U.S. sues Md. firm over lead set­tle­ments

Watch­dog says it took ad­van­tage of vic­tims

Baltimore Sun - - NEWS - By John Fritze john.fritze@balt­sun.com twit­ter.com/jfritze

WASH­ING­TON — A fed­eral fi­nan­cial over­sight agency sued a Mary­land-based fi­nan­cial firm Mon­day, al­leg­ing it cre­ated an il­le­gal scheme to take ad­van­tage of vic­tims of lead paint poisoning who won cour­tap­proved set­tle­ments.

Ac­cess Fund­ing, based in Chevy Chase, came un­der state and fed­eral scru­tiny last year for pur­chas­ing lead-paint set­tle­ments from vic­tims in Bal­ti­more and else­where in ex­change for one-time, lump-sum pay­ments that were far less than the long-term fi­nan­cial sup­port they had won in court.

The fed­eral Con­sumer Fi­nan­cial Protection Bureau filed the law­suit in U.S. District Court in Bal­ti­more. The agency said the deals vi­o­lated the Wall Street over­haul ap­proved by Congress in 2010.

The agency said Ac­cess steered lead paint vic­tims to an at­tor­ney who claimed to be in­de­pen­dent but who was in fact paid by the com­pany.

“Many of these strug­gling con­sumers were vic­tim­ized first by toxic lead, and sec­ond by a com­pany that saw them as lit­tle more than in­come streams to be courted and har­vested,” agency di­rec­tor Richard Cor­dray said.

At­tempts to reach Ac­cess Fund­ing and its at­tor­neys Mon­day were not suc­cess­ful.

The set­tle­ment pay­ments are in­tended to help com­pen­sate vic­tims who are un­able to get or hold a job be­cause they were ex­posed to the toxic lead-based paint that rid­dles much of Mary­land’s older hous­ing.

Inges­tion by in­fants and tod­dlers of even small amounts of lead paint flakes or dust can lead to last­ing learn­ing and be­hav­ior prob­lems, re­search has shown.

Reg­u­la­tors say com­pa­nies like Ac­cess get lead paint vic­tims to sign over their set­tle­ments in ex­change for much smaller, one-time pay­ments, with­out fully ex­plain­ing the dif­fer­ence in value.

Ac­cess of­fered con­sumers about 30 per­cent of the present value of their fu­ture pay­ments, the Con­sumer Fi­nan­cial Protection Bureau said.

The com­pany con­ducted about 70 per­cent of its set­tle­ment trans­fers in Mary­land, ac­cord­ing to the agency. It sought court ap­proval for about 200 trans­fers in Mary­land from 2013 to 2015. At least 158 were ap­proved.

Mary­land At­tor­ney Gen­eral Brian E. Frosh filed suit against Ac­cess in Bal­ti­more Cir­cuit Court in May. That case, in which Frosh al­leged vi­o­la­tions of the Mary­land Con­sumer Protection Act, is pend­ing.

Ac­tion by the Con­sumer Fi­nan­cial Protection Bureau comes at a po­lit­i­cally sen­si­tive time for the agency. The bureau was cre­ated by the 2010 Dodd-Frank Wall Street law, ap­proved by Congress in re­sponse to the 2008 fi­nan­cial cri­sis. But the law’s reg­u­la­tions have raised some op­po­si­tion, and Pres­i­dent-elect Don­ald Trump vowed dur­ing his cam­paign to re­peal them.

Democrats have said they would re­sist changes to the law.

“This law­suit is proof of the crit­i­cal work the CFPB is do­ing, and ev­i­dence that any ef­fort to un­der­mine its le­git­i­macy serves only to harm con­sumers,” said Rep. Eli­jah E. Cummings, who­has be­come a lead­ing voice on the lead-paint set­tle­ment is­sue.

“Ac­cess Fund­ing took ad­van­tage of lead­paint poisoning vic­tims in Bal­ti­more, and the com­pany and its ad­vis­ers de­serve to face the full force of law,” the Bal­ti­more Demo­crat said in a state­ment.

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