|Posted: September 28, 2007, 1:18 am - IP Logged|
Let's do the math here. That company settled an $8M or $9M annuity for slightly less than $2M. If the winners had taken the lump sum to begin with, they would have gotten about $4M-$4.5M before taxes, about $3M after. The winners just got legally scammed for about a mil.
As Ed's post notes, nobody got scammed. If somebody offers you $10 for something that may be worth $15 or $20 the options are yes and no thanks, and it's your choice which one to choose. As far as how much they may have lost, the payment is taxable income, so in your example it's the difference between about 2.6 to 2.9 million and 1.3 million, based just on federal taxes of 35%.