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Last November approximately 200 people with claims settled back in the '80s from workplace accidents, auto wrecks and botched medical procedures stopped receiving their checks. The claims were a result of structured settlements that guaranteed income for victims for 20-30 years. On Friday, April 27, an initial settlement to remedy this situation was reached, according to attorneys in Los Angeles associated with the case.

In a move to restore victims’ payments, Merrill Lynch stepped up to the plate and agreed to pay $16.9 million in an effort to stem the effects of over $100 million of mishandled bonds. Interest generated from the bonds was used to pay victims’ living expenses. This gesture by Merrill Lynch is seen by a lawyer for defendants to be the right thing at the right time and part of the solution, not part of the problem.

Merrill Lynch admits no liability for the mishandled bonds, which originally were arranged by Merrill Lynch Settlement Services—which was sold in 1991 to Johnathan H. Pardee and became Settlement Services Treasury Assignments. In 1995 Pardee negotiated a new trust agreement with Bankers Trust Co. of New York to hold the bonds and handle the disbursement checks. The acceptable use of these bonds changed in the Bankers Trust Co. agreement, making it acceptable to use the bonds to secure loans.

The new agreement opened the door for Pardee to secure a line of credit from Morgan Stanley. In 1997 Pardee sold his company to Charles E. Bradley Sr. of Connecticut and Charles E. Bradley Jr. of Orange County. The Bradleys purchased Settlement Services Treasury Assignments primarily for the opportunity to borrow against the bonds.

Under Bradley management the bonds were put up to secure tens of millions of dollars in loans from Morgan Stanley that went into default. To recover costs, Morgan Stanley sold the bonds and provided the Bradley firm with the balance. The Bradley firm has attempted to make current all it owes to the victims.

The Merrill Lynch agreement will provide $7.9 million to pay against the class action law suit, and make available as much as $9 million more to keep payments flowing through December.

Defendants named in class action suits associated with the loss and mishandling of the treasury bonds are: Bank of America Corp., Wells Fargo & Co., Bear Stearns Cos., Bankers Trust Co. of New York, and Morgan Stanley Dean Witter & Co.