U.S., NY accuse firm of scamming 9/11 heroes, NFL retirees

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By Karen Freifeld and Jonathan Stempel | NEW YORK

NEW YORK A company that advances money to people
awaiting settlement payouts was accused by New York and federal
regulators of scamming sick responders to the Sept. 11, 2001
attacks, as well as National Football League retirees with brain
injuries.

RD Legal Funding LLC and founder Roni Dersovitz allegedly
cheated victims out of millions of dollars by deceiving them
about the terms of the advances, according to a lawsuit filed on
Tuesday by the U.S. Consumer Financial Protection Bureau and the
office of New York Attorney General Eric Schneiderman.

Victims of the Cresskill, New Jersey-based company allegedly
included firefighters, police officers and other 9/11 first
responders suffering from cancer, other respiratory illnesses,
stress and depression.

They also allegedly included former NFL players suffering
from Alzheimer’s disease, dementia and other illnesses tied to
head trauma, entitling them to money from the league’s estimated
$1 billion class-action concussion settlement in 2015.

According to the lawsuit filed in Manhattan federal court,
victims often ended up repaying more than double what they
received upfront, at interest rates that could top 250 percent.

“RD Legal scammed 9/11 heroes and NFL concussion victims out
of millions of dollars,” CFPB Director Richard Cordray said in a
statement. “Our lawsuit seeks to end this illegal scheme and get
money back to those entitled to receive it.”

David Willingham, a lawyer for RD, in an email called the
allegations “outrageous and without merit.”

RD “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,” he said.

Dersovitz was not immediately available for comment.

CFPB FUTURE

Regulators said RD would contact 9/11 first responders after
learning they were eligible for the Zadroga Fund, set up by
Congress to assist with medical costs and lost income, and
promise to “cut through red tape” to get them paid faster.

But the cost was high, regulators said. In one case, they
said a female first responder who received an $18,590 advance
ended up repaying $33,800 a mere six months later.

Tuesday’s lawsuit alleged violations of federal laws against
consumer finance abuses, as well as New York fraud and usury
laws. It seeks restitution, civil fines and other remedies.

The U.S. Securities and Exchange Commission is pursuing a
separate case against Dersovitz and his firm RD Legal Capital
LLC.

It said the defendants misled investors about the risks of
their investments, including a big bet that litigation tied to
the 1983 bombing of the U.S. Marine barracks in Beirut would pay
off. Dersovitz has been defending against the SEC claims.

Registration for the NFL settlement began this week. The
deadline is Aug. 7.

The CFPB was created through the 2010 Dodd-Frank Wall Street
reforms. Its lawsuit on behalf of first responders and NFL
veterans comes as many Republicans in Washington question
whether the consumer watchdog should exist at all.

A federal appeals court is deciding whether to revisit its
decision, now on hold, that the bureau’s single-director
structure is unconstitutional and that the president deserves
power to fire Cordray at will, not just for cause.

Some Republican lawmakers have urged President Donald Trump
to close the CFPB, replace Cordray with someone who will curb
enforcement activity, or create a governing commission.

They have also sought to include the CFPB in the formal
Congressional budgeting process, enabling them to reduce or
eliminate funding. (Additional reporting by Lisa Lambert in Washington)



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