A few days ago, New York State Supreme Court Judge John M. Galasso held in civil contempt the attorneys representing a number of structured settlement annuity payees who, thanks to the New York Liquidation Bureau's epic mismanagement of the Executive Life Insurance Company of New York, are seeing their structured settlement payments being cut by as much as 60 percent. LifeHealthPro investigated the ELNY debacle in depth last November, and since then the case has only grown more interesting ... and more unbelievable.
The long story short is that ELNY was once a solvent company taken into what amounts to protective custody more than 20 years ago. The Liquidation Bureau then spent years mismanaging ELNY (and in at least one case, stealing from it outright) until the company was truly insolvent. As a result, many structured settlement annuity payees whose annuities are their sole source of income, are receiving drastic payment cuts. And why? Because no New York State official within striking distance of the ELNY debacle has the will to actually fix the problem. ELNY is short by about a billion dollars. And while New York, under Department of Financial Services head Ben Lawsky, has issued at least that much in fines to various financial services firms, none of that money has been earmarked to fix ELNY. Rather, the state has enacted a byzantine plan of piecemeal measures involving voluntary contrbutions from ELNY's former competitors and state guaranty funds. It all sounds impressive when you examine the ELNY liquidation plan, until you realize that it simply falls short, and that the people getting hurt are not the petty functionaries at the Liquidation Bureau, or anyone at the Department of Financial Services (which, unsurprisingly, has been slow to receive our reporters' calls since we broke the ELNY investigation). Ben Lawsky, the head of the DFS, and also head of the Liquidation Bureau (where he has yet to issue any kind of public inquiry into how ELNY was mishandled) feels no pain from ELNY's liquidation. Nor does his boss, Governor Andrew Cuomo, who at this point seems far more interested in cultivating a run for higher office than in actually serving the best interests of those ELNY shortfall payees who are his constituents.
Faced with such appalling apathy on the part of the public officials charged with protecting consumers in this case, a class action has formed to sue the state for the funds to make the ELNY annuities whole once more. The problem is, when ELNY was liquidated, the Liquidation Bureau and its agents were granted blanket immunity from civil lawsuit.
As in, no matter how much money was stolen from ELNY, no matter how much was thrown into dodgy equity market holdings, no matter how much was simply wasted, nobody who ever took part in it can be held accountable in a court of law. The law, in this case, chose to protect a group of state government functionaries, rather than the public. It was Judge Galasso who approved the liquidation, ignoring the objections of the annuity shortfall payees themselves, abdicating any authority to weigh in on the matter, despite his lofty station. When the class action pressed on, Lawsky and Galasso once again double-teamed the ELNY annuitants by hitting their lawyers with civil contempt.
Since we published "The Complete ELNY Saga," I have received numerous letters and emails from readers expressing their alarm at this whole thing and gratitude that we covered it. Apparently, we have not raised enough awareness, since Lawsky and Galasso have only salted the wound, as it were. Perhaps if they heard from more industry professionals, and from the public at large over their handling of this matter, they might think differently about their chosen course of action. There is only one way to find out.
DFS Superintendent Ben Lawsky
New York State Department of Financial Services
One State Street
New York, NY 10004-1511
The Honorable Andrew M. Cuomo
Governor of New York State
NYS State Capitol Building
Albany, NY 12224
Hon. John Michael Galasso
Joyce Andren, Esq., Law Clerk
Nicole Troncone, Secretary
Court Clerk Sheila Rand 516-493-3195