Access Funding, LLC; Access Holding, LLC; Reliance Funding, LLC; Lee Jundanian; Raffi Boghosian; Michael Borkowski; and Charles Smith

Agency: Consumer Financial Protection Bureau
Date: Nov. 21, 2016
Type: enforcement action
Source: consumerfinance.gov/enforcement/actions/access-funding-llc-access-hold
Pages: 81
PDFs: 6 documents (links below)

Documents in this case

Amended complaint · 18 p.
Complaint · Nov. 2016 · 17 p.
Order · Dec. 2021 · 16 p.
Dismissal · Dec. 2021 · 1 p.
Order · Dec. 2021 · 16 p.
Consent order · May 2022 · 12 p.

Case summary

On November 21, 2016, the Bureau filed a complaint against Access Funding, LLC, Access Holding, LLC, Reliance Funding, LLC, three of the companies’ principals—Lee Jundanian, Raffi Boghosian, and Michael Borkowski—and a Maryland attorney, Charles Smith. The Bureau alleged that Access Funding was aware that the individuals from whom they purchased structured settlement payments were financially unsophisticated and in need of the funds the company could supply. The Bureau also alleged that the companies and their principals steered consumers to receive “independent advice” from Smith, who was paid directly by Access Funding and only provided cursory communications to consumers. The Bureau alleged that Smith’s conduct was unfair, abusive, and deceptive in violation of the Consumer Financial Protection Act of 2010 and that Access Funding and its leadership unlawfully aided Smith’s illegal conduct and engaged in abusive conduct. The Bureau further alleged that Access Funding engaged in abusive conduct by advancing money to some consumers and represented to those consumers that the advances obligated them to go forward with transactions even if they realized that the transactions were not in their best interests. On September 13, 2017, the court granted defendants’ motions to dismiss counts I–IV, arising out of Smith’s conduct, on the grounds that he had attorney-client relationships with the consumers in question. The court denied the defendants’ motions to dismiss the Bureau’s claim relating to the advances Access Funding offered consumers. The court granted the Bureau’s motion to file an amended complaint alleging Smith did not have attorney-client relationships with the consumers in question. Defendants again filed motions to dismiss, which the court denied. The defendants filed a motion for partial summary judgment, which the court denied on January 18, 2019. On December 26, 2019, the court stayed the case pending the Supreme Court’s decision in Seila Law LLC v. CFPB, No. 19-7 (cert. granted Oct. 18, 2019). On October 23, 2020, based on the parties’ stipulation, the court dismissed the claims against Reliance Funding, LLC. The parties moved for summary judgment, which the Court denied on July 12, 2021.

On November 18, 2021, the court entered a stipulated judgment and order against Charles Smith, which requires him to pay $40,000 in disgorgement and a $10,000 civil money penalty. The order also permanently bans him from the structured-settlement industry. On December 17, 2021, the court entered a stipulated judgment and order against Access Funding, LLC, Access Holding, LLC, Lee Jundanian, and Raffi Boghosian, requiring the settling defendants to pay $40,000 in disgorgement and a $10,000 civil money penalty. On May 18, 2022, the court entered a consent order against Michael Borkowski requiring him to pay a $5,000 civil money penalty. The December 2021 and May 2022 orders also prohibit the settling defendants from referring consumers to a specific individual or for-profit entity for advice concerning any structured-settlement transaction or taking unreasonable advantage of consumers’ lack of understanding of the material risks, costs, or conditions of any cash advance. The orders also prohibit the settling defendants from misrepresenting the relationship between themselves and providers of independent professional advice, and any other fact material to consumers (such as the material risks, total costs, or conditions of any Advance) in connection with the transfer of payment streams from structured-settlement holders.

Amended complaint

PDF of this document (18 pages)

Page 2

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND BALTIMORE DIVISION

CONSUMER FINANCIAL PROTECTION BUREAU,

Plaintiff, v.

ACCESS FUNDING, LLC, ACCESS HOLDING, LLC, RELIANCE FUNDING, LLC, LEE JUNDANIAN, RAFFI BOGHOSIAN, MICHAEL BORKOWSKI, and

Case No. 1-16-cv-03759-JFM

CHARLES SMITH,

Defendants.

AMDENDED COMPLAINT Plaintiff, the Consumer Financial Protection Bureau (“Bureau”), alleges as follows:

INTRODUCTION 1.

The Bureau brings this action against Access Funding, LLC, Access Holding, LLC, Reliance Funding, LLC, Lee Jundanian, Raffi Boghosian, Michael Borkowski, and Charles Smith to address Defendants’ unfair, abusive, and deceptive practices related to Access Funding’s purchase of structured settlements, in violation of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531, 5536(a). JURISDICTION AND VENUE 2.

This Court has subject-matter jurisdiction because the action is “brought under Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 2 of 19

Page 3

question, 28 U.S.C. § 1331, and is brought by an agency of the United States. 28 U.S.C. § 1345.

This Court has personal jurisdiction over Defendants because the causes of action arise from Defendants’ conduct in this district, and Defendants reside here. 12 U.S.C. § 5564(f).

Venue is proper in this district because Defendants are located, reside, and do business in this district. Id.

PARTIES 5.

The Bureau is an agency of the United States charged with regulating the offering and providing of consumer-financial products and services under “Federal consumer financial laws,” 12 U.S.C. § 5491(a), including the CFPA. 12 U.S.C. § 5481(14). The Bureau has independent litigating authority, including the authority to enforce the CFPA. 12 U.S.C. § 5564(a)-(b).

Access Funding is a limited-liability company that operated in all 50 states. Its principal place of business is at 6900 Wisconsin Ave, Suite 700, Chevy Chase, Maryland. From December 2012 through November 2015, Access Funding purchased payment streams from structured-settlement holders, a practice referred to as “structured-settlement factoring.” Access Funding conducted business under two alterego names, Assoc LLC, and En Cor LLC.

As described below, Access Funding provided advances to consumers that were to be repaid through a deduction from the proceeds of structured-settlement transfers once those transactions were completed. These advances were extensions of credit to consumers and were therefore consumer-financial products or services under Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 3 of 19

Page 4

§ 1002 of the CFPA. 12 U.S.C. §§ 5481(5), 5481(15)(A)(i). Access Funding is therefore a “covered person” under the CFPA. 12 U.S.C. § 5481(6). 8.

Access Holding is a limited-liability company organized under the laws of Delaware and headquartered at 6900 Wisconsin Avenue, Suite 700, Chevy Chase, Maryland. Access Holding is the sole and managing member of Access Funding and is legally responsible for the liabilities of Access Funding. 9.

Reliance Funding is a limited-liability company engaged in structuredsettlement factoring and is the successor company to Access Funding. Reliance Funding’s principal place of business is at 6900 Wisconsin Ave, Suite 700, Chevy Chase, Maryland. On October 17, 2015, after being notified of the Bureau’s investigation through service of a Civil Investigative Demand, Access Funding, through its affiliate Access Holding, sold its assets to Reliance Funding. Reliance Funding is a successor in interest to Access Funding.

10.

Lee Jundanian served as CEO of Access Funding from February 2013 to May 2014. After May 2014, Jundanian was an advisor to Access Funding. Jundanian has an ownership interest in Access Funding and helped develop Access Funding’s business model and manage its business. Under the CFPA, Jundanian is a “related person” to Access Funding because he was a director, officer, or employee charged with managerial responsibility for the company and a shareholder who materially participated in the conduct of its affairs. 12 U.S.C. § 5481(25)(C)(i), (ii). As a result, he is a “covered person” under the CFPA. 12 U.S.C. § 5481(25)(B).

11.

Raffi Boghosian has served as COO of Access Funding since May 2014, with responsibilities including managing marketing and sales activities. Boghosian has Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 4 of 19

Page 5

an ownership interest in Access Funding and helped develop Access Funding’s business model and manage its business. Under the CFPA, Boghosian is a “related person” to Access Funding because he was a director, officer, or employee charged with managerial responsibility for the company and a shareholder who materially participated in the conduct of its affairs. 12 U.S.C. § 5481(25)(C)(i), (ii). As a result, he is a “covered person” under the CFPA. 12 U.S.C. § 5481(25)(B).

12.

Michael Borkowski has served as CEO of Access Funding since May 2014. Before May 2014, he served as CFO and COO of Access Funding. Borkowski has an ownership interest in Access Funding and helped develop Access Funding’s business model and manage its business. Under the CFPA, Borkowski is a “related person” to Access Funding because he was a director, officer, or employee charged with managerial responsibility for the company and a shareholder who materially participated in the conduct of its affairs. 12 U.S.C. § 5481(25)(C)(i),(ii). As a result, he is a “covered person” under the CFPA. 12 U.S.C. § 5481(25)(B).

13.

Charles Smith provided purportedly independent professional advice for almost all Maryland consumers who made structured-settlement transfers to Access Funding. Under the CFPA, Smith is a “covered person” because he provided “financial advisory services” in the form of advice to consumers regarding these transactions. 12 U.S.C. § 5481(6), (15)(A)(viii). Further, although he is a Maryland-based attorney, Smith did not have an attorney-client relationship with the Maryland consumers he spoke to about structured-settlement transfers to Access Funding. Smith is therefore not protected by the “practice of law” exclusion in the CFPA. 12 U.S.C. 5517(e). Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 5 of 19

Page 6

FACTS 14.

Defendants Lee Jundanian, Raffi Boghosian, and Michael Borkowski (together with Access Funding and Access Holding, the “Access Funding Defendants”) founded Access Funding on or around December 1, 2012. 15.

As CEO and part owner of Access Funding, Jundanian was responsible for managing all operations of the company.

16.

As COO and part owner of Access Funding, Boghosian was responsible for managing Access Funding’s marketing and sales activities. 17.

As CFO, COO, and, after May 2014, CEO of Access Funding, Borkowski was responsible for managing all operations of the company. 18.

From its founding through November 2015, Access Funding’s principal business was to acquire future structured-settlement-payment streams and transfer those payment streams to third-party investors. 19.

Structured settlements are established by legal judgments or settlements of tort claims to provide recipients with an arrangement for periodic payment of damages for personal injuries. Structured settlements are often used to ensure the financial well-being of victims who have suffered long-term physical or cognitive harm. 20.

Structured-settlement-factoring companies like Access Funding offer recipients of structured settlements the opportunity to transfer a portion of their future payment streams in exchange for a discounted immediate lump sum. 21.

Forty-nine states have enacted Structured Settlement Protection Acts (“SSPAs”) that set forth requirements for structured-settlement transfers. Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 6 of 19

Page 7

22.

Under state SSPAs and federal tax law, 26 U.S.C. § 5891, a structuredsettlement-factoring company that wishes to purchase all or a portion of a structured settlement from a structured-settlement holder and avoid certain taxes must, among other things, petition for and receive court approval for the sale. 23.

Access Funding searched court records for approved transfers to identify consumers who had previously transferred a portion of their structured settlements. 24.

Access Funding also searched court records for pending filings by other structured-settlement-factoring companies and contacted the consumers involved before the courts approved the transfers to attempt to convince the consumers to back out of the pending transfers and enter transactions with Access Funding instead. 25.

Access Funding continued to pressure structured-settlement holders to enter additional transactions with it until all of their remaining expected payments were transferred.

26.

Access Funding conducted aggressive outreach to structured-settlement holders by phone and through targeted direct mail. 27.

Consumers received a steeply discounted lump sum in return for signing away their future payment streams. The lump sums Access Funding provided consumers typically represented only about 30% of the present value of those future payments.

28.

Many of the consumers from whom Access Funding purchased settlements were lead-poisoning victims with cognitive impairments. Structured settlements had been deemed to be the most appropriate settlements for these individuals. The Access Funding Defendants were aware of these facts. Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 7 of 19

Page 8

29.

Many SSPAs, including Maryland’s, require the court to find that the consumer has consulted with an independent professional advisor (“IPA”) before it can approve a structured-settlement transfer.

30.

In order to finalize transfers of structured settlements, Jundanian, Boghosian, and Borkowski each had responsibility for ensuring that Access Funding’s transferors had consulted an IPA in states where the SSPA required it. 31.

Access Funding conducted approximately 70% of its transfers in Maryland. The company sought court approval for about 200 transfers in Maryland from 2013 to 2015, of which at least 158 have been approved. 32.

During the relevant period, Maryland’s SSPA required that an IPA advise on the financial, legal, and tax implications of a transfer. Md. Cts. & Jud. Proc. §§ 5-1102(b)(3) (2000).

33.

Access Funding steered nearly all its Maryland consumers to a single individual, Charles Smith, who acted as the IPA for almost all of its Maryland transactions.

34.

Smith had both personal and professional ties to the Access Funding Defendants.

35.

Access Funding typically paid Smith $250 for each IPA letter he provided. The company paid him directly.

36.

Access Funding initiated Smith’s contact with consumers by sending him a copy of the consumer’s structured-settlement-transfer-disclosure statement, along with the consumer’s phone number.

Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 8 of 19

Page 9

37.

In some instances, Access Funding couriered to consumers prepaid cell phones that Smith used to contact the consumers. Other times, Access Funding’s salespeople initiated a three-way call with Smith and a consumer. Access Funding took these steps to ensure the calls with Smith were completed. 38.

Access Funding had consumers sign statements indicating that they had received IPA services from Smith even before Smith had spoken to the consumers. 39.

Access Funding salespeople instructed consumers intending to complete structured-settlement transfers that speaking with Smith was one of the steps the consumers were required to complete. But neither Access Funding nor Smith typically informed consumers that Smith was an attorney, and consumers typically did not know that Smith was an attorney.

40.

Consumers did not believe that Smith was acting as their attorney, and they did nothing to indicate that they intended to have an attorney-client relationship with him.

41.

Before speaking with a consumer, Smith typically spent ten to fifteen minutes reviewing the settlement-transfer-disclosure statement and any other documents provided by Access Funding.

42.

Smith did not ask consumers for any additional information beyond the documents Access Funding provided.

43.

Smith’s phone calls with consumers typically lasted between five and ten minutes. During the calls, Smith merely recited the terms from the structuredsettlement-transfer-disclosure statement provided by Access Funding and asked whether the consumers understood them.

Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 9 of 19

Page 10

44.

Smith did not tell consumers he was acting as their attorney on these calls or at any other time.

45.

In some instances, Access Funding’s salespeople were on these calls along with Smith and the consumer.

46.

Smith did not explain to consumers that he represented them, as opposed to Access Funding, or that their interests might be different from Access Funding’s. 47.

Apart from this single, brief phone call, Smith typically had no other contact with the consumer.

48.

After speaking with a consumer, Smith spent about ten minutes drafting and sending a letter and invoice to Access Funding. The letter was substantially the same for every consumer to whom Smith purportedly provided IPA services, stating that the consumer had received “independent professional advice.” Access Funding later submitted the IPA letters to the court for approval of the transfer. 49.

Consumers did not receive or approve the letters Smith prepared for Access Funding. Smith provided the letters directly to Access Funding, which submitted them to the court.

50.

Smith never met with a consumer in person.

51.

Consumers never received anything in writing or signed any document that evidenced an attorney-client relationship with Smith. 52.

Smith did not provide consumers advice about their structured-settlement transfers apart from his recitation of the terms from the document Access Funding provided him.

Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 10 of 19

Page 11

53.

Smith did not analyze whether structured-settlement transfers would be in consumers’ best interest and did not offer consumers advice about whether the transactions would be in their best interest.

54.

Smith never advised a consumer not to enter into a structured-settlementtransfer contract.

55.

Smith never advised a consumer to seek additional money from Access Funding.

56.

Smith never advised a consumer to sell fewer payments, or a different duration of payments, to Access Funding.

57.

Smith did not disclose to consumers his personal and professional ties to the Access Funding Defendants, and he did not obtain written informed consent from consumers regarding any potential conflicts of interest. 58.

Jundanian, Boghosian, and Borkowski were aware that Access Funding was steering nearly all of its Maryland customers to Smith, that Smith had ties to the Access Funding Defendants, and that Smith was compensated directly by Access Funding for his purported services.

59.

Access Funding provided advances to many consumers, both in Maryland and elsewhere, while the consumers waited to complete their paperwork and finalize their transfers. These advances often consisted of $500 for signing a contract, $1000 when a court date was set, and another $1000 when a judge approved the sale. 60.

Jundanian, Boghosian, and Borkowski each participated in establishing Access Funding’s policies related to advances, including the terms of the advances and Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 11 of 19

Page 12

how they were presented to consumers, and dictated when Access Funding would issue advances to consumers.

61.

Access Funding’s advance agreements stated that consumers were required to cooperate fully with the company in obtaining court approval for the contemplated transfer and that consumers would be liable for the advance if the transaction was not completed.

CAUSES OF ACTION Count I (Against Smith) Unfair Acts and Practices Under the CFPA

62.

The allegations in paragraphs 1-61 are incorporated by reference. 63.

Under § 1031(c) of the CFPA, an act or practice is unfair if it causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers, and such substantial injury is not outweighed by countervailing benefits to consumers or to competition. 12 U.S.C. §§ 5531(c), 5536(a)(1)(B). 64.

Smith held himself out as an “independent professional advisor,” and by purporting to provide IPA services for purposes of the structured-settlement transactions, was therefore obligated to explain the financial, legal, and tax implications of the transfers consumers made to Access Funding. 65.

Smith did not tell consumers about his relationship with Access Funding. He provided virtually no advice to these consumers, and did not take the consumers’ personal circumstances, including other debt obligations, into consideration. Smith was compensated directly by Access Funding for his services. Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 12 of 19

Page 13

66.

Smith’s conduct caused or was likely to cause substantial injury to consumers because he did not actually provide “independent” professional advice and did not disclose his lack of independence to consumers. Consumers who otherwise could have availed themselves of truly independent advice, which might have dissuaded them from moving forward with transactions that were not in their best interests or permitted them to evaluate alternatives, were not aware that the advice they were receiving was not independent.

67.

The injury to consumers was not reasonably avoidable by consumers because Smith failed to disclose that the advice he purported to give was not independent.

68.

The injury was not outweighed by countervailing benefits to consumers or to competition.

69.

Smith therefore engaged in unfair acts or practices, in violation of §§ 1031 and 1036 of the CFPA. 12 U.S.C. § 5531(a), 5536(a)(1)(B). Count II (Against Smith) Deceptive Acts and Practices Under the CFPA

70.

The allegations in paragraphs 1-61 are incorporated by reference. 71.

Under the CFPA, a practice is deceptive if (1) there is a representation or omission of information that is likely to mislead consumers acting reasonably under the circumstances; and (2) that information is material to consumers. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).

72.

Smith represented to consumers that he provided “independent” professional advice. Smith knew that the Maryland SSPA required independent Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 13 of 19

Page 14

professional advice before a transaction could be approved, and that consumers signed affidavits for Access Funding stating “I have been advised to seek independent professional advice in connection with the transfer. I have received independent professional advice and desire to go forward with the transaction.” 73.

In fact, Smith misrepresented his independence from Access Funding. He had personal and professional ties to the Access Funding Defendants and was paid directly by Access Funding. Smith’s lack of independence was material to consumers, who, had they known Smith was not independent, likely would have known that his advice was insufficient to move forward with the transaction. Consumers were reasonable in believing that the person purporting to provide independent professional advice to them was independent.

74.

Smith therefore engaged in deceptive acts or practices, in violation of §§ 1031 and 1036 of the CFPA. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B). Count III (Against Smith) Abusive Acts and Practices Under the CFPA

75.

The allegations in paragraphs 1-61 are incorporated by reference. 76.

Under § 1031(d)(2)(C) of the CFPA, a practice is abusive if it takes unreasonable advantage of “the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.” 12 U.S.C. § 5531(d)(2)(C). 77.

Under § 1031(d)(2)(A) of the CFPA, a practice is abusive if it takes unreasonable advantage of “a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service.” 12 U.S.C. § 5531(d)(2)(A). Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 14 of 19

Page 15

78.

Consumers were told they needed independent advice and were directed by Access Funding to Smith for IPA services. Smith held himself out as providing independent professional advice on the implications of consumers’ contemplated transfers. Consumers reasonably relied on Smith to provide independent professional advice that took their best interests into account. 79.

Smith was not independent; rather, he had personal and professional ties to the Access Funding Defendants. Smith did not seek out or consider information about the consumers’ best interests; rather, he advised consumers without having any information about the consumers’ financial situations. Smith was paid by Access Funding for the IPA services he provided to Access Funding consumers. 80.

Consumers did not understand that Smith was not providing independent professional advice or that he did not take their individual circumstances or interests into account. They also did not understand that their interests would likely be better served by a truly independent advisor.

81.

The cursory interactions Smith had with consumers implied to consumers that they did not need to understand anything else about the transfers they were contemplating.

82.

Smith took unreasonable advantage of consumers’ reliance on him to act in their best interests, in violation of §§ 1031(d)(2)(C) and 1036(a)(1)(B) of the CFPA. 12 U.S.C. §§ 5531(d)(2)(c), 5536(a)(1)(B).

83.

Smith took unreasonable advantage of consumers’ lack of understanding of the material risks, costs, and conditions of the advice he purported to provide about Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 15 of 19

Page 16

structured-settlement transfers, in violation of §§ 1031(d)(2)(A) and 1036(a)(1)(B) of the CFPA. 12 U.S.C. §§ 5531(d)(2)(A), 5536(a)(1)(B). Count IV (Against the Access Funding Defendants) Substantial Assistance to Smith’s Unfair, Deceptive, and Abusive Acts

84.

The allegations in paragraphs 1-61 are incorporated by reference. 85.

It is unlawful to knowingly or recklessly provide substantial assistance to a covered person in violation of the provisions of § 1031 of the CFPA. 12 U.S.C. § 5536(a)(3).

86.

Access Funding referred nearly all of its Maryland consumers to Smith for IPA services, ensured Smith could contact the consumers, had consumers sign letters saying they had received IPA services before they had spoken with Smith, and paid Smith directly for his services.

87.

Access Funding knew or should have known that Smith engaged in only cursory communications with these consumers and did not provide truly independent professional advice, including by failing to consider consumers’ individual circumstances. Access Funding knew or should have known that Smith’s representations that the consumers he advised had received independent professional advice were inaccurate.

88.

As CEO and part owner of Access Funding, Jundanian was responsible for managing the operations of the company, including ensuring that structured-settlement transferors received independent professional advice in states where the SSPA required it so that Access Funding could seek court approval of the transactions. Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 16 of 19

Page 17

89.

As COO and part owner of Access Funding, Boghosian was responsible for marketing and sales activities, which involved ensuring that structured-settlement transferors received independent professional advice in states where the SSPA required it so that Access Funding could seek court approval of the transactions. 90.

As CEO, CFO, and COO and part owner of Access Funding, Borkowski was responsible for managing the operations of the company, including ensuring that structured-settlement transferors received independent professional advice in states where the SSPA required it so that Access Funding could seek court approval of the transactions.

91.

Jundanian, Boghosian, and Borkowski were aware that Access Funding referred nearly all of its Maryland consumers to Smith for IPA services, that Smith had personal relationships with individuals at Access Funding, that Smith was paid directly by Access Funding for providing purported IPA services, and that Smith could be relied on to provide IPA letters when asked.

92.

The Access Funding Defendants therefore knowingly or recklessly provided substantial assistance to Smith’s unfair, deceptive, and abusive acts or practices, in violation of §§ 1031 and 1036(a)(3) of the CFPA. 12 U.S.C. §§ 5531, 5536(a)(3).

Count V (Against the Access Funding Defendants) Abusive Acts and Practices Related to Advances to Consumers

93.

The allegations in paragraphs 1-61 are incorporated by reference. Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 17 of 19

Page 18

94.

Under § 1031(d)(2)(A) of the CFPA , a practice is abusive if it takes unreasonable advantage of consumers’ lack of understanding of the material risks, costs, or conditions of a financial product or service. 12 U.S.C. § 5531(d)(2)(A). 95.

As the Access Funding Defendants knew, Access Funding’s consumers frequently had an immediate need for cash, and the company’s practice was to encourage consumers to take advances to meet those needs. 96.

The Access Funding Defendants represented to the consumers who received advanced, including in the advance agreement Access Funding used, that consumers would be bound to complete the transactions and liable to repay the advance amounts if they did not complete the transaction. 97.

Consumers who could not otherwise repay the advances were told that they were obligated to go forward with the transfer even if they realized it was not in their best interest.

98.

Consumers did not understand the risks or conditions of the advances, including that the advances did not bind them to complete the transactions. 99.

The Access Funding Defendants therefore took unreasonable advantage of consumers’ lack of understanding of the material risks, costs, or conditions of the advance loans, in violation of §§ 1031(d)(2)(A) and 1036(a)(1)(B) of the CFPA. 12 U.S.C. §§ 5531(d)(2)(A), 5536(a)(1)(B).

DEMAND FOR RELIEF Plaintiff requests that the Court:

permanently enjoin Defendants from participating in the structuredsettlement industry in any way;

Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 18 of 19

Page 19

award damages or other monetary relief against Defendants; c.

order Defendants to pay redress to consumers; d.

order disgorgement of ill-gotten revenues by Defendants; e.

impose civil money penalties on Defendants under the CFPA; f.

order Defendants to pay the Bureau’s costs incurred in connection with prosecuting this action; and g.

award additional relief as the Court may determine to be just and proper.

Respectfully submitted,

ANTHONY ALEXIS Enforcement Director JEFFREY PAUL EHRLICH Deputy Enforcement Director JOHN C. WELLS Assistant Litigation Deputy

_/s/ Christina S. Coll________________ CHRISTINA S. COLL (Fed. Bar No. 806530, CA Bar No. 250712) JAMES MEADE (Fed. Bar No.803044, DC Bar No. 414732) Enforcement Attorneys Consumer Financial Protection Bureau 1700 G Street, NW Washington, D.C. 20552 Telephone (Coll): 202-435-7843 Telephone (Meade): 414-645-6616 Facsimile: 202-435-7722 e-mail: [email protected] e-mail: [email protected] Attorneys for Plaintiff Consumer Financial Protection Bureau Case 1:16-cv-03759-ELH Document 44 Filed 12/13/17 Page 19 of 19

Complaint (Nov. 2016)

PDF of this document (17 pages)

Page 20

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND BALTIMORE DIVISION CONSUMER FINANCIAL PROTECTION BUREAU 1700 G Street, NW Washington, DC 20552

Plaintiff, v.

ACCESS FUNDING, LLC 6900 Wisconsin Avenue, Suite 700 Chevy Chase, Maryland 20815 Montgomery County

ACCESS HOLDING, LLC 6900 Wisconsin Avenue, Suite 700 Chevy Chase, Maryland 20815 Montgomery County

RELIANCE FUNDING, LLC 6900 Wisconsin Avenue, Suite 700 Chevy Chase, Maryland 20815 Montgomery County

LEE JUNDANIAN 6900 Wisconsin Avenue, Suite 700 Chevy Chase, Maryland 20815 Montgomery County

RAFFI BOGHOSIAN 6900 Wisconsin Avenue, Suite 700 Chevy Chase, Maryland 20815 Montgomery County

MICHAEL BORKOWSKI 7105 Ridgewood Avenue Chevy Chase, Maryland 20815 Montgomery County

and

Case No.

Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 1 of 17

Page 21

CHARLES SMITH 4505 Custis Drive Rockville, Maryland 20853 Montgomery County

Defendants.

COMPLAINT Plaintiff, the Consumer Financial Protection Bureau (“Bureau”), alleges as follows:

INTRODUCTION 1.

The Bureau brings this action against Access Funding, LLC, Access Holding, LLC, Reliance Funding, LLC, Lee Jundanian, Raffi Boghosian, Michael Borkowski, and Charles Smith, (collectively, “Defendants”) to address Defendants’ unfair, abusive, and deceptive practices related to Access Funding’s purchase of structured settlements, in violation of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531, 5536(a).

JURISDICTION AND VENUE 2.

This Court has subject-matter jurisdiction over this action because the action is “brought under Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345.

This Court has personal jurisdiction over Defendants because the causes of action arise from Defendants’ conduct of business in this district, and Defendants reside here. 12 U.S.C. § 5564(f).

Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 2 of 17

Page 22

Venue is proper in this district because a substantial amount of the transactions, acts, practices, and courses of conduct at issue occurred within this district, Defendants all conducted business in this district, and Defendants resided in this district during the relevant period. 28 U.S.C. § 1391(b), (c); 12 U.S.C. § 5564(f). PARTIES 5.

As described below, Access Funding provided advances to consumers that were to be repaid through a deduction from the proceeds of structured-settlement transfers once those transactions were completed. These advances were extensions of credit to consumers, and therefore consumer-financial products or services, under § 1002 of the CFPA. 12 U.S.C. §§ 5481(5), 5481(15)(A)(i). Access Funding is therefore a “covered person” under § 1002 the CFPA. 12 U.S.C. § 5481(6). Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 3 of 17

Page 23

10.

11.

Raffi Boghosian has served as COO of Access Funding since May 2014, with responsibilities including managing marketing and sales activities. Boghosian has an ownership interest in Access Funding and helped develop Access Funding’s business model and manage its business. Under the CFPA, Boghosian is a “related person” to Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 4 of 17

Page 24

Access Funding because he was a director, officer, or employee charged with managerial responsibility for the company and a shareholder who materially participated in the conduct of its affairs. 12 U.S.C. § 5481(25)(C)(i), (ii). As a result, he is a “covered person” under the CFPA. 12 U.S.C. § 5481(25)(B).

12.

13.

Charles Smith is a Maryland-based attorney who provided purportedly independent professional advice for almost all Maryland consumers who made structured-settlement transfers to Access Funding. Under the CFPA, Smith is a “covered person” because he provided “financial advisory services” in the form of advice to consumers regarding these transactions 12 U.S.C. § 5481(6), (15)(A)(viii). FACTS 14.

As CEO and part owner of Access Funding, Jundanian was responsible for managing all operations of the company.

Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 5 of 17

Page 25

16.

As COO and part owner of Access Funding, Boghosian was responsible for managing Access Funding’s marketing and sales activities. 17.

As CFO, COO, and, after May 2014, CEO of Access Funding, Borkowski was responsible for managing all operations of the company. 18.

Forty-nine states have enacted Structured Settlement Protection Acts (SSPAs) that set forth requirements for structured-settlement transfers. 22.

Access Funding searched court records for approved transfers to identify consumers who had previously transferred a portion of their structured settlements. Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 6 of 17

Page 26

24.

Access Funding continued to pressure structured-settlement holders to enter additional transactions with it until all of their remaining expected payments were transferred.

26.

Access Funding conducted aggressive outreach to structured-settlement holders by phone and through targeted direct mail. 27.

28.

30.

Page 27

31.

During the relevant period, Maryland’s SSPA required that an IPA advise on the financial, legal, and tax implications of a transfer. Md. Cts. & Jud. Proc. §§ 5-1102(b)(3) (2000).

33.

Access Funding steered Maryland consumers to a single individual, Charles Smith, who acted as the IPA for almost all of its Maryland transactions. 34.

Smith had both personal and professional ties to the Access Funding Defendants. Smith was paid directly by Access Funding for his purported IPA services. 35.

Jundanian, Boghosian, and Borkowski were aware that nearly all of Access Funding’s Maryland customers were steered to Smith, that Smith had ties to the Access Funding Defendants, and that Smith was compensated directly by Access Funding for his purported services.

36.

Access Funding sent emails to Smith telling him when and at which phone number to contact consumers, conducted three-way calls with consumers and Smith, and couriered to consumers prepaid cell phones that Smith used to contact the consumers. Access Funding took these steps to ensure the calls with Smith were completed.

37.

Smith’s phone calls with consumers lasted just a few minutes, during which time he recited the terms of the contract offered by Access Funding and asked whether the consumers understood them. In some instances, Access Funding salespeople were on these calls along with Smith and a consumer. Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 8 of 17

Page 28

38.

Smith provided to Access Funding a substantially similar letter for every consumer to whom he purported to provide IPA services stating that the consumer had received “independent professional advice.” Access Funding then submitted the IPA letters to the court for approval of the transfer. 39.

Access Funding paid Smith $200 for each IPA letter he provided. 40.

Access Funding often had consumers sign statements indicating that they had received IPA services before the consumers had spoken to Smith. 41.

Jundanian, Boghosian, and Borkowski each participated in establishing Access Funding’s policies related to advances, including the terms of the advances and how they were presented to consumers, and dictated when Access Funding would issue advances to consumers.

43.

CAUSES OF ACTION Count I (Against Smith) Unfair Acts and Practices Under the CFPA

44.

The allegations in paragraphs 1-43 are incorporated by reference. Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 9 of 17

Page 29

45.

49.

The injury to consumers was not reasonably avoidable by consumers because Smith failed to disclose that the advice he purported to give was not independent.

Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 10 of 17

Page 30

50.

The injury was not outweighed by countervailing benefits to consumers or to competition.

51.

52.

The allegations in paragraphs 1-43 are incorporated by reference. 53.

54.

Smith represented to consumers that he provided “independent” professional advice. Smith knew that the Maryland SSPA required independent professional advice before a transaction could be approved, and that consumers signed affidavits for Access Funding stating “I have been advised to seek independent professional advice in connection with the transfer. I have received independent professional advice and desire to go forward with the transaction.” 55.

In fact, Smith misrepresented his independence from Access Funding. He had personal and professional ties to the Access Funding Defendants and was paid directly by Access Funding. Smith’s lack of independence was material to consumers, who, had they known Smith was not independent, likely would have known that his advice was insufficient to move forward with the transaction. Consumers were Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 11 of 17

Page 31

reasonable in believing that the person purporting to provide independent professional advice to them was independent.

56.

57.

The allegations in paragraphs 1-43 are incorporated by reference. 58.

Page 32

62.

63.

The cursory interactions Smith had with consumers implied to consumers that they did not need to understand anything else about the transfers they were contemplating.

64.

65.

Smith took unreasonable advantage of consumers’ lack of understanding of the material risks, costs, and conditions of the advice he purported to provide about structured-settlement transfers, in violation of §§ 1031(d)(2)(A) and 1036(a)(1)(B) of the CFPA. 12 U.S.C. §§ 5531(d)(2)(A), 5536(a)(1)(B). Count IV (Against the Access Funding Defendants) Substantial Assistance to Smith’s Unfair, Deceptive, and Abusive Acts

66.

The allegations in paragraphs 1-43 are incorporated by reference. 67.

It is unlawful to knowingly or recklessly provide substantial assistance to a covered person in violation of the provisions of § 1031 of the CFPA. 12 U.S.C. § 5536(a)(3).

68.

Access Funding referred nearly all of its Maryland consumers to Smith for IPA services, ensured Smith could contact the consumers, had consumers sign letters Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 13 of 17

Page 33

saying they had received IPA services before they had spoken with Smith, and paid Smith directly for his services.

69.

70.

73.

Jundanian, Boghosian, and Borkowski were aware that Access Funding referred nearly all of its Maryland consumers to Smith for IPA services, that Smith had Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 14 of 17

Page 34

personal relationships with individuals at Access Funding, that Smith was paid directly by Access Funding for providing purported IPA services, and that Smith could be relied on to provide IPA letters when asked.

74.

Count VI (Against the Access Funding Defendants) Abusive Acts and Practices Related to Advances to Consumers

75.

The allegations in paragraphs 1-43 are incorporated by reference. 76.

Consumers who could not otherwise repay the advances were told that they were obligated to go forward with the transfer even if they realized it was not in their best interest.

Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 15 of 17

Page 35

80.

Consumers did not understand the risks or conditions of the advances, including that the advances did not bind them to complete the transactions. 81.

DEMAND FOR RELIEF Plaintiff requests that the Court:

permanently enjoin Defendants from participating in the structuredsettlement industry in any way;

award damages or other monetary relief against Defendants; c.

order Defendants to pay redress to consumers; d.

order disgorgement of ill-gotten revenues by Defendants; e.

impose civil money penalties on Defendants under the CFPA; f.

order Defendants to pay the Bureau’s costs incurred in connection with prosecuting this action; and g.

award additional relief as the Court may determine to be just and proper.

Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 16 of 17

Page 36

Respectfully submitted,

ANTHONY ALEXIS Enforcement Director JEFFREY PAUL EHRLICH Deputy Enforcement Director JOHN C. WELLS Assistant Litigation Deputy

s/Meghan Sherman Cater MEGHAN SHERMAN CATER (Fed. Bar No 806212, NY Bar No. 4473120) CHRISTINA COLL (CA Bar No. 0073458) Enforcement Attorneys Consumer Financial Protection Bureau 1700 G Street, NW Washington, D.C. 20552 Telephone (Sherman Cater): 202-435-9165 Telephone (Coll): 202-435-7843 Facsimile: 202-435-7722 e-mail: [email protected] e-mail: [email protected] Attorneys for Plaintiff Consumer Financial Protection Bureau Case 1:16-cv-03759-JFM Document 1 Filed 11/21/16 Page 17 of 17

Order (Dec. 2021)

PDF of this document (16 pages)

Page 37

CRASL AGRON ROZELYOBRRHERTIGGA Fred HATA Bage 4 of 46

THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

BALTIMORE DIVISION CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff, Case No. 1-16-cv-03759-ELH Vv.

ACCESS FUNDING, LLC, et al.,

Defendants.

cit

[PROPOSED ] STIPULATED FINAL JUDGMENT AND ORDER AGAINST ACCESS FUNDING, LLC; ACCESS HOLDING, LLC; LEE JUNDANIAN; AND RAFFI BOGHOSIAN The Consumer Financial Protection Bureau (Bureau) commenced this civil | action on November 21, 2016, to obtain injunctive and monetary relief and civil penalties from Access Funding, LLC, Access Holding, LLC, Reliance Funding, LLC, Lee Jundanian, Raffi Boghosian, Michael Borkowski; and Charles Smith. The Bureau filed an Amended Complaint (Complaint) on December 13, 2017. The Complaint alleges violations of §§ 1031 and 1036 of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. 88 5531, 5536, in connection with unfair, abusive, and deceptive practices related to the transfer of consumers’ future structured-settlement payments in exchange for immediate lump-sum payments.

The Bureau and the Access Funding Defendants (Access Funding, LLC; Access Holding, LLC; Jundanian, and Boghosian, collectively) agree to entry of this Stipulated

Final Judgment and Order (Order), without adjudication of any issue of fact or law, to

Page 38

CEASE ALE LOSS EBUM DOQMMEHIIOA Fited 12/07/24 Page 2 oF46

settle and resolve all matters in dispute arising from the conduct alleged against the Access Funding Defendants in the Complaint.

FINDINGS 1, Access Funding, a wholly owned subsidiary of Access Holding, is a limitedliability company that facilitated the transfer of payment streams from structuredsettlement holders, a practice referred to as “structured-settlement factoring.” Access

Funding additionally conducted business as “Assoc LLC” and “En Cor LLC.”

2. Defendant Jundanian had an ownership interest in Access Holding from its inception to its dissolution. He served as CEO of Access Funding from February 2013

to May 2014. After May 2014, he was an advisor to Access Funding.

3. Defendant Boghosian had an ownership interest in Access Holding from May 2014 to its dissolution. He served as COO of Access Funding from May 2014 to

October 2015.

4. ‘This Court has jurisdiction over the Bureau and the Access Funding

Defendants and the subject matter of this action.

5. The Access Funding Defendants neither admit nor deny the allegations in . the Complaint or the Findings in this Order, except that the Access Funding Defendants admit the facts necessary to establish the Court’s jurisdiction over them and the subject

matter of this action.

6. The Access Funding Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim they may have

under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of

Page 39

Chast LAG RUOMSREUM DBAGHRPIGGA FHRAIZAPRBL Bagesoh4e

this action to the date of this Order. The Bureau and the Access Funding Defendants agree to bear their own costs and expenses, including, without limitation, attorneys’ _

fees.

7. Entry of this Order is in the public interest. DEFINITIONS

8. “Advance” means any money given to an Affected Consumer before the

consumer completing a Transaction.

9. “Affected Consumer” means any consumer who completed a Transaction with Access Funding, LLC between December 1, 2012, and November 21, 2016, for whom Defendant Smith acted or purported to act as an independent professional advisor, or any consumer who received an Advance from Access Funding before court

approval of the structured-settlement transfer.

10. “Defendants” means—individually, collectively, or in any combination—

Lee Jundanian, Raffi Boghosian, Michael Borkowski, and Charles Smith, and each of them by any other names by which they might be known; and Access Funding, LLC

- (d/b/a Assoc LLC and En Cor LLC), Access Holding, LLC, and their successors and

assigns.

11. “Effective Date” means the date on which this Order is entered by the Court. | 12, “Enforcement Director” means the Assistant Director of the Office of |

Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

Page 40

CEASTAAERUSBOLELY DEATONUGOL FIRGIZAFEL Page 4 oes

13. “Related Consumer Action” means a private action by or on behalf of one or more Affected Consumers or an enforcement action by another governmental agency brought against the Access Funding Defendants based on substantially the same facts as

described in the Complaint.

14. “Structured-Settlement Transaction” means the purchase, acquisition, or transfer of the right to payments under a structured settlement. CONDUCT PROVISIONS I.

Prohibited Conduct IT IS ORDERED that:

15. | The Access Funding Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them who have actual notice of this Order, whether acting directly or indirectly, may not violate §§ 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B).

16. The Access Funding Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them who have actual notice of this Order, whether acting directly or indirectly, in connection with the transfer of payment streams from structured-settlement holders, may not: |

a. misrepresent, expressly or impliedly:

i. the relationship between Defendants and any provider of

independent professional advice;

Page 41

CETERA ACER DEAMAR SAL Fieai2i7ei Pages die

ii, any other fact material to consumers, such as the material risks, total costs, or conditions of any Advance; b. take unreasonable advantage of consumers’ lack of understanding of the material risks, costs, or conditions of any Advance.

17. The Access Funding Defendants, whether acting directly or indirectly, shall not refer consumers to a specific individual or for-profit entity for advice concerning any Structured-Settlement Transaction, including for independent professional advice.

18. Within 7 days of the Effective Date of this Order, the Access Funding Defendants shall provide the Maryland Office of Attorney General a copy of this Order.

II. | Customer Information IT IS FURTHER ORDERED that:

19. The Access Funding Defendants and all other persons in active concert or participation with them who receive actual notice of this Order, whether acting directly or indirectly, may not disclose, use, or benefit from an Affected Consumer’s information, including the name, address, telephone number, email address, Social Security number, other identifying information, or any data that enables access to an Affected Consumer's account (including a credit card, bank account, or other financial account), that the Access Funding Defendants obtained before the Effective Date in connection with any Structured-Settlement Transaction. However, an Affected Consumer’s information may be disclosed if requested by a government agency or required by law, regulation, court

order, or as required in an administrative or regulatory proceeding. |

Page 42

CHEERS CEE DEANE ISA FiediZA7ei Pages or 46

MONETARY PROVISIONS In.

| Order to Pay Disgorgement IT IS FURTHER ORDERED that: |

20. A judgment for disgorgement is entered in favor of the Bureau and against the Access Funding Defendants, jointly and severally, in the amount of $40,000.

21. Within 10 days of the Effective Date, the Access Funding Defendants must pay to the Bureau, by wire transfer to the Bureau or to the Bureau’s ‘agent, and according to the Bureau’s wiring instructions, $40,000 in full satisfaction of the judgment as ordered in Paragraph 20 of this Section.

22. The Bureau shall deposit these funds in the U.S. Treasury as disgorgement. Defendant will have no right to challenge any actions that the Bureau or its representatives may take under this paragraph.

Civil Money Penalty IT IS FURTHER ORDERED that:

23. Under § 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in Counts IV and V of the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), the Access Funding Defendants, jointly and — severally, must pay a civil money penalty of $10,000 to the Bureau.

24. Within io days of the Effective Date, the Access Funding Defendants must pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in

compliance with the Bureau’s wiring instructions.

Page 43

cGaS4 hae VORZSLELH DBAGHRIRDLGOA Files IMB Rage 7 Keke

25. The civil money penalty will be deposited in the Civil Penalty Fund of the Bureau as required by § 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

26. The Access Funding Defendants must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, the Access Funding Defendants may not:

a. claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or

b. seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order.

27. The Access Funding Defendants agree that the civil penalty imposed by the Order represents a civil penalty owed to the United States Government, is not compensation for actual pecuniary loss, and, thus, as to them, it is not subject to discharge under the Bankruptcy Code under 11 U.S.C. § 523(a)(7).

Iv.

Additional Monetary Provisions IT IS FURTHER ORDERED that:

28. In the event of any default on the Access Funding Defendants’ obligations : to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to

the date of payment, and will immediately become due and payable.

Page 44

ChBS9AARAUGMOLELY DBAGHAGG FIRB, Page Bohs

29. The Access Funding Defendants relinquish all dominion, control, and title to the funds paid under this Order to the fullest extent permitted by law, and no part of the funds may be returned to them.

| 30. The facts alleged in the Complaint will be taken as true solely for the purposes noted herein and will be given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Order, or in any subsequent civil litigation only by or on behalf of the Bureau ina proceeding to enforce its rights to any payment or monetary judgment under this Order such as a nondischargeability complaint in any bankruptcy case.

31. The facts alleged in the Complaint establish all elements necessary to sustain an action by the Bureau under Section 523(a)(2)(A) of the Bankruptcy Code,

11 U.S.C. § 523(a)(2)(A), and for such purposes this Order will-have collateral estoppel effect against the Access Funding Defendants, even in such Defendants’ capacities as debtors-in-possession.

32. Under 31 U.S.C. § 7701, the Access Funding Defendants, unless they have already done so, must furnish to the Bureau their taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. |

33. | Within 30 days of the entry of a final judgment, consent order, or settlement in a Related Consumer Action, the Access Funding Defendants must notify the Bureau of the final judgment, consent order, or settlement in writing. That notification must indicate the amount of redress, if any, that the Access Funding

Defendants paid or are required to pay to Affected Consumers and describe the

Page 45

CEASA LUPAEES4HDRUHEISRA Filed 13/47/84 Bage 9 af 46

consumers or classes of consumers to whom that redress has been or will be paid. To - preserve the deterrent effect of the civil money penalty in any Related Consumer Action, the Access Funding Defendants may not argue that they are entitled to, nor may they benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against the Access Funding Defendants based on the civil money penalty paid in this action or based on any payment that the Bureau makes from - the Civil Penalty Fund, the Access Funding Defendants must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action. , 34. Under § 604(a)(I) of the Fair Credit Reporting Act, 15 U.S.C.§ 1681b(a)(1), any consumer-reporting agency may furnish to the Bureau a consumer report concerning Defendants Jundanian and Boghosian, and any such report may be used for

purposes of collecting and reporting on any delinquent amount arising out of this Order.

Page 46

CRELARRUPTERSIDRRHERIGAL Filed 12/731 Bage 48 of 46

COMPLIANCE PROVISIONS Vv.

Reporting Requirements IT IS FURTHER ORDERED that:

35. The Access Funding Defendants must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against the Access Funding Defendants; or a change in the Access Funding Defendants’ names or addresses. The Access Funding Defendants must provide this notice, if practicable, at least 30 days

| before the development, but in any case no later than 14 days after the development.

36. Within 7 days of the Effective Date, the Access Funding Defendants must:

a. designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with the Access Funding Defendants;

b. identify all businesses for which the Access Funding Defendants are the majority owner or which the Access Funding Defendants directly or indirectly control that are engaged in offering or providing consumer-financial products or services or other practices subject to this Order, by all of their names, telephone

~ numbers, and physical, postal, email, and Internet addresses;

Page 47

CEASE LAR UP BOE EHD RorHER Not Filed 13/47/34 Bage 44 of 416

Cc.

describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales; and |

identify Defendants Jundanian’s and Boghosian’s telephone numbers and all email, Internet, physical, and postal addresses, including all residences. , |

Describe in detail both Defendants Jundanian’s and Boghosian’s involvement in any business for which each performs services in any capacity or which either wholly or partially owns, including that Defendant’s title, role, responsibilities, participation, authority,

control, and ownership.

37. The Access Funding Defendants must report any changes in the

information required to be submitted under Paragraph 36 at least 30 days before the

change or as soon as practicable after the learning about the change, whichever is

sooner.

38. Within 90 days of the Effective Date, and again one year after the Effective

Date, the Access Funding Defendants must each submit to the Enforcement Director an

accurate written compliance progress report sworn to under penalty of perjury

(Compliance Report), which, at a minimum:

lists each applicable paragraph and subparagraph of the Order and describes in detail the manner and form in which that Defendant has complied with each such paragraph and subparagraph of this

Order; and

Page 48

CASE TORUS SR ES Rue ORL Filed 12/47/31 Bage 12 of 16

b. attaches a copy of each Order Acknowledgment obtained under Section VI, unless previously submitted to the Bureau. VI.

Order Distribution and Acknowledgment IT IS FURTHER ORDERED that:

39. Within 7 days of the Effective Date, the Access Funding Defendants must each submit to the Enforcement Director an acknowledgement of receipt of this Order, sworn under the penalty of perjury.

40. Within 30 days of the Effective Date, the Access Funding Defendants, for any business for which they are the majority owner or which they directly or indirectly control that offers or provides any consumer-financial products or services or other services or practices subject to this Order, must deliver a copy of this Order to its executive officers, as well as to any managers, employees, service providers, or other , agents and representatives who have responsibilities related to the subject matter of the Order.

41. For5 years from the Effective Date, the Access Funding Defendants, for any business for which they are the majority owner or which they directly or indirectly control, must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section V, and any future board members and executive officers, as well as to any managers, employees, service providers, or other agents and representatives who will have responsibilities related to the subject matter of

the Order before they assume their responsibilities.

Page 49

CEE IGE OPERA Hp dearnarevoeet Filed 12/47/24 Page 13 ef 16

42. The Access Funding Defendants must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section.

43. Within 90 days of the Effective Date, the Access.Funding Defendants must provide the Bureau with a list of all persons and their titles to whom this Order was delivered through that date under Paragraphs 40 and 41 and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 42.

VII.

Recordkeeping IT IS FURTHER ORDERED that:

44. The Access Funding Defendants must create, for at least 5 years from the Effective Date, all documents and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau, and make such documents and records available to the Bureau upon request. The Access Funding Defendants must retain such documents for at least 5 years after creation.

VIII.

Compliance Monitoring — IT IS FURTHER ORDERED that:

45. To monitor the Access Funding Defendants’ compliance with this Order,

within 14 days of receipt of a written request from the Bureau, the Access Funding

Defendants must submit additional compliance reports or other requested information,

Page 50

Cast FTL OSTERELH Ddeement Toned FIGa 12/27/24 Page 14 of 18

which must be sworn under penalty of perjury; provide sworn testimony; or produce documents.

46. For purposes of this Section, the Bureau may communicate directly with the Access Funding Defendants unless they retain counsel related to these communications.

47. The Access Funding Defendants must permit Bureau representatives to interview any employee or other person affiliated with any Defendant who has agreed to such an interview regarding: (a) this matter; (b) anything related to or associated with the conduct described the Complaint; or (c) compliance with this Order. The person interviewed may have counsel present.

48. Nothing in this Order will limit the Bureau's lawful use of compulsory process, under 12 C.F.R. § 1080.6. ,

IX.

Notices IT IS FURTHER ORDERED that:

49. Unless otherwise directed in writing by the Bureau, the Access Funding Defendants must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Access Funding, Case No. i-16-cv-03759-ELH,” and send them by overnight courier or first-

class mail to the below address and contemporaneously by email to

Page 51

CRORE EEET HD RUE TSE Filled 13/47/34 Pagé 15 of 18

[email protected]:

Assistant Director for Enforcement

Bureau of Consumer Financial Protection

ATTENTION: Office of Enforcement

1700 G Street, N.W.

Washington D.C. 20552

Cooperation with the Bureau

IT IS FURTHER ORDERED that:

50. The Access Funding Defendants must cooperate fully to help the Bureau determine the identity and location of, and the amount of harm sustained by, each Affected Consumer. The Access Funding Defendants must provide such information in his or his agents’ possession or control within 14 days of receiving a written request from the Bureau.

51. The Access Funding Defendants must cooperate fully with the Bureau in this matter and in any investigation or litigation related to or associated with the conduct described in the Complaint. The Access Funding Defendants must provide truthful and complete information, evidence, and testimony. The Access Funding Defendants must appear for interviews, discovery, hearings, trials, and any other proceedings that the Bureau may reasonably request upon 10 days’ written notice, or other reasonable notice, at such places and times as the Bureau may designate, without the service of compulsory process.

XI.

52. Should the Access Funding Defendants seek to transfer or assign all or

part of their operations that are subject to this Order, such Defendants must, as a

Page 52

CHASTE UP BREE HD RAHA VARS Filed 13/47/34 Bage 46 of 16

condition of sale, obtain the written agreement of the transferee or assignee to comply

with all applicable provisions of this Order. XII.

Retention of Jurisdiction ' IT IS FURTHER ORDERED that:

53. The Court will retain jurisdiction of this matter for purposes of

enforcement of this Order.

SO ORDERED AND ADJUDGED.

GOAL beth ro | (24(2!

The Honorable Ellen Lipton Hollander DATE United States District Judge

Dismissal (Dec. 2021)

PDF of this document (1 pages)

Page 53

Casesp 16l6vs7SooBtH HDdeornera 4a Filed 10/23/20 Page 1 efi

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

CONSUMER FINANCIAL PROTECTION BUREAU,

Plaintiff, ¥ CASE NO. 1:16-CV-03759-ELH

ACCESS FUNDING, LLC, et al.,

Defendants.

PROPOSED] ORDER DISMISSING Cor ACTION AGAINST RELIANCE FUNDING, LLC

The Parties have stipulated to the dismissal from the case of Defendant Reliance

Funding, LLC under Rule 41(a)(1)(A)(ii). Accordingly, it is hereby

ORDERED that this action is dismissed with prejudice with respect to Defendant

Reliance Funding, LLC.

Judge Ellen L. Hollander U.S. District Court for the District of Maryland

Order (Dec. 2021)

PDF of this document (16 pages)

Page 54

CaSOE LEA USESETH DAKE Tet FSG 11/18/24 Page 4 St 46

THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

BALTIMORE DIVISION CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff, Case No. 1-16-cv-03759-ELH v.

ACCESS FUNDING, LLC, et al.,

Defendants.

EL [PROPOSED] STIPULATED FINAL JUDGMENT AND ORDER

The Consumer Financial Protection Bureau (“Bureau”) commenced this civil action on November 21, 2016, to obtain injunctive and monetary relief and civil penalties from Access Funding, LLC, Access Holding, LLC, Reliance Funding, LLC,

Lee Jundanian, Raffi Boghosian, Michael Borkowski, and Charles Smith. The Bureau filed an Amended Complaint (“Complaint”) on December 13, 2017. The Complaint alleges violations of §§ 1031 and 1036 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531, 5536, in connection with unfair, abusive, and deceptive practices related to the transfer of consumers’ future structured-settlement payments in exchange for immediate lump-sum payments.

The Bureau and Defendant Smith agree to entry of this Stipulated Final Judgment and Order (“Order”), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute arising from the conduct alleged against Defendant

Smith in the Complaint.

Page 55

cast F 16 sR LH pdearhene tess? Filed 12/18/21 Page 2 of 16

FINDINGS 1. Charles Smith is an attorney who provided purportedly independent professional advice for almost all Maryland consumers who made structured-settlement

transfers with Access Funding, LLC.

2. This Court has jurisdiction over the Bureau and Defendant Smith and the

subject matter of this action.

3. Defendant Smith neither admits nor denies the allegations in the Complaint or the Findings in this Order, except that Defendant Smith admits the facts necessary to establish the Court’s jurisdiction over him and the subject matter of this

action.

4. The amount of harm suffered by the Affected Consumers is the amount of the total Discounted Present Values of the transferred structured-settlement payments, less the total of the Gross Advance Amounts paid to Affected Consumers by

Access Funding, LLC.

5. Defendant Smith waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim he may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. The Bureau and Defendant Smith agree to bear their own costs

and expenses, including, without limitation, attorneys’ fees.

6. Entry of this Order is in the public interest.

Page 56

casASF HeAW S782 DACAHERE IESE? NEG 11/18/21 Page 3 of 16

DEFINITIONS

“Affected Consumer” means any consumer who completed a Transaction

with Access Funding, LLC between December 1, 2012, and November 21, 2016, for

whom Defendant Smith acted or purported to act as an independent professional

advisor.

“Assist[ing] Others” includes, but is not limited to:

consulting in any form whatsoever;

providing paralegal or administrative support services;

performing customer service functions, including but not limited to, receiving or responding to consumer complaints;

formulating or providing, or arranging for the formulation or provision of, any advertising or marketing material, including but not limited to, any telephone sales script, direct mail solicitation, or the text of any Internet website, email, or other electronic communication or advertisement;

formulating or providing, or arranging for the formulation or provision of, any marketing support material or service, including but not limited to, web or Internet Protocol addresses or domain name registration for any Internet websites, affiliate marketing services, or media placement services;

providing names of, or assisting in the generation of, potential customers;

performing marketing, billing, or payment services of any kind; and

Page 57

cawaS# 118298622 Hb eOnREIBSEet Filed 12/18/34 Rage 4 of 46

h. acting or serving as an owner, Officer, director, manager, or principal of any entity.

9. “Defendants” means—individually, collectively, or in any combination—

Lee Jundanian, Raffi Boghosian, Michael Borkowski, and Charles Smith, and each of them by any other names by which they might be known; and Access Funding, LLC (d/b/a Assoc LLC and En Cor LLC), Access Holding, LLC, and their successors and

assigns.

10. “Disclosure Statement” means the document provided to Affected Consumers that summarizes the number, timeframe, and amount of structuredsettlement payments to be transferred, the value of payments to be transferred, and the

amount Affected Consumers were to receive in exchange for the transfer.

11. “Discounted Present Value” means the amount identified on an Affected Consumer’s Disclosure Statement as the current value of the transferred structured-

settlement payments at the time of the Affected Consumer’s Structured-Settlement

Transaction.

12. “Effective Date” means the date on which this Order is entered by the Court.

13. | “Enforcement Director” means the Assistant Director of the Office of

Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

14. “Gross Advance Amount” means the amount paid to or for the benefit of

an Affected Consumer at the time of his or her Structured-Settlement Transaction.

Page 58

cas8SE 1eAie78Gre Ht Ddeahene eset Filed 12/48/21 Page 8 Bf 18

15. “Related Consumer Action” means a private action by or on behalf of one or more Affected Consumers or an enforcement action by another governmental agency brought against Defendant Smith based on substantially the same facts as described in

the Complaint.

16. “Structured-Settlement Transaction” means the purchase, acquisition, or transfer of the right to payments under a structured settlement. CONDUCT PROVISIONS I.

Prohibited Conduct IT IS ORDERED that:

17. Defendant Smith and all other persons in active concert or participation with him who have actual notice of this Order, whether acting directly or indirectly, may not violate §§ 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B).

18. | Defendant Smith and all other persons in active concert or participation with him who have actual notice of this Order, whether acting directly or indirectly, in connection with Structured-Settlement Transactions, may not misrepresent, expressly or impliedly, the relationship between any Defendant and any provider or purported provider of independent professional advice.

19. | Within 7 days of the Effective Date of this Order, Defendant Smith shall

provide the Maryland Office of Attorney General a copy of this Order.

Page 59

casOF 1A UIEREH DROME Test FG H1/T8/21 Page 6 F168

20. Defendant Smith, whether acting directly or indirectly, shall not:

a. participate or Assist Others in participating in any Structured- Settlement Transaction;

b. own, be employed by, or serve as agent of any structured-

settlement-factoring company;

G; provide any advice concerning any Structured-Settlement Transaction, including providing or purporting to provide independent professional advice to any persons seeking to sell structured-settlement payment rights.

II.

Customer Information IT IS FURTHER ORDERED that:

21. Defendant Smith and all other persons in active concert or participation with him, who receive actual notice of this Order, whether acting directly or indirectly, may not disclose, use, or benefit from an Affected Consumer's information, including the name, address, telephone number, email address, Social Security number, other identifying information, or any data that enables access to an Affected Consumer's account (including a credit card, bank account, or other financial account), that Defendant Smith obtained before the Effective Date in connection with any Structured- Settlement Transaction. However, an Affected Consumer’s information may be disclosed if requested by a government agency or required by law, regulation, court

order, or as required in an administrative or regulatory proceeding.

Page 60

caeSE deli ys9s ert tp RerHERE NSS? Filed 12/48/34 Bage 7 of 46

MONETARY PROVISIONS Ill.

Order to Pay Disgorgement IT IS FURTHER ORDERED that:

22. Ajudgment for disgorgement is entered in favor of the Bureau and against the Defendant Smith in the amount of $40,000.

23. | Within 30 days of the Effective Date, Defendant must pay to the Bureau, by wire transfer to the Bureau or to the Bureau’s agent, and according to the Bureau's wiring instructions, $40,000 in full satisfaction of the judgment as ordered in Paragraph 22 of this Section.

24. The Bureau shall deposit these funds in the U.S. Treasury as disgorgement. Defendant will have no right to challenge any actions that the Bureau or its representatives may take under this paragraph.

Civil Money Penalty IT IS FURTHER ORDERED that:

25. Under § 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in Counts I, II, and III of the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), Defendant Smith must pay a civil money penalty of $10,000 to the Bureau.

26. Within 10 days of the Effective Date, Defendant Smith must pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance

with the Bureau’s wiring instructions.

Page 61

cast te Ws7SG2 EH DARAHENR eset Filed 11/28/31 Page 8 oF 46

27. The civil money penalty will be deposited in the Civil Penalty Fund of the Bureau as required by § 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

28. Defendant Smith must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Defendant Smith may not:

a. claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or

29. Defendant Smith agrees that the civil penalty imposed by the Order represents a civil penalty owed to the United States Government, is not compensation for actual pecuniary loss, and, thus, as to him, it is not subject to discharge under the Bankruptcy Code under 11 U.S.C. § 523(a)(7).

IV.

Additional Monetary Provisions IT IS FURTHER ORDERED that:

30. Inthe event of any default on Defendant Smith’s obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of

payment, and will immediately become due and payable.

Page 62

caeaS# tele ys9S re tp dearmentiiss3? Filed 14/18/24 Bage 9 ef 46

31. Defendant Smith relinquishes all dominion, control, and title to the funds paid under this Order to the fullest extent permitted by law, and no part of the funds may be returned to him.

32. The facts alleged in the Complaint will be taken as true solely for the purposes noted herein and will be given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Order, or in any subsequent civil litigation only by or on behalf of the Bureau in a proceeding to enforce its rights to any payment or monetary judgment under this Order such as a nondischargeability complaint in any bankruptcy case.

33. The facts alleged in the Complaint establish all elements necessary to sustain an action by the Bureau under Section 523(a)(2)(A) of the Bankruptcy Code,

11 U.S.C. § 523(a)(2)(A), and for such purposes this Order will have collateral estoppel effect against Defendant Smith, even in such Defendant’s capacity as debtor-inpossession.

34. Under 31 U.S.C. § 7701, Defendant Smith, unless he has already done so, must furnish to the Bureau his taxpayer-identification number, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

35. | Within 30 days of the entry of a final judgment, consent order, or settlement in a Related Consumer Action, Defendant Smith must notify the Bureau of the final judgment, consent order, or settlement in writing. That notification must indicate the amount of redress, if any, that Defendant Smith paid or is required to pay to Affected Consumers and describe the consumers or classes of consumers to whom that

redress has been or will be paid. To preserve the deterrent effect of the civil money

Page 63

cas8SE 16 Wa7SerE lH DdeUMHeNe eset FIG 12/18/2t Page 16 oF 46

penalty in any Related Consumer Action, Defendant Smith may not argue that he is entitled to, nor may he benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against Defendant Smith based on the civil money penalty paid in this action or based on any payment that the Bureau makes from the Civil Penalty Fund, Defendant Smith must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action.

36. Under § 604(a)(I) of the Fair Credit Reporting Act, 15 U.S.C.§ 1681b(a)(1), any consumer-reporting agency may furnish to the Bureau a consumer report concerning Defendant Smith, and any such report may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

COMPLIANCE PROVISIONS V.

Reporting Requirements IT IS FURTHER ORDERED that:

37. Defendant Smith must notify the Bureau of any development that may

affect compliance obligations arising under this Order, including but not limited to a

dissolution, assignment, sale, merger, or other action that would result in the emergence

Page 64

casas? telGqya9sereret tp deanveneiesst Filed 12/48/21 Bage 44 ef 416

of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate

that engages in any acts or practices subject to this Order; the filing of any bankruptcy

or insolvency proceeding by or against Defendant Smith; or a change in Defendant

Smith’s name or address. Defendant Smith must provide this notice, if practicable, at

least 30 days before the development, but in any case no later than 14 days after the

development.

38. Within 7 days of the Effective Date, Defendant Smith must:

designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Defendant Smith;

identify all businesses for which Defendant Smith is the majority owner or which Defendant Smith directly or indirectly controls that are engaged in offering or providing consumer-financial products or services or other practices subject to this Order, by all of their names, telephone numbers, and physical, postal, email, and Internet addresses;

describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales; and

identify all of Defendant Smith’s telephone numbers and all email,

Internet, physical, and postal addresses, including all residences.

Page 65

caseSE tess RPH DAaAHENe eset Filed 12/78/27 Page 12 of 46

39. Defendant Smith must report any changes in the information required to be submitted under Paragraph 37 at least 30 days before the change or as soon as practicable after the learning about the change, whichever is sooner.

40. Within 90 days of the Effective Date, and again one year after the Effective Date, Defendant Smith must submit to the Enforcement Director an accurate written compliance progress report sworn to under penalty of perjury (Compliance Report), which, at a minimum:

a. lists each applicable paragraph and subparagraph of the Order and describes in detail the manner and form in which Defendant has complied with each such paragraph and subparagraph of this Order; and

b. attaches a copy of each Order Acknowledgment obtained under Section VI, unless previously submitted to the Bureau.

VI.

Order Distribution and Acknowledgment IT IS FURTHER ORDERED that:

41. Within 7 days of the Effective Date, Defendant Smith must submit to the Enforcement Director an acknowledgement of receipt of this Order, sworn under the penalty of perjury.

42. Within 30 days of the Effective Date, Defendant Smith, for any business for which he is the majority owner or which he directly or indirectly controls that offers or provides any consumer-financial products or services or other services or practices

subject to this Order, must deliver a copy of this Order to its executive officers, as well as

Page 66

cast 16280398672 DARA ese? Filed 12/48/2t Page 13 BF 16

to any managers, employees, service providers, or other agents and representatives who have responsibilities related to the subject matter of the Order.

43. For5 years from the Effective Date, Defendant Smith, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section V, and any future board members and executive officers, as well as to any managers, employees, service providers, or other agents and representatives who will have responsibilities related to the subject matter of the Order before they assume their responsibilities.

44. Defendant Smith must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section.

45. | Within 90 days of the Effective Date, Defendant Smith must provide the Bureau with a list of all persons and their titles to whom this Order was delivered through that date under Paragraphs 40 and 41 and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 42.

VII.

Recordkeeping IT IS FURTHER ORDERED that:

46. Defendant Smith must create, for at least 5 years from the Effective Date,

all documents and records necessary to demonstrate full compliance with each

provision of this Order, including all submissions to the Bureau, and make such

Page 67

casaSt HelQWe7SererH pdearmene eset Filed 22/18/21 Page 14 ef 46

documents and records available to the Bureau upon request. Defendant Smith must retain such documents for at least 5 years after creation. Vil.

Compliance Monitoring IT IS FURTHER ORDERED that:

47. To monitor Defendant Smith’s compliance with this Order, within 14 days of receipt of a written request from the Bureau, Defendant Smith must submit additional compliance reports or other requested non-privileged information, which must be sworn under penalty of perjury; provide sworn testimony related to requirements of this Order and his compliance with those requirements; or produce non-privileged documents related to the requirements of this Order and Defendant Smith’s compliance with those requirements.

48. For purposes of this Section, the Bureau may communicate directly with Defendant Smith unless he retains counsel related to these communications.

49. Defendant Smith must permit Bureau representatives to interview about the requirements of this Order and Defendant Smith’s compliance with those requirements any employee or other person affiliated with Defendant Smith who has agreed to such an interview. The person interviewed may have counsel present.

50. Nothing in this Order will limit the Bureau’s lawful use of compulsory

process, under 12 C.F.R. § 1080.6.

Page 68

CasBS# HEL SET dearhent Wek84 Filed 41/48/24 Bage 15 ef 46

IX.

Notices IT IS FURTHER ORDERED that:

51. Unless otherwise directed in writing by the Bureau, Defendant Smith must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Access Funding, Case No. 1-16-cv- 03759-ELH,” and send them by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]:

Assistant Director for Enforcement

Bureau of Consumer Financial Protection

ATTENTION: Office of Enforcement

1700 G Street, N.W.

Washington D.C. 20552

Cooperation with the Bureau

IT IS FURTHER ORDERED that:

52. Defendant Smith must cooperate fully to help the Bureau determine the identity and location of, and the amount of harm sustained by, each Affected Consumer. Defendant Smith must provide such information in his or his agents’ possession or control within 14 days of receiving a written request from the Bureau.

53. | Defendant Smith must cooperate fully with the Bureau in this matter and in any investigation or litigation related to or associated with the conduct described in the Complaint. Defendant Smith must provide truthful and complete information,

evidence, and testimony. Defendant Smith must appear for interviews, discovery,

hearings, trials, and any other proceedings that the Bureau may reasonably request

Page 69

casASe HeLa wagsQert Hp dearmene igh’ Filed 12/48/21 Bage 46 ef 46

upon 10 days’ written notice, or other reasonable notice, at such places and times as the Bureau may designate, without the service of compulsory process. XI.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

54. The Court will retain jurisdiction of this matter for purposes of

enforcement of this Order.

5S. Te. Clete Lt0l. Clore. re Casa &TO BR

SO ORDERED AND ADJUDGED.

Lhe, K trounce yel2!

The Honorable Ellen Lipton Hollander DATE United States District Judge

Consent order (May 2022)

PDF of this document (12 pages)

Page 70

Casese: LelevcuS BiH Hp dearnent 3637 Filed 06/18/22 Page i ef 12

THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

CONSUMER FINANCIAL PROTECTION BUREAU,

Plaintiff, Case No. 1-16-cv-03759-ELH Vv.

ACCESS FUNDING, LLC, et al.,

Defendants.

TPROPOSED] CONSENT ORDER Ltt

The Parties jointly submit this Consent Order for approval and entry by the Court. The Bureau commenced this civil action on November 21, 2016, to obtain injunctive and monetary relief and civil penalties from Access Funding, LLC, Access Holding, LLC, Reliance Funding, LLC, Lee Jundanian, Raffi Boghosian, Charles Smith, and Michael Borkowski (Borkowski). The Bureau filed an Amended Complaint (Complaint) on December 13, 2017. The Complaint alleges violations of §§ 1031 and 1036 of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531, 5536, in connection with unfair, abusive, and deceptive practices related to the transfer of consumers’ future structured-settlement payments in exchange for immediate lumpsum payments. The Bureau and Borkowski enter into this Consent Order without adjudication of any issue of fact or law, to voluntarily settle and resolve matters in

dispute arising from the conduct alleged in the Complaint.

Page 71

Caésest:16L6vcOS7S0 AEH HD dournentiase37 Filed 05/18/22 Page 2 of 12

- FINDINGS

1. Borkowski had an ownership interest in Access Holding and served in

executive positions at Access Funding from their inception to their dissolution.

2. The Court has jurisdiction over the Parties and subject matter of this

action.

3. | Borkowski neither admits nor denies any of the allegations in the Complaint except that, for the purposes of this Consent Order, he admits facts necessary

to establish this Court’s jurisdiction over it and over the subject matter of this action.

4. Borkowski waives.all rights to seek judicial review or otherwise challenge or contest the validity of this Consent Order and any claim he may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Consent Order. The Bureau and Borkowski agree to bear their own costs and

expenses, including, without limitation, attorneys’ fees.

5. Entry of this Consent Order is in the public interest.

DEFIN ITION S 6. “Effective Date” means the date on which this Consent Order is entered by the Court. | 7. “Enforcement Director” means the Assistant Director of the Office of

Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

8. “Related Consumer Action” means a private action by or on behalf of one

or more Access Funding customer or an enforcement action by another governmental

Page 72

Césese: 1élevcos7SM b+ Hp deornent ase27 Filed 05/18/22 Page 3 ef 12

agency brought against the Borkowski based on substantially the same facts as

described in the Complaint.

CONDUCT PROVISIONS I.

Prohibited Conduct IT IS ORDERED that:

9. Borkowski and all other persons in active concert or participation with

him who have actual notice of this Consent Order, whether acting directly or indirectly, may not violate §§ 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B). 10. Borkowski and all other persons in active concert or participation with him who have actual notice of this Consent Order, whether acting directly or indirectly, in connection with the transfer of payment streams from structured-settlement holders, may not:

a. misrepresent, expressly or impliedly:

i. the relationship between Borkowski and any provider of independent professional advice; .

ii, any other fact material to consumers, such as the material risks, total costs, or conditions of any advance.

b. take unreasonable advantage of consumers’ lack of understanding of the material risks, costs, or conditions of any advance. 11. Borkowski, whether acting directly or indirectly, shall not refer consumers to a specific individual or for-profit entity for advice concerning any structured-

settlement transaction, including for independent professional advice.

Page 73

Cheese: 1eleycus75o> 21H Hp dearment3e27 Filed 06/18/22 Page 4 ef 12

II.

Customer Information IT IS FURTHER ORDERED that:

12. Borkowski and all other persons in active concert or participation with him who receive actual notice of this Consent Order, whether acting directly or indirectly, may not disclose, use, or benefit from an Access Funding customer’s information, including the name, address, telephone number, email address, Social Security number, other identifying information, or any data that enables access to an Access Funding customer’s account (including a credit card, bank account, or other financial account), that Borkowski obtained before the Effective Date in connection with any purchase, acquisition, or transfer of the right to payments under a structured settlement. However, an Access Funding customer’s information may be disclosed in connection with a Related Consumer Action, in response to legal process requiring such disclosure, if requested by a government agency or required by law, regulation, court order, or as required in an administrative or regulatory matter or proceeding.

MONETARY PROVISIONS III.

Civil Money Penalty | IT IS FURTHER ORDERED that: |

13. Under § 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in Counts IV and V of the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), Borkowski must pay a civil money penalty of

$5,000 to the Bureau.

Page 74

Casast: 16L6vcos 75 OB HDdeurment 23621 Filed 08/18/22 Page § of 12

14. Within 10 days of the Effective Date, Borkowski must pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions.

15. The civil money penalty will be deposited in the Civil Penalty Fund of the Bureau as required by § 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

16. Borkowski must treat the civil money penalty paid under this Consent Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Borkowski may not:

a. dlaim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Consent Order; or

b. seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to ~ payment made under any insurance policy, with regard to any civil money penalty paid under this Consent Order.

17. Borkowski agrees that the civil penalty imposed by the Consent Order represents a civil penalty owed to the United States Government, is not compensation for actual pecuniary loss, and, thus, as to them, it is not subject to discharge under the

Bankruptcy Code under 11 U.S.C. § 523(a)(7).

Page 75

Cabesth:16-6veOSTERSEEM HD dkuerientBSBI Filed 05/18/22 Page 6 of 12

IV.

Additional Monetary Provisions ITIS FURTHER ORDERED that: ~

18. In the event of any default on Borkowski’s obligations to make payment under this Consent Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable.

19. Borkowski relinquishes all dominion, control, and title to the funds paid under this Consent Order to the fullest extent permitted by law, and no part of the funds may be returned to him.

20. The facts alleged in the Complaint will be taken as true solely for the purposes noted herein and will be given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Consent Order, or in any subsequent civil litigation only by or on behalf of the Bureau in a proceeding to enforce its rights to any payment or monetary judgment under this Consent Order.

21. Under 31 U.S.C. § 7701, Borkowski, unless he has already done so, must furnish to the Bureau his taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Consent Order.

22, Within 30 days of the entry of a final judgment, consent order, or settlement in a Related Consumer Action, Borkowski must notify the Bureau of the final judgment, consent order, or settlement in writing. That notification must indicate the

amount of redress, if any, that Borkowski paid or is required to pay to Access Funding’s

Page 76

CAésese:16LevcusSHEH4 Hpaternerewserr Filed 65/18/22 Page 7 ef 12

consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Borkowski may not argue that he is entitled to, nor may he benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against Borkowski based on the civil money penalty paid in this action or based on any payment that the Bureau makes from the Civil Penalty Fund, Borkowski must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action.

23. ‘ Under § 604(a)(I) of the Fair Credit Reporting Act, 15 U.S.C.§ 1681b(a)(1), _ any consumer-reporting agency may furnish to the Bureau a consumer report concerning Borkowski, and any such report may be used for purposes of collecting and reporting on any delinquent amount arising out of this Consent Order.

COMPLIANCE PROVISIONS Vv. | Reporting Requirements IT IS FURTHER ORDERED that:

24. Borkowski must notify the Bureau of any development that may affect

compliance obligations arising under this Consent Order, including but not limited to

Page 77

cases delevcus7S Heir Hp dearene 23627 Filed 05/18/22 Page & ef 12

the filing of any bankruptcy or insolvency proceeding by or against Borkowski before full payment of the Civil Money Penalty. Borkowski must provide this notice, if practicable, at least 30 days before the development, but in any case no later than 14 days after the development.

25. Within 7 days of the Effective Date, Borkowski must:

a. designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Borkowski;

b. identify all businesses for which Borkowski is the majority owner or which Borkowski directly or indirectly controls that are engaged in offering or providing consumer-financial products or services or other practices subject to this Consent Order, by all of their names, telephone numbers, and physical, postal, email, and Internet addresses; ,

c. describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales; and

d. identify all of Borkowski’s telephone numbers and all email, Internet, physical, and postal addresses, including all residences.

26. Borkowski must report any changes in the information required to be submitted under Paragraph 25(b) and 25(c) at least 30 days before the change or as

soon as practicable after the learning about the change, whichever is sooner.

Page 78

Caésese: 1élevcos7S0o8tH_HDdeamene 28627 Filed 05/18/22 Page 9 of 12

27. Within 90 days of the Effective Date, and again one year after the Effective . Date, Borkowski must submit to the Enforcement Director an accurate written compliance progress report sworn to under penalty of perjury (Compliance Report), which, at a minimum:

a. lists each applicable paragraph and subparagraph of the Consent Order and describes in detail the manner and form in which he has complied with each such paragraph and subparagraph of this Consent Order; and b. attaches a copy of each Order Acknowledgment obtained under Section VI, unless previously submitted to the Bureau. or Order Distribution and Acknowledgment IT IS FURTHER ORDERED that:

28. Within 7 days of the Effective Date, must submit to the Enforcement Director an acknowledgement of receipt of this Consent Order, sworn under the penalty of perjury.

29. Within 30 days of the Effective Date, Borkowski, for any business for ) which he is the majority owner or which he directly or indirectly controls that offers or provides any consumer-financial products or services or other services or practices subject to this Consent Order, must deliver a copy of this Consent Order to its executive officers, as well as to any managers, employees, service providers, or other agents and

representatives who have responsibilities related to the subject matter of the Consent

Order.

Page 79

Caésese Islovcos7Se28uH Hp dearent 28627 Filed 08/18/22 Page 10 of 12

30. For5 years from the Effective Date, Borkowski, for any business for which he is the majority owner or which he directly or indirectly controls that offers or provides any consumer-financial products or services or other services or practices subject to this Consent Order, must deliver a copy of this Consent Order to any future . board members and executive officers, as well as to any managers, employees, service providers, or other agents and representatives who will have responsibilities related to the subject matter of the Consent Order before they assume their responsibilities.

31. , Borkowski must secure a signed and dated statement acknowledging receipt of a copy of this Consent Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Consent Order under this Section.

32. Within 90 days of the Effective Date, Borkowski must provide the Bureau with a list of all persons and their titles to whom this Consent Order was delivered through that date under Paragraphs 29 and 30 and a copy of all signed and dated statements acknowledging receipt of this Consent Order under Paragraph 31.

VITi.

Compliance Monitoring IT IS FURTHER ORDERED that:

33. To monitor Borkowski’s compliance with this Consent Order, within 14 days of receipt of a written request from the Bureau, Borkowski must submit additional compliance reports or other requested information, which must be sworn

under penalty of perjury; provide sworn testimony; or produce documents.

Page 80

Cé3esb: 16L6vc0S 75068 UH HD ddoment 23627 Filed 05/18/22 Page 11 of 12

34. For purposes of this Section, the Bureau may communicate directly with Borkowski unless he retains counsel related to these communications.

35. Borkowski must permit Bureau representatives to interview any employee or other person affiliated with him who has agreed to such an interview regarding: (a) this matter; (b) anything related to or associated with the conduct described the Complaint; or (c) compliance with this Consent Order. The person interviewed may have counsel present.

36. Nothing in this Consent Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6.

IX.

Notices IT IS FURTHER ORDERED that:

37. Unless otherwise directed in writing by the Bureau, Borkowski must provide all submissions, requests, communications, or other documents relating to this Consent Order in writing, with the subject line, “CFPB v. Access Funding, Case No. 1-16- . Cv-03759-ELH,” and send them by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]:

Assistant Director for Enforcement Bureau of Consumer Financial Protection ATTENTION: Office of Enforcement :

1700 G Street, N.W.

Washington D.C. 20552

Page 81

Césese: IglevcusS GBH Hp deornent 23637 Filed 05/18/22 Page 12 ef 12

XI.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

38. All pending motions are hereby denied as moot. 39. The Court will retain jurisdiction of this matter for purposes of . enforcement of this Consent Order. 6 Slop 2 Chex Abel Clete ho xe

SO ORDERED AND ADJUDGED.

Zien k- Youacle 5 Ne >

The Honorable Ellen Lipton Hollander DATE United States District Judge