SC lawyers who helped take millions from Murdaugh victim’s children now paying the price

The Badger family in Allendale County, South Carolina, is nearing some positive news after suffering tragedies on top of tragedies since Jan. 28, 2011.

That’s the day Donna Hay Badger, 35, died in a collision with a UPS truck, leaving Arthur Badger Jr. as a single father of six. His attorney negotiated a multi-million dollar settlement in 2012 to ease the financial burden. But that attorney was Alex Murdaugh, who quietly stole more than $1.3 million of that settlement along with former Palmetto State Bank CEO Russell Laffitte.

Millions more from the settlement, meant for the Badger children, were placed into structured settlements, financial arrangements that would grant each child periodic tax-free payments across several decades after they turned 18.

But nearly all those future payments were sold to out-of-state entities, known as structured settlement factoring companies, who paid the cash-strapped Badgers small amounts of immediate cash to secure those future millions. The three youngest Badger children, for instance, received 7 cents on the dollar from the companies.

Court filings show that those children, who were 8, 9, and 11 years old when those deals were made in 2018, are now on the verge of getting all that money back after a settlement was reached between the family, the factoring companies, and the attorneys who helped them execute the “unconscionable” deals.

McClatchy published in 2022 the investigative series, “Cashed Out,” detailing how factoring companies were taking advantage of inadequate state protection laws and inattentive S.C. judges to gain control of future payments meant to provide financial stability to vulnerable injury victims. The series led to state lawmakers making wholesale changes to South Carolina’s law governing these transactions, including more disclosure requirements and ensuring the deals must be approved by judges in the county where the seller lives.

As part of that series, McClatchy told the story of how a group of factoring companies, all operated by a man banned from doing these deals in Maryland, convinced Arthur Badger — nearing a financial breaking point — to sell more than $2.8 million worth of his daughters’ future payments for $200,000 in a series of deals approved by a part-time judge who never denied these types of transactions.

Mark Tinsley, the attorney representing the Badger family in its dispute with Murdaugh, was in disbelief when a reporter directed him to the court filings associated with these deals, but he vowed to do whatever he could to reinstate the girls’ structured settlements.

Once a judge signs off on this settlement in October, Tinsley will have fulfilled that promise and then some. The defendants in the case agreed to fully reinstate the girls’ future payment rights plus pay an additional $2.3 million in order to release them of all claims related to the deals and allow them to continue denying liability, the court filing shows.

“They don’t admit fault, but you can draw whatever conclusion you want to draw,” Tinsley said. “People don’t pay millions of dollars (to settle a case) they think they’re going to win.”

Who are the defendants and what did they do?

Defendants in the case included Ryan Blank and the three Delaware-based LLCs he created to conduct the transactions. The Maryland Attorney General’s Office banned Blank and several of his associates in 2018 from doing business in the state after an investigation found they were acting deceptively in pushing structured settlement transfer deals through the courts.

Blank first did a deal with the Badger’s eldest daughter, 21 at the time, in 2017, before asking her to introduced him to Arthur Badger, according to the complaint. Blank then paid for Arthur to visit Washington D.C., where he “wined, dined, and lavishly entertained” him to convince him to quickly sign off on deals selling his minor daughters’ future payments, the complaint states.

Blank and his entities agreed to pay $700,000 as part of the settlement, while SuttonPark Capital, the Florida firm that was set to receive the girls’ future payments, agreed to fully reinstate the structured settlements. Neither Blank, nor SuttonPark responded to requests for comment.

The other defendants were all local attorneys involved in getting the deals approved. North Charleston attorney Richard Steadman, who represented the factoring companies, and his law firm agreed to pay $250,000 in the settlement.

Chapin attorney Taylor Peace and his firm agreed to pay $650,000. Peace submitted a letter to the court filed in some of girls’ transactions stating that he gave independent advice to Arthur Badger concerning the deals. Peace, who clerked for Steadman while he was in law school, was paid by Steadman for this work, a conflict of interest since he was supposed to be acting on behalf of the Badgers, the complaint alleged.

Barnwell attorney Martin Harvey and his firm agreed to pay $700,000 after serving as guardian ad litem for the Badger girls during the last of the transactions. McClatchy previously reported that Harvey reported his opinion to the court that the deals were in the minors’ best interests to help move them into a safer home in a more desirable neighborhood..

But the girls continued to live in the same home, which Harvey admitted he never visited, while the money received in the deals was used to purchase a rental property to supplement the family’s income.

None of Steadman, Peace or Harvey returned requests for comment about the settlement.

Brain injury victim also gets settlement

The Badger children won’t be the first people featured in “Cashed Out” to receive a settlement after alleged abuses by structured settlement factoring companies.

The series also featured Grace, a woman who suffered a traumatic brain injury after her mom’s car was struck by a train when she was 12.

She was permitted to sell 30 years worth of her future payments across 17 separate transactions while she quickly spent the money she received in the deals, leaving her on the verge of losing her home.

The factoring companies in those deals agreed to offer $182,000 to settle the lawsuit alleging they took advantage of the incapacitated woman.

Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center, helped represent Grace in litigation.

“This young woman needed this support (of her structured settlement), but she was taken advantage of,” Berkowitz said. “We’re very happy (with this settlement) to be able to get her out of dire circumstances.”