high expense (commissions may be 7% or higher), the product’s illiquid nature (once money is committed to the investment, it cannot be readily exited like selling shares in stock or a mutual fund), and lack of information regarding the investment itself (unlike publicly traded securities, investments in FIPs do not have the same disclosure requirements as publicly traded securities).
As recently reported, about 370 investment intermediaries nationwide sold investments in structured cash flows through FIP LLC. Upon information and belief these intermediaries received upfront commissions between 6-10% on capital invested. Most recently, certain state securities regulators have determined that the up-front payments made to pensioners are, in fact, unlawful loans charging pensioners allegedly usurious interest rates. Furthermore, it has been estimated that approximately 1,000 investors have lost at least $100 million in connection with investing in structured cash flows though FIP LLC.
Attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with a range of esoteric and illiquid investment products, including private placement offerings, as well as unregistered securities offerings in various investment programs, including insurance-backed investments products. Investors may contact our office at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.