American Advisors Group
Documents in this case
- Complaint · · 7 p.
- Stipulation · · 18 p.
Case summary
On October 8, 2021, the Bureau filed a lawsuit and proposed stipulated final judgment and order in the United States District Court for the Central District of California against American Advisors Group (AAG), which the court entered on October 25, 2021. AAG, based in Irvine, California, is the nation’s largest provider of reverse mortgages. In 2016, the Bureau issued an administrative consent order against AAG to address the Bureau’s finding that AAG used deceptive advertisements, including falsely claiming that consumers could not lose their homes. In this action, the Bureau alleged that in marketing its reverse mortgage product, AAG inflated consumers’ estimated home values to entice them to enter into negotiations to open a reverse mortgage with the company and falsely reassured consumers that AAG made “every attempt to ensure the home value information provided is reliable,” when in fact it did not. The Bureau alleged that this conduct was deceptive under the CFPA and violated the Bureau’s 2016 consent order. The stipulated final judgment and order requires AAG to pay $173,400 in consumer redress, stop its unlawful conduct, and pay a $1,100,000 civil money penalty.
Complaint ()
PDF of this document (7 pages)
Page 2
COMPLAINT
OWEN P. MARTIKAN (CA Bar #177104) [email protected] BENJAMIN KONOP [email protected] CONSUMER FINANCIAL PROTECTION BUREAU 1700 G Street NW Washington, DC 20552 Telephone: (415) 844-9790 Facsimile: (415) 844-9788
Attorneys for Plaintiff Consumer Financial Protection Bureau
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff, v.
AMERICAN ADVISORS GROUP, Defendant.
CASE NO.:
COMPLAINT
INTRODUCTION 1.
American Advisors Group (AAG) offers and provides reverse mortgages, products marketed toward consumers 62 years and older that allow homeowners to borrow money using their home’s value as security for the loans. Case 8:21-cv-01674 Document 1 Filed 10/08/21 Page 1 of 7 Page ID #:1
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COMPLAINT
2.
The home’s value is thus a key component in determining how much a consumer can borrow: the bigger the difference between the home’s appraised value and the existing mortgage balance, the more funds a consumer can obtain from a reverse mortgage.
3.
In the course of marketing its product, AAG sent to consumers mail advertisements that included inflated estimates of the consumers’ estimated home values to entice the consumers to enter into negotiations to open reverse mortgages with the company. The advertisements falsely stated that AAG had made “every attempt to ensure the home value information provided is reliable.” 4.
AAG’s inflated estimates and false statements were deceptive under the Consumer Financial Protection Act and violated a 2016 administrative consent order entered by the Bureau against AAG.
5.
The Bureau brings this action under § 1054 of the CFPA, 12 U.S.C. § 5564, to stop AAG’s unlawful conduct, to obtain relief for harmed consumers, and to seek a civil money penalty against AAG.
JURISDICTION AND VENUE 6.
This Court has subject-matter jurisdiction because this 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.
7.
This Court has personal jurisdiction over AAG because the causes of action arise from AAG’s conduct in this district. 12 U.S.C. § 5564(f). 8.
Venue is proper in this district because AAG is located, resides, and does business in this district. 12 U.S.C. § 5564(f).
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COMPLAINT
PARTIES 9.
The Bureau is an agency of the United States charged with regulating the offering and provision 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). 10.
American Advisors Group is a national mortgage lender licensed in 49 states and the District of Columbia and headquartered in Irvine, California. 11.
AAG is a “covered person” under the CFPA because it is a corporation that engages in offering and providing residential mortgage loans, which are “consumer financial products or services” under the CFPA. 12 U.S.C. § 5481(5), (6), (15)(A)(i), (19).
FACTS 12.
AAG is the nation’s largest provider of reverse mortgages. 13.
Unlike traditional mortgages, reverse mortgages do not require borrowers to make monthly mortgage payments. Instead, the amount that the borrower owes grows over time, and the loan is repaid when the borrower no longer lives in the home or defaults on the loan, such as through failure to pay property taxes or to maintain insurance.
14.
Reverse mortgages take part of the home equity and convert it into payments to consumers—a kind of advance payment on home equity. 15.
The home’s value is thus a key component in determining how much a consumer can borrow: the bigger the difference between the home’s appraised value and the mortgage balance, the more funds a consumer can obtain from a reverse mortgage.
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COMPLAINT
16.
In marketing its product, AAG used mailers that included inflated estimated home values to solicit consumers to open a reverse mortgage with the company.
17.
Once consumers engaged with AAG, they were more likely to complete the transactions.
18.
AAG’s inflated home-value estimates harmed consumers, who might not have shopped for competing products and who might have seen a reduced borrower benefit once the property was appraised, and it harmed other market participants, who might have lost customers to their competitor’s deceptive advertising.
19.
AAG prominently displayed the misleading “Est[imated] Home Value” at the top of many of its marketing materials. 20.
A small footnote at the bottom of AAG’s mailers stated that “AAG makes every attempt to ensure the home value information provided is reliable, however we provide this information with no guarantee of the accuracy and are not responsible for any errors.”
21.
The midpoints of estimated home values provided by AAG to consumers were inflated on average by about 18% in reverse mortgages where an appraisal was performed.
22.
The high end of the estimated home values provided by AAG to consumers were inflated on average by about 28% in reverse mortgages where an appraisal was performed.
23.
AAG also claimed in its advertising mailers that it “makes every attempt to ensure the home value information provided is reliable.” 24.
In reality, AAG did very little, if anything, to ensure that the homevalue information was reliable.
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COMPLAINT
25.
Specifically, after 2016, AAG performed no analysis directly related to the estimated home values that it advertised in its mailers. 26.
In December 2016, the Bureau settled administratively with AAG for a variety of deceptive statements made in marketing materials that were in violation of the CFPA. The December 2016 settlement was effectuated by an order prescribed by the Bureau. See Consent Order, In re American Advisors Group, No. 2016-CFPB- 0026 (Dec. 7, 2016) (“2016 Consent Order”). The 2016 Consent Order prohibited AAG from violating the CFPA for five years, or until December 2021.
COUNT 1 Deceptive Representations About Estimated Home Values 27.
The Bureau re-alleges and incorporates by reference paragraphs 1-25. 28.
By using inflated estimated home values in its marketing materials, AAG induced consumers to enter into negotiations with the company. 29.
This tactic is deceptive, as it would likely lead a reasonable consumer to believe that the consumer had more equity in their home than was actually available and could reap more proceeds from the reverse mortgage than were actually available.
30.
AAG’s misrepresentations were material because a consumer would likely enter into negotiations with AAG based on the inflated estimate of their home value.
31.
Therefore, AAG engaged in deceptive acts or practices that violated the CFPB. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).
COUNT 2 Deceptive Representations About Accuracy of Home Estimates 32.
The Bureau re-alleges and incorporates by reference paragraphs 1-25. Case 8:21-cv-01674 Document 1 Filed 10/08/21 Page 5 of 7 Page ID #:5
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COMPLAINT
33.
AAG stated in marketing materials to consumers that it “makes every attempt to ensure the home value information provided is reliable.” In fact, AAG made no real attempt to ensure that the home valuations it provided to consumers were reliable.
34.
AAG’s misrepresentations were likely to mislead consumers acting reasonably under the circumstances because a reasonable consumer would believe that the inflated home estimate was accurate based on AAG’s assurances. 35.
AAG’s misrepresentations were material because they induced consumers to rely on AAG’s estimate and enter into negotiations with the company.
36.
Therefore, AAG engaged in deceptive acts or practices that violated the CFPA. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).
COUNT 3 Violation of Prior Order 37.
The Bureau re-alleges and incorporates by reference paragraphs 1-26. 38.
As an order prescribed by the Bureau, the 2016 Consent Order constitutes a federal consumer-financial law as defined by 12 U.S.C. § 5481(14). 39.
The deceptive acts and practices committed by AAG violated the 2016 Consent Order and thus violated federal consumer-financial law. 12 U.S.C. § 5536(a)(1)(A).
DEMAND FOR RELIEF The Bureau requests that the Court, as permitted by 12 U.S.C. § 5565: a.
enjoin AAG from committing future CFPA violations; b.
award damages or other monetary relief;
c.
order AAG to pay redress to consumers;
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COMPLAINT
d.
order disgorgement of AAG’s ill-gotten gains; e.
impose a civil money penalty on AAG; f.
order AAG to pay the costs incurred in connection with prosecuting this action; and g.
award additional relief as may be just and proper.
Respectfully submitted,
CARA M. PETERSEN
Acting Enforcement Director
JEFFREY PAUL EHRLICH
Deputy Enforcement Director
/s/ Owen P. Martikan
OWEN P. MARTIKAN (CA Bar #177104)
Assistant Litigation Deputy
Telephone: (415) 844-9790
e-mail: [email protected]
BENJAMIN KONOP
Senior Litigation Counsel
Telephone: 202-435-7265
e-mail: [email protected]
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, D.C. 20552
Attorneys for Plaintiff Consumer
Financial Protection Bureau Case 8:21-cv-01674 Document 1 Filed 10/08/21 Page 7 of 7 Page ID #:7
Stipulation ()
PDF of this document (18 pages)
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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff, v.
AMERICAN ADVISORS GROUP, Defendant.
CASE NO.: 8:21-cv-01674 JLS (JDEx)
STIPULATED FINAL JUDGMENT AND ORDER
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The Consumer Financial Protection Bureau (Bureau) commenced a civil action against American Advisors Group (AAG) on October 8, 2021, to obtain injunctive and monetary relief and a civil money penalty. The Complaint alleges violations of § 1036(a)(1)(B) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. § 5536(a)(1)(B), and violation of the 2016 administrative order that the Bureau entered against AAG, in connection with AAG’s reversemortgage product.
The Bureau and AAG agree to the Court’s 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 in the Complaint.
FINDINGS 1.
This Court has jurisdiction over the parties and the subject matter of this action.
2.
Defendant neither admits nor denies the allegations in the Complaint, except as specified in this Order. For purposes of this Order, Defendant admits the facts necessary to establish the Court’s jurisdiction over it and the subject matter of this action.
3.
Defendant waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim it 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. Each Party agrees to bear its own costs and expenses, including, without limitation, attorney’s fees. 4.
Entry of this Order is in the public interest.
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DEFINITIONS 5.
The following definitions apply to this Order: a. “Advertising Compliance Official” means an individual designated by Defendant as the person responsible for performing the tasks and duties required under Paragraph 8. The Advertising Compliance Official must be a director or senior-level executive (e.g., president, chief executive officer, chief financial officer, chief operating officer, chief information officer, senior vice president, or managing member) of Defendant, or an individual who reports directly to the president, chief executive officer, managing member, or board of directors of Defendant.
b. “Affected Consumers” means consumers who received mailers from AAG with estimated home values, paid fees associated with a reverse-mortgage application, obtained an appraisal with a property value that was lower than the estimated home value on the mailer, and did not ultimately contract with AAG for a reverse mortgage. c. “Assist Others” includes but is not limited to: i. consulting in any form whatsoever;
ii. providing paralegal or administrative support services; iii. performing customer-service functions, including but not limited to receiving or responding to consumer complaints; iv. 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; Case 8:21-cv-01674-JLS-JDE Document 8 Filed 10/25/21 Page 3 of 18 Page ID #:46
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v. 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; vi. providing names of, or assisting in the generation of, potential customers;
vii. performing marketing, billing, or payment services of any kind; and viii. acting or serving as an owner, officer, director, manager, or principal of any entity.
d. “Consumer Financial Product or Service” is synonymous in meaning with and equal in scope to the definition of the term in the CFPA, 12 U.S.C. § 5481(5), and, subject to applicable restrictions contained in the CFPA, includes but is not limited to “extending credit and servicing loans, including acquiring, purchasing, selling, brokering, or other extensions of credit.” 12 U.S.C. § 5481(15)(A)(i). e. “Defendant” means American Advisors Group, and all its successors and assigns.
f. “Effective Date” means the date on which the Order is entered on the docket.
g. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Consumer Financial Protection Bureau, or his or her delegate.
h. “Regional Director” means the Regional Director for the West Region for the Office of Supervision for the Consumer Financial Protection Bureau, or his or her delegate. Case 8:21-cv-01674-JLS-JDE Document 8 Filed 10/25/21 Page 4 of 18 Page ID #:47
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i. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Defendant based on substantially the same facts as described in the Complaint.
CO
I.
Prohibitions IT IS ORDERED that:
6.
Defendant and its 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: a. violate §§ 1031 or 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B); and b. in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any Consumer Financial Product or Service, may not misrepresent, or Assist Others in misrepresenting, expressly or impliedly, any fact material to consumers, including but not limited to estimated home values to consumers. 7.
All executive officers, marketing, and compliance personnel must attend mandatory training that covers the legal requirements related to mortgage advertising.
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II.
Advertising Review IT IS FURTHER ORDERED that:
8.
Within 90 days of the Effective Date, Defendant’s Advertising Compliance Official must ensure that AAG provides a URL link to the CFPB’s Reverse Mortgage: A Discussion Guide on all direct-mail solicitations sent to prospective borrowers. Defendant’s Advertising Compliance Official must also ensure that a URL link to the CFPB’s Guide, You have a reverse mortgage: Know your rights and responsibilities, is provided in a welcome communication to borrowers with newly originated reverse-mortgage loans.
III.
Compliance Plan IT IS FURTHER ORDERED that:
9.
Within 60 days of the Effective Date, Defendant must submit to the Enforcement Director for review and determination of non-objection a comprehensive compliance plan designed to ensure that Defendant’s advertising of reverse-mortgage credit products complies with the terms of this Order (Compliance Plan). The Compliance Plan must include, at a minimum: a. Detailed steps for addressing each action required by this Order; b. A comprehensive advertising compliance policy and procedure for evaluating all advertisements for compliance with the CFPA before publication. The policy must at a minimum include: i. A process for the Advertising Compliance Official to review each advertisement for compliance with the CFPA before publication;
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ii. A requirement that each review is documented by the Advertising Compliance Official, including when the review occurred and who conducted the review;
iii. A requirement that the Advertising Compliance Official reviews scripts for all telemarking calls conducted by the Defendant and its officers, agents, servants, employees, and all other persons in active concert, or participation with them; and iv. A process for the Advertising Compliance Official to review all existing advertisements currently in circulation for compliance with the CFPA;
c. An explanation of Defendant’s consumer-compliance organizational and reporting structure;
d. Written descriptions of the job duties of all employees with duties under the advertising-compliance policy. The written description shall include the persons over whom each employee has authority and to whom each employee reports;
e. A requirement that Defendant allocate resources to compliance that are commensurate with Defendant’s size, complexity, and business operations to ensure that Defendant implements adequate compliance programs including appropriate staffing levels with qualified and experienced personnel;
f. A requirement that Defendant provides mandatory ongoing education and training in Federal consumer financial laws (as defined by 12 U.S.C. § 5481(14)) and the prohibitions and requirements of this Order for all affected officers, agents, servants, employees, and attorneys; the training must be appropriate for each individual’s responsibilities and duties; training activities must be Case 8:21-cv-01674-JLS-JDE Document 8 Filed 10/25/21 Page 7 of 18 Page ID #:50
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documented and the training programs reviewed and updated at least annually to ensure that appropriate personnel are provided with the most relevant and pertinent information; and all new employees of Defendant or Defendant’s agents in the affected roles must complete this training before communicating with any consumer about a reverse-mortgage credit product; g. A requirement that the Compliance Plan be updated at least every two years, or as required by changes in laws or regulations, so that the Compliance Plan remains current and effective; h. A plan requiring timely and appropriate corrective action to remedy any material non-compliance with the Compliance Plan; and i. Specific timeframes and deadlines for implementation of the steps described above.
10.
The Enforcement Director will have the discretion to make a determination of non-objection to the Compliance Plan or direct Defendant to revise it. If the Enforcement Director directs Defendant to revise the Compliance Plan, Defendant must make the revisions and resubmit the Compliance Plan to the Enforcement Director within 30 days.
11.
After receiving notification that the Enforcement Director has made a determination of non-objection to the Compliance Plan, Defendant must implement and adhere to the steps, recommendations, deadlines, and timeframes outline in the Compliance Plan.
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MONETARY PROVISIONS IV.
Order to Pay Redress IT IS FURTHER ORDERED that:
12.
Within 10 days of the Effective Date, Defendant must reserve or deposit into a segregated deposit account $173,400 for the purpose of providing redress to Affected Consumers as required by this Section. 13.
Within 60 days of the Effective Date, Defendant must submit to the Enforcement Director for review and non-objection a comprehensive written plan for providing redress consistent with this Order (Redress Plan). The Enforcement Director will have the discretion to make a determination of nonobjection to the Redress Plan or direct Defendant to revise it. If the Enforcement Director directs Defendant to revise the Redress Plan, Defendant must revise and resubmit the Redress Plan to the Enforcement Director within 30 days. After receiving notification that the Enforcement Director has made a determination of non-objection to the Redress Plan, Defendant must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Redress Plan. 14.
The Redress Plan must include the process for providing redress totaling $173,400 to Affected Consumers by mailing a certified or bank check. 15.
The Redress Plan must include: (1) the form of the letter (Redress Notification Letter) to be sent notifying Affected Consumers of the redress; and (2) the form of the envelope that will contain the Redress Notification Letter. The letter must include language explaining how the amount of redress was calculated and a statement that the provision of redress payment complies with the terms of this Order. Defendant may not include in any envelope containing a Redress Notification Letter any materials other than the approved letters and redress checks.
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16.
Defendant must send such redress to the Affected Consumers by United States Postal Service first-class mail, address-correction service requested, to the Affected Consumer’s most recent address as maintained in Defendant’s records.
a. For any Affected Consumer whose redress payment is returned or whose check is not cashed in 90 days, Defendant must make reasonable attempts to obtain a current address using standard address-search methodologies, including a standard address search using the National Change of Address system and to promptly remail all returned redress checks to current addresses, if any; and b. If the check for any Affected Consumer is returned to Defendant or if the check is not cashed within 90 days after a second mailing, and if a current mailing address cannot be identified using standard address methodologies, Defendant must retain the Redress Amount for that Affected Consumer for a period of three-hundred sixty (360) days from the date the redress check was originally mailed, or a shorter period if required by law, during which period such amount may be claimed by such Affected Consumer upon appropriate proof of identity and, after such time, dispose of these monies in accordance with this Paragraph 17.
17.
After completing the Redress Plan, if the amount of redress provided to Affected Consumers is less than $173,400, within 30 days of the completion of the Redress Plan, 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, the difference between the amount of redress provided to Affected Consumers and $173,400.
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18.
The Bureau may use these remaining funds to pay additional redress to Affected Consumers. If the Bureau determines, in its sole discretion, that additional redress is wholly or partially impracticable or otherwise inappropriate, or if funds remain after the additional redress is completed, the Bureau will deposit any remaining funds in the U.S. Treasury. Defendant will have no right to challenge any actions that the Bureau or its representatives may take under this Section.
19.
Defendant may not condition the payment of any redress to any Affected Consumer under this Order on that Affected Consumer waiving any right.
V.
Order to Pay Civil Money Penalty IT IS FURTHER ORDERED that:
20.
Under § 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Complaint and continuing until the Effective Date, and taking into account the factors in 12 U.S.C. § 5565(c)(3), Defendant must pay a civil money penalty of $1,100,000 to the Bureau. 21.
Within 10 days of the Effective Date, Defendant 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. 22.
The civil money penalty paid under this Order 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).
23.
Defendant, for all purposes, must treat the civil money penalty paid under this Order as a penalty paid to the government. Regardless of how the Bureau ultimately uses those funds, Defendant may not: Case 8:21-cv-01674-JLS-JDE Document 8 Filed 10/25/21 Page 11 of 18 Page ID #:54
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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.
VI.
Additional Monetary Provisions IT IS FURTHER ORDERED that:
24.
In the event of any default on Defendant’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. 25.
Defendant must relinquish all dominion, control, and title to the funds paid to the fullest extent permitted by law and no part of the funds may be returned to Defendant.
26.
Under 31 U.S.C. § 7701, Defendant, unless it already has done so, must furnish to the Bureau its taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.
27.
Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Defendant must notify the Bureau of the final judgment, order, or settlement in writing. That notification must indicate the amount of redress, if any, that Defendant paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid.
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COMPLIANCE PROVISIONS VII.
Reporting Requirements IT IS FURTHER ORDERED that:
28.
Defendant 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 Defendant; or a change in Defendant’s name or address. Defendant 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.
29.
Within 7 days of the Effective Date, Defendant must: a. Designate at least one telephone number and email, physical, and postal addresses as points of contact that the Bureau may use to communicate with Defendant;
b. Identify all businesses for which Defendant is the majority owner, or that Defendant directly or indirectly controls, by all of their names, telephone numbers, and physical, postal, email, and Internet addresses; and c. Describe the activities of each such business, including the products and services offered and the means of advertising, marketing, and sales.
30.
Defendant must report any change in the information required to be submitted under Paragraph 29 at least 30 days before the change or as soon as practicable after learning about the change, whichever is sooner. Case 8:21-cv-01674-JLS-JDE Document 8 Filed 10/25/21 Page 13 of 18 Page ID #:56
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31.
Within 90 days of the Effective Date, and again every year for five years after the Effective Date, Defendant must submit to the Regional Director an accurate written compliance progress report (Compliance Report), sworn to under penalty of perjury, 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 the Order; b. Describes in detail the manner and form in which Defendant has complied with the Compliance Plan and Redress Plan; and c. Attaches a copy of each Order Acknowledgment obtained under Section VIII, unless previously submitted to the Bureau.
VIII.
Order Distribution and Acknowledgement IT IS FURTHER ORDERED that:
32.
Within 7 days of the Effective Date, Defendant must submit to the Regional Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.
33.
Within 30 days of the Effective Date, Defendant must deliver a copy of this Order to each of its board members and 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. 34.
For 5 years from the Effective Date, Defendant must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section VII, any future board members and executive officers, as well as to any managers, employees, service providers, or other agents and representatives Case 8:21-cv-01674-JLS-JDE Document 8 Filed 10/25/21 Page 14 of 18 Page ID #:57
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who will have responsibilities related to the subject matter of the Order before they assume their responsibilities.
35.
Defendant 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. 36.
Within 90 days of the Effective Date, Defendant must provide the Regional Director with a list of all persons and their titles to whom this Order was delivered through that date under Paragraphs 33-34 and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 35.
IX.
Recordkeeping IT IS FURTHER ORDERED that:
37.
For five years from the Effective Date, Defendant must create and retain the following business records:
a. All documents and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau.
b. All documents and records pertaining to the Redress Plan, described in Section IV above.
c. Copies of all sales scripts; training materials; advertisement; websites; and other marketing materials, including any such materials used by a third party on Defendant’s behalf.
38.
Defendant must make documents identified in Paragraph 37 available to the Bureau upon the Bureau’s request.
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X.
Notices IT IS FURTHER ORDERED that:
39.
Unless otherwise directed in writing by the Bureau, Defendant must provide all submissions, requests, communications, or other documents related to this Order in writing, with the subject line, “CFPB v. American Advisors Group, Central District of California Case No. 8:21-cv-01674 JLS (JDEx),” and send them by overnight courier or first-class mail to the below addresses: Assistant Director for Enforcement Consumer Financial Protection Bureau ATTENTION: Office of Enforcement 1700 G Street, N.W.
Washington, D.C. 20552
and Regional Director for the West Region Consumer Financial Protection Bureau 301 Howard Street, Suite 1200 San Francisco, CA 94105 and contemporaneously by email to:
XI.
Compliance Monitoring IT IS FURTHER ORDERED that:
40.
Within 14 days of receipt of a written request from the Bureau, Defendant must submit additional Compliance Reports or other requested Case 8:21-cv-01674-JLS-JDE Document 8 Filed 10/25/21 Page 16 of 18 Page ID #:59
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information, which must be made under penalty of perjury; provide sworn testimony; or produce documents.
41.
Defendant must permit Bureau representatives to interview any employee or other person affiliated with Defendant who has agreed to such an interview regarding: (a) this matter; (b) anything related to or associated with the conduct described in the Complaint; and (c) compliance with this Order. The person interviewed may have counsel present.
42.
Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6.
43.
For five years from the Effective Date, should Defendant seek to transfer or assign all or part of its operations that are subject to this Order, Defendant must, as a condition of sale, obtain the written agreement of the transferee or assignee to comply with all applicable provisions of this Order.
XII.
Release and Termination 44.
The Bureau releases and discharges Defendant from all potential liability for violations of law that the Bureau has or might have asserted based on the practices described in the Complaint, to the extent such conduct occurred before the Effective Date and the Bureau knows about it as of the Effective Date. The Bureau may use the practices described in the Complaint in future enforcement actions against Defendant and its affiliates, including, without limitation, to establish a pattern or practice of violations or the continuation of a pattern or practice of violations or to calculate the amount of any penalty. This release does not preclude or affect any right of the Bureau to determine and ensure compliance with this Order, or to seek penalties for any violation of this Order.
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XIII.
Retention of Jurisdiction IT IS FURTHER ORDERED that:
45.
The Court will retain jurisdiction over this matter for the purpose of enforcing this Order.
IT IS SO ORDERED.
DATED: October 25, 2021
_________________________________________
HON. JOSEPHINE L. STATON
UNITED STATES DISTRICT JUDGE
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