Firm cheated 9-11 heroes with shady loans: Attorney General

Firm cheated 9-11 heroes with shady loans: Attorney General
Associated Press / Stan Honda

A New Jersey-based financial company cheated 9-11 heroes out of millions of dollars owed to them for compensation and health care for injuries related to the 2001 terrorist attacks, according to New York Attorney General Eric Schneiderman and federal watchdogs.

Schneiderman and the Consumer Financial Protection Bureau accuse RD Legal and its owner Roni Dersovitz, along with two other entities, of “luring [victims] into costly advances on compensation fund and settlement payouts by lying about the terms” of their advance loans.

RD Legal approached its victims — who included police officers and firefighters who worked at Ground Zero and also former professional football players suffering brain injuries — shortly after they signed deals for compensation payouts, but before they received most of their money. RD Legal offered to loan them the rest of their payout, but through what the attorney general’s office called “confusing contracts,” the firm burdened them with massive interest rates, in some cases as high at 250 percent, Schneiderman’s office said in a statement.

Lawyer Michael Barasch, a leading attorney for people entitled to compensation and health care for 9-11–related injuries through the Zadroga Act, said he “blew the whistle” on the scheme and referred RD Legal to the Attorney General over the summer after one of his clients — a former New York police officer — signed up for such a loan from RD Legal.

The victim wasn’t going to get the bulk of his settlement from the government for more than a year, but he needed his compensation money as soon as possible to move out of the northeast to a more asthma-friendly part of the country. Barasch said RD Legal advertised a 19-percent interest rate on the loan but really charged him an eye-watering rate of 61 percent.

Barasch said that anyone who encounters such lenders should consult a lawyer before signing any contract for a loan.

“Don’t fall for the same trap, if it sounds too good to be true, always have an attorney or expert in this area review the contract to be sure,” Barasch said.

Selling advance loans on legal settlements isn’t in itself a crime. Sometimes a person will take a loan before they’ve reached a settlement agreement or court verdict, and the lender takes the risk that they may not receive a favorable settlement. But that wasn’t the case with Barasch’s client, who was guaranteed his payout.

“They were taking no risk, there was zero chance [the victims] wouldn’t win their settlement,” Barasch said. “With a car accident, at least there’s the possibility they may not win.”

New York state law criminalizes usury — defined as lending money at rates higher than 25 percent of the loan. RD Legal’s actions also violated the Dodd-Frank Wall Street Reform and Consumer Protection Act, according to the Attorney General.

This is not the first time Dersovitz and RD Legal have been accused fraud. Last summer the Securities and Exchange Commission accused RD Legal of defrauding investors as well.

Reach reporter Dennis Lynch at (718) 260–2508 or e-mail him at dlynch@cnglocal.com.