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.
RD Legal LLC is facing a lawsuit filed by the Consumer Financial Protection Bureau (CFPB) and New York Attorney General Eric Schneiderman.
Scott M. Pearson
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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 Roni Dersovitz.
It was 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.”
According to 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.
Pearson noted that the CFPB did not provide an exact number of victims, but did estimate that damages incurred are in the millions of dollars.
The company also may have violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition on deceptive and abusive acts and practices.
Pearson noted that the allegation is that the company misled and took advantage of vulnerable consumers.
“The complaint 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.
“The complaint also alleges that the transactions could not be assignments because the underlying settlements expressly prohibit assignment of claimant recoveries,” he added.
Whether this case has any long-ranging impact on litigation against the funding industry and the recovery companies may seek remains to be seen.
“Many 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.”