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Loan Company Preys on 9/11 Responder

February 17, 2017 
By Silver Krieger

New York, NY - Attorney Michael Barasch has a message for retirees across the country: don’t get scammed by predatory lending companies.

His involvement in a recent high-profile case of a 9/11 First Responder has led to him being contacted by many, unfortunately involved in the same predicament, and now, he wants 9/11 victims to know that they are seen as easy prey by these unscrupulous lenders.

Barasch, who worked with NYPD Detective James Zadroga, after whom the Zadroga Compensation Act was named, recently handled the case of Elmer Santiago, a former New York City police officer who had to retire after only six years on the job. Santiago, now 43,  was diagnosed in 2004 with interstitial lung disease after working at the site of the World Trade Center disaster, and, with Barasch’s help, brought a 9/11 Victim Compensation Fund claim in 2012 and was awarded $3.9 million in compensation for pain and suffering as well as future lost income, in 2014. However, he would not receive the money for another 18 months. In desperation – he even lived in his car for a period of time – Santiago obtained a loan from a company, RD Legal Funding, that he found online. He used the money - $355,000 - to purchase a home in Florida, where the climate would not aggravate his condition. When the money came through, RD Legal said he owed $860,000, a rate of 67% interest. Although the contract had stated that the loan rate was 19%, there was also mention of compounded interest, and other complicated terminology that Santiago didn’t understand.

Barasch feared that the rate was usurious, and contacted RD Legal, whose representatives claimed that they had taken a “big risk,” in making the loan.  Barasch didn’t accept that excuse. “This was backed by the Federal government,” he says, referring to the letter of compensation that Santiago had and that was used as his collateral. RD Legal tried to get around the claim of usury by saying that it was not a loan, but, an “assignment,” and that therefore usury laws, which forbid such high rates of interest for loans, did not apply.

Barasch repaid the initial loan of $355,000, and put the interest claimed by RD Legal into an escrow account where it sits today.  But, Barasch told RDL that paying the additional monies might make it appear that he was suborning usury. He said that he would ask the New York State Attorney General and the Consumer Financial Protection Bureau in Washington, D.C., if the requested interest was usurious, and if they said it was not, he’d pay RD Legal what they were asking. The next day, Barasch’s firm, Barasch, McGarry, Salzman, and Penson, was sued by RD Legal.

After Barasch blew the whistle on RD Legal, the New York State Attorney General (NYAG) and the Consumer Financial Protection Bureau (CFPB) each launched their own investigations.  Apparently, Mr. Santiago wasn’t the only 9/11 responder to be charged outrageous interest on a loan.  Last week, the NYAG and the CFPB both sued RD Legal.  They say the company allegedly misled police officers, firefighters and other first responders about the terms of the advance payments, and collected millions by charging interest rates as high as 250 percent, along with high fees on the advances. RD Legal, however, was sued by both the New York State Attorney General and the Consumer Financial Protection Bureau. Now, says Barasch, “I’ve never felt so good about being sued.” It was this rash of legal action that has made the case visible, and now he is using the attention to spread the message of caution. “I hope this sends a loud message to retirees all over the country,” he says. “Firefighters, police, construction workers, laborers of all kinds, teachers – I represent over 10,000 people who were affected by 9/11. We all breathed the same air. I want to get the word out there – be careful of these people, if you are a victim who has been compensated. You’re prey, seen as an easy mark to these companies. Hire a lawyer. Don’t get yourself taken advantage of.”

RD Legal’s case against Barasch was dismissed, but they plan to refile in New Jersey. And Barasch now plans to bring them to the attention of the New Jersey State Attorney General, as well.


 

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