WASHINGTON (Legal Newsline) – It was necessary for a federal agency to team with a state attorney general in order to accuse a legal funding company of scamming 9/11 heroes and NFL concussion victims, an attorney says.
Scott M. Pearson | Provided
RD Legal LLC is facing a lawsuit filed by
the Consumer Financial Protection Bureau (CFPB) and New York Attorney General
When asked how RD Legal may defend its
actions, Scott M. Pearson, a partner in the Los Angeles law firm Ballard Spahr,
told Legal Newsline that details are few in the case.
“All we know
at this point is what the CFPB and the AG have alleged,” he said. “The actual
facts could be different, and the contracts used by companies in this industry
often provide strong legal defenses.”
Based in New
Jersey, RD Legal Funding offers financial advances to people awaiting legal
settlements. The lawsuit was filed against two entities related to RD Legal
Funding and the companies' founder and owner
legally necessary for the CFPB to team with Schneiderman’s office to pursue the
case against RD Legal.
“In order to
assert all of the claims in the case, it was necessary,” Pearson pointed out. “The
CFPB can't enforce state usury laws, but the AG can.”
court records, it is accused of scamming first responders to the Sept. 11, 2001,
terrorist attacks by offering high-priced advance proposals on pending
compensation and settlements. According to the CFPB, the company allegedly targeted 9/11
responders, including firefighters, paramedics and police officers who were
eligible to get fund payouts to help cover their medical costs and lost income.
The complaint also alleges that RD Legal Funding targeted former
NFL players who suffer from neuro-degenerative diseases who were entitled to
payments from a class action lawsuit.
noted that the CFPB did not provide an exact number of victims, but did
estimate that damages incurred are in the millions of dollars.
also may have violated the Dodd-Frank Wall Street Reform and Consumer
Protection Act’s prohibition on deceptive and abusive acts and practices.
noted that the allegation is that the company misled and took advantage of
alleges that the transactions were falsely marketed as assignments rather than
loans, that the transactions violate New York usury laws and that RD
misrepresented when the funding would be provided and falsely claimed that it
could; expedite funding and cut through red tape’ associated with the
settlements being financed,” Pearson explained.
also alleges that the transactions could not be assignments because the
underlying settlements expressly prohibit assignment of claimant recoveries,”
case has any long-ranging impact on litigation against the funding industry and
the recovery companies may seek remains to be seen.
companies will view this case as an outlier, since the alleged conduct is not
typical of the industry,” Pearson explained. "That said, it should serve
as a wake-up call for companies that haven't invested a lot in compliance
efforts, because a broader enforcement effort could be coming.”