CFPB takes action in fraudulent wire transfer lawsuit

On June 17, the Consumer Financial Protection Bureau filed an order to settle its 2023 lawsuit against the former CEO of a short-term retail lender and his wife. The lawsuit is related to a series of fraudulent wire transfers that the two companies used to evade civil penalties the CFPB had imposed on the company.

The office’s actions against the company in 2015

In 2015, the CFPB filed suit against the lender and its CEO for deceptive lending practices. Specifically, the CFPB alleged that (1) the company’s loan documents did not fully disclose the total cost of consumers’ loans; (2) the company violated the EFTA by requiring consumers to repay their loans via ACH payment; and (3) the company improperly debited borrower accounts with remotely created checks after consumers revoked their prior authorization.

The FBI’s lawsuit was litigated extensively and resulted in a verdict that required the company to pay over $38 million in restitution, a $7.5 million civil penalty, and the CEO to pay a $5 million civil penalty.

The fraudulent transfer lawsuit

In April 2023, the office took action against the CEO and his wife, alleging that the couple engaged in a scheme to shield assets through multiple fraudulent transfers over two years to obstruct, delay, and defraud the CFPB’s efforts to collect the more than $40 million in consumer compensation and civil penalties. If the court issues an order from the CFPB, both individuals will be required to pay $7 million of a $12.3 million judgment imposed, with the balance suspended due to proven insolvency. The amount will be used to settle the existing $43 million judgment against the CEO and the company.

Put into practice: The CFPB’s order underscores the CFPB’s commitment to enforcing compliance with its consent orders and highlights the consequences of attempts to evade the penalties imposed by the regulation.

Legal trainee Brandon Mohamad and summer intern Celene Gayle contributed to this article