Litigation

An Orange County, New York man who squandered approximately 60% of the $1 million net settlement he received  in April 2006, was denied a petition to sell 54.5% of his monthly structured settlement payment rights by a New York Judge. In denying the request Hon. William J. Giacomo made note of:

1. Knight's inability to "demonstrate an acuity for financial management". Despite the sizable net settlement sum he received "up front" he still finds himself in debt.
2. The monthly payments from the structured settlement seem to be the only financial security he retains.
3. Knight's being unable to explain where 40% of the sell proceeds would go
4. Doubts that "the amorphous investment" that his CPA was recommending "would garner a greater return for Mr. Knight than his structured settlement"
5. Further dissipation of his funds is not in his children's best interest.

In Matter of Novation Capital, LLC v Knight 2008 NY Slip Op 51628 (U)  Decided July 29, 2008.

In April 2006, Jamel Knight's net settlement was allocated 60% to cash and 40% to a structured settlement with Massachusetts Mutual Life, an A++XV rated annuity issuer. The annuity pays him $1,978.11 per month for life with 360 months (30 years) certain. He also receives $700 per month in disability payments.

According to the footnotes to the Slip Opinion, Knight gave his father $400,000, his mother $100,000 and $100,000 to various friends and took on debt to purchase house, build a vacation home and open a soul food restaurant that paid him $25,000-$30,000 in 2007. His mortgage is $2,500 per month.

Knight has 5 children ranging in age from 1 to age 17. His two oldest do not reside with him and the oldest is now a father.

This is a tragic but classic case which highlights why tort victims need to receive comprehensive settlement planning advice and education at and before the time of settlement and, they need to have an ongoing plan for recovery management. It's unclear, from the information presented in the Slip Opinion, why so much money went to Knight's parents at the expense of setting up education funds for his children, or whether the subject was even raised at the time settlement discussions ensued.