Legal Funding Company accused of scamming 9/11 heroes
RD Legal Funding, based in New Jersey, has come under fire for luring both 9/11 first responders and ex-NFL football players into financial deals, which, allegedly, had hidden interest costs. The company targeted firefighters, police officers and other first responders who were awaiting compensation payouts for illnesses suffered due to working on the scene at 9/11. These heroes’ health conditions have forced them to retire from work, leading them to experience financial hardship. RD Legal Funding then offered financial advances to these people under the agreement that they would be repaid once the compensation was awarded.
RD Legal also approached ex-NFL football players who, due to their playing career, had been left with illnesses such as Alzheimer’s disease. Neurological conditions such as these, which are seen to be the cumulative result of concussions attained by playing professional football, entitle the ex-players to a cash payout from an amended 2015 court settlement. The total amount paid out to players could exceed $1 billion. Again, RD Legal offered to alleviate the financial hardship faced by these men whilst awaiting their settlements.
However, the New York Attorney General’s office and the Consumer Financial Protection Bureau have stepped in and filed a federal lawsuit against RD Legal Funding, deeming the alleged tactics of RD Legal ‘shameful’. This is because the deals RD Legal offered often resulted in the participants paying back double or even triple what the company lent them. The company achieved this by concocting contracts which were designed to confuse and mislead the participants, to the extent that the real cost of the agreement was obscured. The interest rates that RD Legal charged were, on occasions, the equivalent of 250% – rates that are unlawfully high under New York law.
CFPB’s lawsuit has been filed with the intention of putting a stop to RD Legal’s scheme and returning lost money to the participants, who as a whole have lost millions of dollars.
The investigation of RD Legal was launched when Michael Barasch, an attorney representing one of RD Legal’s clients, reported the company to the New York Attorney General’s office. He said he couldn’t bear to see his client, Elmer Santiago, ‘fleeced’ by RD Legal. Mr Santiago was a New York City police officer whose work at Ground Zero following the 9/11 terrorist attacks left him with a respiratory illness that forced him to retire in 2004. In 2014 he was awarded $3.9 million but had to wait 18 months for the award to be paid. In this time, he signed an agreement with RD Legal for a $355,000 advance, under the impression that the interest rate would be 19%. Yet, when his award was paid, RD Legal ordered him to pay approximately $866,000.
Barasch, representing Santiago, declined to pay the amount (offering instead the original $355,00 with 19% interest), believing RD Legal to be guilty of illegal usury. In 2016, RD Legal filed a Supreme Court lawsuit against Santiago and Barasch’s law firm, which was last month dismissed. RD Legal plans to refile the case locally in New Jersey.
Also in 2016, RD Legal Capital and its owner, Roni Dersovitz, were charged with fraud relating to the alleged misrepresentation of assets.