Synapse Financial Technologies, Inc.
Documents in this case
- Complaint · · 13 p.
- Stipulation · · 11 p.
Case summary
On August 21, 2025, the Bureau commenced an adversary proceeding and filed a complaint and proposed stipulated final judgment and order against Synapse Financial Technologies, Inc., which the court entered on September 12, 2025. Synapse is a Delaware corporation with its principal place of business in Woodland Hills, California that provided proprietary technology and software that acted as a bridge between nonbank fintech platforms that offered banking services to consumers and traditional partnering banks. On April 22, 2024, Synapse filed for chapter 11 bankruptcy protection. The Bureau alleged that Synapse violated the Consumer Financial Protection Act of 2010 by failing to maintain adequate records of the location of consumers’ funds and failing to ensure those records matched the records maintained by its partnering banks, causing consumers to lose access to their funds. The partnering banks determined that the total funds they were holding for consumers was less than the total amount of consumer funds reflected in records Synapse provided to them, reflecting a shortfall of between $60 and $90 million. Consumers did not have any access to their funds for weeks or months as the partnering banks reconciled their records with Synapse’s records and then distributed funds to consumers, and many consumers have not received the full amount of their account balance. The stipulated final judgment provides for appropriate injunctive relief, including a prohibition on the sale of customer information, and a $1 civil money penalty, which enables the Bureau to access the civil penalty fund for purposes of redressing harmed consumers.
Complaint ()
PDF of this document (13 pages)
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CONSUMER FINANCIAL PROTECTION BUREAU JOSEPH LAKE (CA Bar No. 246679) [email protected] RENÉE ORLEANS (Admitted Pro Hac Vice) [email protected] ADRIENNE WARRELL (Admitted Pro Hac Vice) [email protected] 1700 G Street NW Washington, DC 20552
UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SAN FERNANDO VALLEY DIVISION In re:
SYNAPSE FINANCIAL TECHNOLOGIES, INC.,
Debtor.
Case No.: 1:24-bk-10646-MB
Chapter 11 Case CONSUMER FINANCIAL PROTECTION BUREAU,
Plaintiff, v.
SYNAPSE FINANCIAL TECHNOLOGIES, INC., Defendant.
Adv. No.
ADVERSARY PROCEEDING COMPLAINT
Plaintiff the Consumer Financial Protection Bureau (the Bureau) brings this action against Synapse Financial Technologies, Inc. (Synapse or Defendant) and alleges as follows: INTRODUCTION 1.
The Bureau consents to entry of a final order by the Court in connection with this adversary proceeding. Case 1:25-ap-01052-MB Doc 1 Filed 08/21/25 Entered 08/21/25 10:13:04 Desc Main Document Page 1 of 13
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2.
Synapse offered and provided proprietary technology and software to nonbank fintech platforms that offered banking services to consumer end users (FinTech Platforms). Synapse’s technology acted as a bridge between the FinTech Platforms that interfaced with consumers and the traditional banks that held consumers’ money, issued debit cards, and processed ACH and wire transfers and other transactions (Partner Banks), pursuant to agreements between one or more of the banks and Synapse. 3.
In 2017, Synapse partnered with only one of the Partner Banks. As early as September 2023, Synapse’s records did not match the records maintained by that bank, which was holding less money for the FinTech Platform end users than Synapse’s records indicated the bank should be holding.
4.
Beginning in mid-2023, Synapse engaged with additional Partner Banks to offer FinTech Platform end users a Cash Management Program. As part of the Cash Management Program, Synapse directed the transfer of consumers’ funds from the FinTech Platforms to more than one Partner Bank to hold those funds in an omnibus account held by a Synapse subsidiary for the benefit of the consumers. It also directed the movement of consumers’ money to and from those Partner Banks to other Partner Banks that were originating and receiving ACH and wire transfers for consumers. Synapse was responsible for tracking and maintaining records of the movement of consumers’ funds across these Partner Banks and ensuring those records matched the records maintained by the Partner Banks.
5.
In May 2024, after filing this Chapter 11 Proceeding, Synapse’s operations deteriorated and eventually ceased, and it stopped providing data it had regularly provided to at least one Partner Bank and failed to maintain that bank’s access to an online dashboard that provided information about consumer balances and transactions. 6.
After the Bankruptcy Court appointed a Chapter 11 Trustee, it became apparent that Synapse’s records did not match the records maintained by multiple Partner Banks. The Partner Banks held significantly less money than Synapse’s records indicated they should Case 1:25-ap-01052-MB Doc 1 Filed 08/21/25 Entered 08/21/25 10:13:04 Desc Main Document Page 2 of 13
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collectively be holding. It took some Partner Banks many months to determine how much money they should distribute to each consumer. During that period, thousands of consumers could not withdraw or transfer any of the money they had placed with the FinTech Platforms, inflicting significant hardships on those affected consumers. Consumers reported they were unable to pay their rent or mortgage and feared they would lose their homes. Others reported they were unable to afford food or pay for medical care or other bills.
7.
Consumers did not have control over how Synapse moved or tracked funds across different Partner Banks that were holding their funds and processing their debit card, ACH, and wire transactions.
8.
Because the Partner Banks held significantly less money than Synapse’s records indicated they should collectively be holding for consumers, many consumers have not received the full amount they had deposited with their FinTech Platform. 9.
Consumers were substantially injured because Synapse’s records did not match the records of its Partner Banks. Consumers did not have any access to their money for weeks or months as Partner Banks reconciled their records with Synapse’s records and then distributed funds to consumers. Over a year later, many consumers have not received the full amount of their account balance with their FinTech Platform.
10.
Synapse engaged in unfair acts or practices by failing to maintain adequate records of the location of consumers’ funds and failing to ensure those records matched the records maintained by the Partner Banks.
11.
The Bureau brings this action under the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5564, 5565, to stop Synapse’s unlawful conduct and obtain redress for affected consumers, a penalty, and all other appropriate relief. JURISDICTION AND VENUE 12.
This adversary proceeding relates to the Defendant’s Chapter 11 bankruptcy case, pending in the United States Bankruptcy Court for the Central District of California. Case 1:25-ap-01052-MB Doc 1 Filed 08/21/25 Entered 08/21/25 10:13:04 Desc Main Document Page 3 of 13
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13.
This adversary proceeding is brought pursuant to Rule 7001 of the Federal Rules of Bankruptcy Procedure.
14.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. This adversary proceeding is a not a core proceeding but is otherwise related to a case under title 11. 28 U.S.C. § 157(c).
15.
Venue is proper in this district pursuant to 28 U.S.C. § 1409. PARTIES 16.
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). The Bureau is authorized to initiate civil actions to secure appropriate relief for violations of Federal consumer financial law, including the CFPA. 12 U.S.C. § 5564(a)-(b).
17.
Defendant Synapse is a Delaware corporation with its principal place of business in Woodland Hills, California that provided technology and other services to FinTech Platforms and Partner Banks.
18.
The FinTech Platforms offered and provided consumers with financial services, including accepting and maintaining deposits accounts, transmitting consumers’ funds to financial institutions, offering consumers debit cards and services, direct deposit, bill payment, and wire transfers. The FinTech Platforms are “covered persons” as that term is defined by 12 U.S.C. § 5481(6)(A), because they offered or provided a “consumer financial product or service” under the CFPA, by “engaging in deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer” and by “providing payments or other financial data processing products or services to a consumer by any technological means.” 12 U.S.C. § 5481(5)(A)(i), (15)(A)(iv), (vii). 19.
At least one of the Partner Banks, Evolve Bank & Trust (Evolve), offered and provided consumers with financial services, including accepting and maintaining deposits Case 1:25-ap-01052-MB Doc 1 Filed 08/21/25 Entered 08/21/25 10:13:04 Desc Main Document Page 4 of 13
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accounts, transmitting consumers’ funds to financial institutions, offering consumers debit cards and services, direct deposit, bill payment, and wire transfers. Evolve is a “covered person” as that term is defined by 12 U.S.C. § 5481(6)(A), because it offered or provided a “consumer financial product or service” under the CFPA, by “engaging in deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer.” 12 U.S.C. § 5481(5)(A), (15)(A)(iv). 20.
Synapse provided the FinTech Platforms and at least one Partner Bank with the technology and software that connected the FinTech Platforms (that interfaced with consumers) with the Partner Banks that accepted and maintained the deposits and provided other financial services. Synapse provided a material service to the FinTech Platforms and Evolve in connection with the FinTech Platforms’ and Evolve’s offering or provision of a consumer financial product or service by “participat[ing] in designing, operating, or maintaining the consumer financial product or service” and “by process[ing] transactions relating to the consumer financial product or service.” 12 U.S.C. § 5481(26). Synapse is a “service provider” within the meaning of the CFPA. Id.
FACTUAL ALLEGATIONS A.
Synapse Provided FinTech Platforms and Partner Banks With Technology and Services That Enabled the FinTech Platforms and Partner Banks to Offer Consumer Financial Products and Services to Consumers 21.
Synapse offered proprietary technology and software to FinTech Platforms and Partner Banks. The FinTech Platforms provided a user interface through which consumers and businesses (End Users) could set up checking accounts and among other things, make deposits, transfer funds to and from other financial institutions, obtain debit cards, set up direct deposit and bill payment, and make wire transfers.
22.
Synapse’s technology and software created the link between the FinTech Platforms and the Partner Banks that held End User funds. Synapse’s technology and software communicated the transactions End Users requested from the FinTech Platforms to the Partner Banks to perform. Case 1:25-ap-01052-MB Doc 1 Filed 08/21/25 Entered 08/21/25 10:13:04 Desc Main Document Page 5 of 13
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23.
Synapse performed these services for at least one FinTech Platform pursuant to a Master Services Agreement.
24.
Evolve was a Partner Bank. Synapse executed a Bank Services Agreement with Evolve on or about April 18, 2017, and subsequently executed the Master Bank Services Agreement on or about September 23, 2022. At least until the summer of 2023, when a consumer opened an account with a FinTech Platform, Synapse provided the consumer with a deposit account agreement on behalf of Evolve.
25.
At least as of September 2023, if not earlier, both Evolve and Synapse were aware that there was a deficit of tens of millions of dollars in funds that Evolve was holding for End Users, which included consumer funds. Evolve and Synapse have publicly blamed each other for the deficit.
26.
As of the date of the filing of this complaint, Synapse has not resolved its dispute with Evolve regarding the deficit.
B.
Beginning in mid-2023, Synapse Offered a Cash Management Program to Consumers Through Synapse Brokerage 27.
Synapse Brokerage LLC (Synapse Brokerage) is a wholly owned subsidiary of Synapse and a registered broker dealer.
28.
In 2023, Synapse began to offer a Cash Management Program through FinTech Platforms. Synapse marketed its Cash Management Program as a way for FinTech Platforms to offer their end users increased FDIC deposit insurance through Synapse’s sweeps program and partnership with multiple banks. FinTech Platforms with an existing relationship with Synapse could choose whether to participate in Synapse’s Cash Management Program. As part of the Cash Management Program, Synapse opened accounts with Synapse Brokerage on End Users’ behalf and one or more omnibus accounts at Partner Banks in the name of Synapse Brokerage for the benefit of End Users.
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29.
When some End Users deposited funds through the FinTech Platforms, the deposit was initially held in the Synapse Brokerage account and then transferred by Synapse Brokerage to omnibus accounts at the Partner Banks. When End Users sought to withdraw funds, Synapse Brokerage would facilitate the withdrawal of the funds from the omnibus accounts at the Partner Banks.
30.
Synapse had arrangements with several Partner Banks for the Cash Management Program.
31.
AMG National Trust Bank (AMG) was one of several Partner Banks for the Cash Management Program. It accepted sweeps deposits from Synapse Brokerage beginning in August 2023 and held those deposits in the name of Synapse Brokerage. It also processed ACH and wire transfers for End Users with some FinTech Platforms that chose to participate in the Cash Management Program.
32.
Evolve was not one of the Partner Banks Synapse engaged to hold funds in the name of Synapse Brokerage on the End User’s behalf for the Cash Management Program. Beginning in October 2023, for FinTech Platforms that chose to participate in Synapse’s Cash Management Program, Synapse directed the transfer of End Users’ funds from Evolve to Synapse Brokerage and then to accounts at other Partner Banks. 33.
Some FinTech Platforms did not participate in Synapse’s Cash Management Program and their End Users’ funds remained with Evolve. 34.
Even for End Users who moved to Synapse’s Cash Management Program, and whose funds therefore had moved to Synapse Brokerage accounts at other Partner Banks, Evolve continued to act as a Partner Bank by providing access to certain banking products and services, including by continuing to sponsor debit cards. Evolve also continued to act as the receiving bank for ACH transfers for which consumers had previously been using Evolve’s routing number, such as direct deposit. Evolve continued to maintain accounts on behalf of these End Users to provide these services. Synapse would sweep funds from those accounts to Synapse Brokerage. Case 1:25-ap-01052-MB Doc 1 Filed 08/21/25 Entered 08/21/25 10:13:04 Desc Main Document Page 7 of 13
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35.
Lineage Bank (Lineage) was also a Partner Bank. It primarily provided payment processing services as an originating bank. When End Users in the Cash Management Program sought to make ACH and wire transfers, Lineage processed those transactions based on instructions from Synapse.
36.
After the introduction of the Cash Management Program, Synapse’s technology continued to create the link between the FinTech Platforms and all Partner Banks and to communicate the transactions End Users requested from the FinTech Platforms to the Partner Banks.
37.
Synapse was also responsible for directing the movement of End User funds from Synapse Brokerage to and from (1) AMG and other Partner Banks that held End User funds in omnibus accounts; (2) Evolve, which continued to process debit card transactions and to act as the receiving bank for ACH transfers; and (3) Lineage, which was originating ACH and wire transfers based on instructions from Synapse.
38.
Synapse was also responsible for tracking the location of individual End User funds across Synapse Brokerage; AMG and other Partner Banks that held End User funds in omnibus accounts; Evolve; and Lineage. Synapse additionally was responsible for providing the banks access to data and records regarding End User activity. C.
Synapse Files For Chapter 11 Bankruptcy 39.
On April 22, 2024, Synapse filed for Chapter 11 Bankruptcy protection as a debtor in possession. At the same time, Synapse sought court approval of an asset purchase agreement with a potential buyer that would have transferred all of Synapse’s business operations to the buyer. At that time, Synapse and Evolve had not resolved their dispute about the deficit in the account balances at Evolve. The buyer required Synapse and Evolve to come to an agreement and ensure that the account balances at Evolve were fully funded as a condition of the purchase. 40.
Synapse and Evolve could not resolve their dispute.
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41.
On May 11, 2024, Synapse failed to maintain Evolve’s access to an online dashboard it maintained through which Evolve could access certain information about End Users’ accounts at Evolve, including current balances and transactions. 42.
Synapse also stopped providing Evolve general ledger reports, which it had previously provided to Evolve daily.
43.
On May 11, 2024, Evolve stopped processing transactions and instituted a freeze on any activity for any End User.
44.
Lineage also stopped processing transactions and instituted a freeze on any activity for End Users.
45.
As a result, consumer End Users could not use their debit cards, withdraw or transfer their funds, pay bills, or receive deposits, including direct deposits of their wages and salaries.
46.
On May 15, 2024, the United States Trustee filed an emergency motion to convert the case to a Chapter 7 under 11 U.S.C. § 1112(b) or direct the appointment of a Chapter 11 Trustee under 11 U.S.C. § 1104(a).
47.
On May 17, 2024, Synapse provided Evolve, AMG, Lineage, and other Partner Banks with Synapse’s records regarding the amount each bank was holding for each End User. 48.
On or about May 17, 2024, Synapse provided Evolve with the general ledger report for May 15, 2024.
49.
On May 24, 2024, the bankruptcy court appointed a Chapter 11 Trustee. D.
Consumers were Substantially Injured Because Partner Banks’ Records Did Not Match Synapse’s Records 50.
With the assistance of the Chapter 11 Trustee, the Partner Banks determined that the total amount of funds all the Partner Banks were holding for End Users was less than the total amount of End User funds reflected in records Synapse provided to the Partner Banks. The Trustee has estimated this shortfall of End User funds is between $60 and $90 million. Case 1:25-ap-01052-MB Doc 1 Filed 08/21/25 Entered 08/21/25 10:13:04 Desc Main Document Page 9 of 13
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51.
Evolve determined that its records for End Users of FinTech Platforms that chose to participate in Synapse’s Cash Management Program were not consistent with the records provided by Synapse on May 17, 2024. Evolve engaged a third-party consultant to help it reconcile and confirm account balances using its own records, Federal Reserve Bank records, and information and records made available to it by the Chapter 11 Trustee. 52.
Upon reviewing the records provided by Synapse on May 17, 2024, Lineage determined that its records were not consistent with Synapse’s records. Lineage engaged a former Synapse employee to help it reconcile and confirm account balances using its own records, Federal Reserve Bank records, and information and records made available to it by the Chapter 11 Trustee. 53.
AMG began to distribute funds to End Users of FinTech Platforms beginning in May 2024. Evolve and Lineage began to distribute funds in June 2024. The Partner Banks most recently reported in March 2025 that they continue to distribute funds, mostly for accounts with very low balances that do not have valid addresses on file and for returned payments. 54.
To date, distributions from Partner Banks collectively have not provided many consumer End Users the full amount of their account balance with their FinTech Platform as of May 17, 2024.
55.
Even consumer End Users that did receive distributions from the Partner Banks, could not withdraw, use, or transfer those funds until the Partner Banks had completed their distribution, which took over eight months in some cases. 56.
Before the distributions were completed, some consumer End Users reported they lost all or most of their life’s savings. Many reported they were unable to afford food or pay their rent, mortgage, hospital bills, or other bills without access to their funds. Some consumer End Users were also forced to pay late fees and other penalties because they did not have access to their funds to timely pay bills. These hardships caused certain End Users emotional distress, including some who expressed suicidal ideations.
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57.
Consumers did not have control over how Synapse moved or tracked funds across different Partner Banks that were holding their funds and processing their debit card, ACH, and wire transactions. As a result, consumers could not reasonably avoid the harm they suffered.
CAUSE OF ACTION Count I – Unfair Acts or Practices 58.
Plaintiff re-alleges and incorporates by reference the allegations contained in the preceding paragraphs of this Complaint.
59.
Section 1036(a)(1)(B) of the CFPA prohibits service providers from engaging in “any unfair, deceptive, or abusive act or practice.” 12 U.S.C. § 5536(a)(1)(B). 60.
An act or practice is unfair under the CFPA if (1) the act or practice causes or is likely to cause substantial injury, (2) which is not reasonably avoidable by consumers, and (3) such substantial injury is not outweighed by countervailing benefits to consumers or to competition. 12 U.S.C. § 5531(c).
61.
Synapse engaged in unfair acts or practices by failing to maintain adequate records of the location of consumers’ funds and failing to ensure those records matched the records maintained by Partner Banks.
62.
Consumers were substantially injured by Synapse’s acts. Consumers did not have any access to their money for weeks or months as Partner Banks reconciled their records with Synapse’s records and then distributed funds to consumers. Many consumers have not received the full amount of their account balance with their FinTech Platform. 63.
Consumers could not reasonably avoid the injury caused by Synapse’s actions as they had no way of knowing that the account balance reflected on their FinTech Platform did not match the balance reflected at Partner Banks, or that they would lose access to their funds Case 1:25-ap-01052-MB Doc 1 Filed 08/21/25 Entered 08/21/25 10:13:04 Desc Main Document Page 11 of 13
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while the Partner Banks reconciled their records with Synapse’s records. There are no countervailing benefits to consumers or competitors from Synapse’s actions. 64.
Thus, Synapse engaged in unfair acts and practices in violation of sections 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531(a), (c), 5536(a)(1)(B).
REQUEST FOR RELIEF
Accordingly, the Bureau requests that the Court: a. permanently enjoin Defendant from committing future violations of the CFPA;
b. grant additional injunctive relief against Defendant as the Court deems just and proper;
c. award such relief as the Court finds necessary to redress injury to consumers including, but not limited to, rescission or reformation of contracts, refund of moneys, restitution, and payment of damages or other monetary relief; d. impose on Defendant civil money penalties under 12 U.S.C. § 5565(c); and e. award additional relief as this Court deems just and proper.
DATED this 21st day of August, 2025.
Respectfully Submitted,
Michael G. Salemi Principal Deputy Enforcement Director
Deborah Morris Assistant Principal Deputy Enforcement Director Case 1:25-ap-01052-MB Doc 1 Filed 08/21/25 Entered 08/21/25 10:13:04 Desc Main Document Page 12 of 13
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Michael P. Favretto Assistant Litigation Deputy
/s/ Joseph Lake Joseph Lake (CA Bar No. 246679) (202) 897-8360 [email protected]
Renée Orleans (MD Bar) Admitted Pro Hac Vice (202) 435-7271 [email protected]
Adrienne Warrell (NY Bar No. 5361092) Admitted Pro Hac Vice (202) 435-7189 [email protected]
Enforcement Attorneys Consumer Financial Protection Bureau 1700 G Street NW Washington, DC 20552 Facsimile: (202) 435-7722
For the Consumer Financial Protection Bureau
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Stipulation ()
PDF of this document (11 pages)
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UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SAN FERNANDO VALLEY DIVISION
In re:
SYNAPSE FINANCIAL TECHNOLOGIES, INC., Debtor.
Case No.: 1:24-bk-10646-MB Chapter 11 Case CONSUMER FINANCIAL PROTECTION BUREAU,
Plaintiff,
v.
SYNAPSE FINANCIAL TECHNOLOGIES, INC.,
Defendant.
Adv. No. 1:25-ap-01052 STIPULATED FINAL JUDGMENT AND ORDER
The Consumer Financial Protection Bureau (“Bureau”) commenced this adversary proceeding on August 21, 2025 to obtain injunctive and monetary relief and civil penalties from Debtor Synapse Financial Technologies, Inc. (“Synapse” or “Debtor”). The Complaint alleges violations of sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1)(B), in connection with Synapse’s provision of material services to entities engaged in deposit-taking activities, the transmission or exchange of funds, otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer, or providing payments or other financial data processing products or services to a consumer by any technological means.
The Bureau and Synapse through Jelena McWilliams, solely in her capacity as the duly appointed Chapter 11 Trustee (“Trustee”), agree to entry of this Stipulated Final Judgment and FILED & ENTERED SEP 12 2025 CLERK U.S. BANKRUPTCY COURT Central District of California BY DEPUTY CLERK Cetulio Case 1:25-ap-01052-MB Doc 4 Filed 09/12/25 Entered 09/12/25 16:21:58 Desc Main Document Page 1 of 11
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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.
On April 22, 2024, before the commencement of the instant adversary proceeding, Synapse filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq., initiating this bankruptcy proceeding (“Bankruptcy Proceeding”) in the United States Bankruptcy Court for the Central District of California, San Fernando Valley Division.
2.
On May 24, 2024, this Court appointed Jelena McWilliams as the Chapter 11 Trustee for Debtor.
3.
On August 21, 2025, Plaintiff filed the above-captioned adversary proceeding against Debtor’s estate.
4.
The automatic stay of the Bankruptcy Code does not stay the affirmative relief sought in this adversary proceeding against Debtor because the action falls within the police and regulatory power exception to the automatic stay set forth in 11 U.S.C. § 362(b)(4). 5.
The Trustee has sought authority to enter into this Order by a motion pursuant to Fed. R. Bankr. P. 9019.
6.
The Trustee is an independent fiduciary for Debtor and its bankruptcy estate, having been appointed by the Court. Accordingly, Plaintiff makes no allegations against the Trustee, but only against Debtor.
7.
The Trustee and Debtor neither admit nor deny the allegations in the Complaint, except as specified in this Order. For purposes of this Order, the Trustee and Debtor admit the facts necessary to establish the Court’s jurisdiction over them and the subject matter of this action.
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8.
Debtor 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, attorneys’ fees. 9.
This Court has jurisdiction over the parties and the subject matter of this action. 10.
The Complaint states a claim upon which relief may be granted under the CFPA, 12 U.S.C. §§ 5531(a), 5536(a).
11.
The relief provided in this Order is appropriate and available pursuant to the CFPA, 12 U.S.C. §§ 5564, 5565.
12.
The acts and practices alleged in the Complaint have resulted in harm to Affected Consumers equal to the sum of: (1) the difference between each Affected Consumer’s Account Balance and the sum of all Partner Bank Distributions to that Affected Consumer (“Affected Consumer Shortfall”); and (2) prejudgment interest at a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of the judgment (a) on the Affected Consumer Shortfall between May 17, 2024 and the Effective Date; and (b) for all Affected Consumers, on the amount of each Partner Bank Distribution for the period between May 17, 2024 and the date of that distribution.
13.
Entry of this Order is in the public interest.
DEFINITIONS 14.
The following definitions apply to this Order:
a. “Account Balance” means a consumer’s balance with their FinTech Platform as of May 17, 2024.
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b. “Affected Consumers” includes any consumer who had an account with a FinTech Platform as of May 17, 2024.
c. “Assisting Others” includes, but is not limited to: i. consulting in any form whatsoever;
ii. providing administrative support services; iii. maintaining transaction data and account balances; iv. processing transactions;
v. participating in designing, operating, or maintaining; and vi. acting or serving as an owner, officer, director, manager, or principal of any entity.
d. “Debtor” means Synapse Financial Technologies, Inc., and its successors and assigns.
e. “Effective Date” means the date on which the Order is entered by the Court on the docket.
f. “Enforcement Director” means the Enforcement Director of the Enforcement Division for the Consumer Financial Protection Bureau, or their delegate.
g. “FinTech Platform” means nonbank financial technology entities that offered banking services to consumer end users, for which Synapse was a Service Provider.
h. “Partner Bank Distributions” means any amounts paid to Affected Consumers by Evolve Bank & Trust, AMG National Trust Bank, or Lineage Bank between May 17, 2024 and the Effective Date. 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 Case 1:25-ap-01052-MB Doc 4 Filed 09/12/25 Entered 09/12/25 16:21:58 Desc Main Document Page 4 of 11
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brought against Synapse based on substantially the same facts as described in the Complaint.
j. “Service Provider” means any person that provides a material service to a covered person, in connection with the offering or provision by such covered person of a consumer financial product or service, including a person that— (i) participates in designing, operating, or maintaining the consumer financial product or service; or (ii) processes transactions relating to the consumer financial product or service (other than unknowingly or incidentally transmitting or processing financial data in a manner that such data is undifferentiated from other types of data of the same form as the person transmits or processes). “Service Provider” does not include a person solely by virtue of such person offering or providing to a covered person—(i) a support service of a type provided to businesses generally or a similar ministerial service; or (ii) time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media. 12 U.S.C. § 5481(26).
k. “Synapse” means Synapse Financial Technologies, Inc., and its successors and assigns.
l. “Trustee” means Jelena McWilliams solely in her capacity as the duly appointed Chapter 11 Trustee for Debtor, and any successor trustee.
CONDUCT PROVISIONS I.
Cessation of Business Operations IT IS ORDERED that:
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15.
Debtor, whether acting directly or indirectly, is permanently enjoined and restrained from:
a. Participating in or Assisting Others in advertising, marketing, promoting, offering for sale, selling, or provision of any deposit-taking activities, the transmission or exchange of funds, activities that otherwise involve acting as a custodian of funds, or payments or other financial data processing; or b. Receiving any remuneration or other consideration from, holding any ownership interest in, providing services to, or working in any capacity for any person engaged in or assisting in advertising, marketing, promoting, offering for sale, selling, or providing any deposit-taking activities, the transmission or exchange of funds, activities that otherwise involve acting as a custodian of funds, or payments or other financial data processing. Nothing in this Order shall be read as an exception to this Paragraph. 16.
The Trustee will not move the Court pursuant to 11 U.S.C. § 721, or otherwise seek authorization for Debtor to engage, whether directly or indirectly, in any of the prohibited acts described in Paragraph 15 above. This prohibition does not apply to the extent it may relate to recovering avoidable transfers or obtaining turnover or possession of property of the estate. II.
Customer Information IT IS FURTHER ORDERED that:
17. Debtor and the Trustee, whether acting directly or indirectly, may not sell customer information, including names, addresses, telephone numbers, email addresses, social security numbers, other identifying information, or any data that enables access to a customer’s account that Debtor obtained before the Effective Date. Case 1:25-ap-01052-MB Doc 4 Filed 09/12/25 Entered 09/12/25 16:21:58 Desc Main Document Page 6 of 11
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MONETARY PROVISIONS III.
Order to Pay Civil Money Penalty IT IS FURTHER ORDERED that:
18.
Under section 1055(c) of the CFPA, 12 U.S.C § 5565(c), by reason of violations of the 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), a civil money penalty in favor of the Bureau and against Debtor is ordered in the amount of $1.00 (One U.S. Dollar) which shall be deemed an allowed general unsecured claim in the Bankruptcy Proceeding and against the estate. 19.
The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by Section 1017(d) of the CFPA, 12 U.S.C. § 5497(d). 20.
Debtor, for all purposes, 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, Debtor 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. 21.
Subject to 11 U.S.C §§ 507(a) and 726 governing priorities of expenses and claims in the Bankruptcy Proceeding, the Trustee 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 the estate.
22.
The facts alleged in the Complaint will be taken as true and be given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Order, or in Case 1:25-ap-01052-MB Doc 4 Filed 09/12/25 Entered 09/12/25 16:21:58 Desc Main Document Page 7 of 11
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any subsequent civil litigation by or on behalf of the Bureau, including in a proceeding to enforce its rights to any payment or monetary judgment under this Order. 23.
Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, to the extent that such a Related Consumer Action is commenced in the Bankruptcy Proceeding or otherwise on notice to the Trustee while the Bankruptcy Proceeding is pending, then the Trustee must notify the Enforcement Director of the final judgment, order, or settlement in writing. That notification must indicate the amount of redress, if any, that Debtor 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.
IV.
Notices IT IS FURTHER ORDERED that:
24.
Unless otherwise directed in writing by the Bureau, Debtor and the Trustee must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “In re Synapse, Case No. 24-bk-10646-MB” and send them by email to [email protected]:
ATTN: Enforcement Director Consumer Financial Protection Bureau Enforcement Division V.
Cooperation with the Bureau IT IS FURTHER ORDERED that:
25.
The Trustee will provide information in its or its agents’ possession or control requested by the Bureau within 14 days of receiving a written request for such information. Case 1:25-ap-01052-MB Doc 4 Filed 09/12/25 Entered 09/12/25 16:21:58 Desc Main Document Page 8 of 11
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26.
Given that the Trustee is not operating and will not seek to operate the business of Debtor, extensive compliance obligations by the Trustee are not warranted. The Trustee shall notify the Bureau of the occurrence of any of the following: a. The Trustee’s discovery of assets in the estate or any assets that could be subject to a turnover motion by the Trustee;
b. The Trustee’s filing of a motion under 11 U.S.C. § 363 in the Bankruptcy Case to use, sell, or lease property of the estate;
c. The Trustee’s filing of any interim report to the Bankruptcy Court; and d. The closure of the Bankruptcy Case.
The Trustee must provide this notice at least 21 days before the development or as soon as practicable after learning about the development, whichever is sooner. VI.
Retention of Jurisdiction IT IS FURTHER ORDERED that:
27.
The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.
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Date: September 12, 2025 Case 1:25-ap-01052-MB Doc 4 Filed 09/12/25 Entered 09/12/25 16:21:58 Desc Main Document Page 9 of 11
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(ase 1:25-ap-01052-MB Doc4 Filed 09/12/25 Entered 09/12/25 16:21:58 Desc Main Document Page 10 of 11
SYNAPSE FINANCIAL TECHNOLOGIES, INC.
Jelena McWilliams
Chapter I 1 ip September 11, 2025 By: a :
PAUL H. ZUMBRO (pro hac vice) ~ GEORGE E. ZOBITZ (pro hac vice)
CRAVATH SWAINE & MOORE LLP Two Manhattan West
375 9th Avenue
New York, NY 10001
JANE KIM JEREMY V. RICHARDS THOMAS B. RUPP
KELLER BENVENUTTI KIM LLP 101 Montogmery Street, Suite 1950 San Francisco, CA 94104
Counsel for Jelena McW illiams,
in her capacity as Chapter 11 Trustee for Synapse Financial Technologies, Inc.
Page 25
Co Oo NY DD
—
ear, I, 2025
Nase 1:25-ap-01052-MB Doc4 Filed 09/12/25 Entered 09/12/25 16:21:58 Desc Main Document
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CONSUMER FINANCIAL PROTECTION BUREAU
Michael G. Salemi Principal Deputy Enforcement Director
Deborah Morris Assistant Principal Deputy Enforcement Director
Michael P. Favretto Assistant Litigation Deputy
en
JQSEPH LAKE (CA Bar No. 246679) (202) 897-8360
RENEE ORLEANS (pro hac vice) (202) 435-7271 [email protected]
ADRIENNE WARRELL (pro hac vice) (202) 435-7189 [email protected] Enforcement Attorneys
CONSUMER FINANCIAL PROTECTION BUREAU
1700 G Street NW
Washington, DC 20552
Facsimile: (202) 435-7722
Counsel for the Consumer Financial Protection Bureau