(CN) – Minnesota’s attorney general claims in court that an unlicensed lender targets veterans in financial distress and offers loans that eat into their pension plans for a three to five-year period.
Minnesota Attorney General Lori Swanson says in a lawsuit filed Wednesday in Hennepin County District Court that Future Income Payments LLC, or FIP, bills itself as “America’s largest pension cash-flow originator,” but is really an unlawful lender that uses “urgency and fear” to gain access to pensions owned by veterans and their spouses.
The complaint says “FIP solicits Minnesota residents seeking to take out small loans, sometimes to cover emergency expenses. FIP then offers the residents an up-front, lump-sum payment in exchange for receiving a portion of the residents’ monthly pension payments over an extended period of time – often three to five years.”
“FIP seeks to evade state lending laws by falsely characterizing its transactions with Minnesota residents as ‘sales’ of residents’ future pension payments. In reality, FIP’s transactions with Minnesota residents are illegal loans with interest rates that far exceed those permitted under Minnesota law,” the lawsuit continues.
AG Swanson alleges FIP uses numerous websites – including www.lumpsum-settlement.com and www.buysellannuity.com – to solicit veterans in need of cash, and then uses trained “representatives to ‘get [Minnesota residents] ‘excited’’ about entering into one of FIP’s unlawful agreements.”
These employees are allegedly trained to instill “a ‘fear of loss’ if a Minnesota resident does not immediately agree to a transaction with FIP and … to get the deal closed, no matter the cost or the resident’s reservations.”
The exorbitant and illegal interest rates charged by FIP mean the veterans usually pay back several times what they borrowed, according to the complaint, which cites several examples of the allegedly predatory loans.
“One Minnesota veteran signed with FIP Delaware in January 2016, [and] in exchange for a one-time payment of $1,500 to the veteran, FIP Delaware was to receive $18,000 from his Department of Veterans Affairs benefit payments over the next five years. This amounts to an APR of 240%,” the complaint states.
According to Swanson, FIP has entered into at least 120 of these “loans” with Minnesota residents since 2011, with the average APR on the loans exceeding 139 percent.
The state attorney general seeks an injunction preventing FIP from soliciting any more loans, a judgment that any existing loans are void, and restitution for all affected veterans and their spouses.
The lawsuit lists Future Income Payments LLC and FIP LLC as defendants. They did not immediately respond Thursday to an email request for comment.
The complaint says Scott Kohn, the sole member of FIP LLC, “pleaded guilty in 2006 to three federal felony offenses related to trafficking in counterfeit goods, and was sentenced to 15 months in federal prison.”
The suit was signed by Assistant Attorney General Frances Kern.