Hedge Fund Wasn’t Defrauding 9/11 First Responders; It Was Just Providing Immediate Liquidity In Arm’s-Length Transactions For 250% In Interest

Finance is complicated, you guys...
Author:
Updated:
Original:
Get one, Cordray.

Get one, Cordray.

We’ve previously explored hedge fund RD Legal Strategies’ fascination with words and their meanings. For instance, with the SEC poised to sue it for the usual—lying to investors, inflating valuations, etc.—RD decided to deregister with the regulator, having decided that legal claims against the Iranians from the families of the Marines killed by Iranian suicide bombers in 1983 weren’t really securities within the meaning of securities laws” after all and it had all been a big mistake. Didn’t work: The SEC sued anyway. RD’s lexicographical adventures then continued with the Consumer Financial Protection Bureau, with the firm arguing that buying up legal claims isn’t the same thing as making a loan, either. It would prefer to go with the term “legal receivable,” which is why it’s allowed to charge ten times as much interest as would normally be legal.

The new lawsuit filed Tuesday alleged that one severely disabled Sept. 11 first responder was required to repay to RD Legal some $63,636 just three months after accepting $35,000 from the firm. That amounted to an interest rate of more than 250%, according to the lawsuit.

New York state law caps interest rates on loans at 25%. Contracts that collect in excess of that rate are labeled usurious, and void, the attorney general’s office said.

RD Legal’s attorney, David Willingham, said the hedge fund’s deals should be considered legal receivables, not loans.

The words “new lawsuit” should clue you in to the fact that RD failed to convince a judge that the CFPB shouldn’t be allowed to sue it. And that embattled regulator was joined by the New York attorney general, and you can see why.

The hedge fund, RD Legal Capital, in some instances allegedly charged the first responders interest rates above 250% to advance federal cash due for the medical care of sick workers, according to the suit. RD Legal similarly defrauded former National Football League players in line for a $1 billion settlement over head injuries suffered in their careers, authorities alleged….

“It is unconscionable that RD Legal scammed 9/11 heroes and NFL concussion victims out of millions of dollars,” said CFPB Director Richard Cordray.

Or, you know, just a really ugly misunderstanding. You know, because of words.

An attorney for RD Legal described the allegations as “outrageous and without merit.” He said the hedge fund “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.”

Hedge Fund Scammed 9/11 Officers, Ex-NFL Players, NY Attorney-General Says [WSJ]
Hedge fund allegedly scammed 9/11 first responders, NFL concussion victims [MarketWatch]

Related