Future Income Payments contracted with people who receive periodic payments from a military, governmental, or private pension or similar benefit program. The contracts were titled “Asset Purchase Agreements.” Under the contracts, FIP provides a one-time lump sum payment (less their fees) in exchange for FIP’s “purchase” of a portion of the “income stream” from the person’s periodic benefit payment. The amounts of the contracts and some of the specific terms of the individual contracts vary, but the core terms are similar throughout. Under the contracts, the individual’s monthly payment obligation is tied to their receipt of the anticipated periodic benefit payments. The contractual payment obligations greatly exceed the original “purchase price.”

For example, in one of the “Purchase Agreements” FIP entered with a veteran, FIP made a one-time payment of $1,500 ($1,800 purchase price minus a $300 “set-up-fee”) in exchange for future payments to FIP of $300 per month for five years upon the veteran’s receipt of his pension benefit payments. The contract provides for the veteran to pay FIP $18,000 over the five-year term, which is more than 10 times the initial payment.

States across the country argued that, regardless of the name, the transactions are actually “loans” and must comply with state laws governing loans, licensing of businesses engaged in the provision of loans and the state’s usury laws. Specifically, the states assert that FIP was engaged in unlicensed lending; that FIP charged unauthorized fees; and that the terms of FIP’s loans violate the usury caps on interest (typically around 12%).

According to one of FIP’s websites, they solicit veterans, spouses of veterans and those receiving pension payments to enter into agreements with FIP. FIP is not licensed to make loans. The FIP contracts are linked to the pensioner’s receipt of periodic benefit payments. The FIP contracts are linked to the customer’s receipt of monthly pension or military disability payments. A significant majority of the contracts are tied to pensioners’ receipt of federal or state pension or benefit payments. According to one lawsuit by the State of Minnesota vs. Future Income Payments, 122 FIP contracts were examined:

The FIP contracts with pensioners contain language that acknowledges the consumer receives fixed periodic payments from a pension or similar benefit program. The contracts declare the income stream to the consumer as an “asset” and provide that FIP is “purchasing” from the consumer “some or all of the monthly payments.”

Under the vast majority of contracts, FIP’s payment to pensioners is $5,000 or less. The most common APR is 200% and the average APR is 139%.  The Court in Minnesota reviewed affidavits and deposition testimony from Minnesota pensioners and made the following findings regarding FIP’s transactions.

FIP claims to be “the industry leader and an innovator in buying and selling secondary market pension cash flows often referred to as Structured Cash Flows.” However, state officials in multiple states have issued cease and desist orders, accusing FIP of issuing loans without a license and disguising them in “sales agreements.” Since March, it appears as FIP is no longer collecting payments, receiving payments, or answering their phones.

Peiffer Wolf is currently investigating claims for anyone who has invested in Future Income Payments. If you or someone you know invested in FIP, Contact Us Today by calling 504-523-2434 or by filling out an online Contact Form for a FREE Consultation. Concerns about possible broker misconduct and investment fraud are serious, and we are committed to fighting on behalf of investors.

Lawsuits Mount Against FIP for Illegal High-Interest Loan Scheme

Embattled Future Income Payments, LLC continues to be sued for an illegal high-interest loan scheme that targeted the pensions of retired veterans and public servants.

Future Income Payments (“FIP”) targeted pensioners — often elderly veterans with military pensions and public servants with pensions — with illegal loans disguised as “sales” that could provide purchasers with a quick lump sum of cash, according to one lawsuit.

In most cases, pensioners thought they were making a sale of a portion of their pension, which is an asset, in a one-time transaction. As it turned out, it was a loan against the pension with payback “interest rates that were sky high,” said Michael Kelly, spokesman for the Virginia Office of the Attorney General.

which far exceeds the applicable 12 percent annual interest cap mandated by State law, according to one complaint. Thus, it is alleged that FIP engaged in lending practices that violated State Consumer Protection Acts.

“These companies and their owner took advantage of [consumers] who earned their pensions through years of dedication to our nation’s armed forces and as civil servants,” one Attorney General said in a statement. “We’re going to do everything we can to get veterans and other retirees their money back, and to wipe out the debt remaining on any illegal loans.”

“There was No Guarantee Purchaser would Receive All Payments” – FIP’s CEO

According to Future Income Payments (“FIP”) CEO, Scott Kohn, FIP is in the process of agreeing to cease and desist orders or has already entered cease and desist orders in the States listed below.

States/Jurisdictions Where FIP Entered into Cease and Desist Orders

States/Jurisdictions with Pending Agency Action or Investigation