MANHATTAN (CN) — World Trade Center first responders and ex-National Football League players suffering brain injuries fell victim to a “simply shameful” scam promising them quick money, New York Attorney General Eric Schneiderman said on Tuesday.
Joining forces with the Consumer Financial Protection Bureau, Schneiderman cried foul in a federal lawsuit against the New Jersey-based company RD Legal, which offered advanced payments to 9/11 heroes and others struggling with their medical bills.
Police officers, firefighters, paramedics and other first responders received life-saving, if belated, medical care owing to the passage of the James Zadroga 9/11 Health and Compensation Act of 2010.
Providing billions in relief for New York’s Bravest, the legislation’s application requirements left some 9/11 survivors vulnerable to RD Legal’s promises to help them “cut through the red tape.”
The lawsuit, filed in the Southern District of New York, claims that the company’s fee sliced substantially into what victims collected.
“For example, one consumer was awarded $65,000 from the Zadroga Fund,” the 23-page complaint states. “While she waited for her full payment from the Fund, RD advanced her $18,590. When her award payment from the Fund arrived six months later, she repaid $33,800 to RD.”
The company, founded by attorney Roni Dersovitz, also promised to speed up the process through which ex-NFL players could collect a 2015 settlement of at least $900 million approved against the league in the Eastern District of Pennsylvania federal court.
The deal would provide up to $5 million per retired player for such neurodegenerative diseases as chronic traumatic encephalopathy, Alzheimer’s or Parkinson’s disease.
Schneiderman said that RD Legal lied about the terms of the deal, the timeline for receiving money and its ability to facilitate the application process.
“RD Legal used deceptive tactics to charge unlawfully high interest rates for advances on settlement and compensation funds, allowing them to profit off the backs of these unsuspecting individuals,” he said.
According to the lawsuit, those rates violated New York usury law.
“Given the often short time from the advance of the funds to the payment of awards, RD’s transactions cost consumers amounts that are equivalent in some cases to rates over 250 percent,” the lawsuit states.
CFPB Director Richard Cordray also did not mince words about the company’s alleged conduct.
“It is unconscionable that RD Legal scammed 9/11 heroes and NFL concussion victims out of millions of dollars,” he said in a statement.
Created under the Dodd-Frank Act, the CFPB owes its existence to legislation under assault by President Donald Trump’s administration; Trump recently signed an executive order gutting two major Wall Street regulations.
Abandoning his populist rhetoric from the campaign trail, Trump has spent much of his presidency cozying up to the big bank executives he once railed against.
One of those men is JP Morgan CEO Jamie Dimon, whom Trump told reporters has been advising him on scaling back Dodd-Frank.
“There is nobody better to tell me about Dodd-Frank than Jamie,” Trump told Business Insider in an interview. “So he has to tell me about it, but we expect to be cutting a lot from Dodd-Frank because I have so many people, friends of mine, that have nice businesses, and they can’t borrow money.”
Now pulling favors for those Wall Street friends, Trump’s antagonism toward the CFPB has the agency fighting for its life.
In October, a divided D.C. Circuit found the bureau’s structure unconstitutional, and the agency has appealed that decision before an en banc court.
Though former President Barack Obama’s legal team strongly defended the CFPB, observers doubt that Trump’s lawyers will follow suit.
On Jan. 23, Schneiderman was one of 16 attorneys general who cited the Trump administration’s hostility toward the bureau as a reason why they should be allowed to intervene in the case.
“As president-elect, Donald Trump has expressed strong opposition to the Dodd-Frank reforms,” their friend-of-the-court brief said. “According to numerous media accounts, the Trump administration is planning to fire and replace the current director as soon as possible and take other steps that could directly impact how, and whether, this litigation proceeds.”
Blasting the allegations as “outrageous and without merit,” RD Legal’s attorney David Willingham noted that the company preemptively sued the regulators last month, describing their action as an “inappropriate overreach of their legal authority.”
“The claims made today by the CFPB and NYAG misunderstand and falsely characterize clear documents with those parties as ‘loans,’ and falsely state that RDLF is ‘scamming’ the affected parties when it did nothing more than provide immediate liquidity – in the form of an arm’s-length transaction – to people who voluntarily sought the benefits of early funding,” Willingham said in an email.
The CPFB did not immediately respond to requests for comment.