A federal financial oversight agency sued a Maryland-based financial firm Monday, alleging it created an illegal scheme to take advantage of victims of lead paint poisoning who won court-approved settlements.
Access Funding, based in Chevy Chase, came under state and federal scrutiny last year for purchasing lead-paint settlements from victims in Baltimore and elsewhere in exchange for one-time, lump-sum payments that were far less than the long-term financial support they had won in court.
The federal Consumer Financial Protection Bureau filed the lawsuit in U.S. District Court in Baltimore. The agency said the deals violated the Wall Street overhaul approved by Congress in 2010.
The agency said Access steered lead paint victims to an attorney who claimed to be independent but who was in fact paid by the company.
"Many of these struggling consumers were victimized first by toxic lead, and second by a company that saw them as little more than income streams to be courted and harvested," agency director Richard Cordray said.
Attempts to reach Access Funding and its attorneys Monday were not successful.
The settlement payments are intended to help compensate victims who are unable to get or hold a job because they were exposed to the toxic lead-based paint that riddles much of Maryland's older housing.
Ingestion by infants and toddlers of even small amounts of lead paint flakes or dust can lead to lasting learning and behavior problems, research has shown.
Regulators say companies like Access get lead paint victims to sign over their settlements in exchange for much smaller, one-time payments, without fully explaining the difference in value.
Access offered consumers about 30 percent of the present value of their future payments, the Consumer Financial Protection Bureau said.
The company conducted about 70 percent of its settlement transfers in Maryland, according to the agency. It sought court approval for about 200 transfers in Maryland from 2013 to 2015. At least 158 were approved.
Maryland Attorney General Brian E. Frosh filed a lawsuit against Access in Baltimore Circuit Court in May. That case, in which Frosh alleged violations of the Maryland Consumer Protection Act, is pending.
Action by the Consumer Financial Protection Bureau comes at a politically sensitive time for the agency. The bureau was created by the 2010 Dodd-Frank Wall Street law, approved by Congress in response to the 2008 financial crisis. But the law's regulations have raised some opposition, and President-elect Donald Trump vowed during his campaign to repeal them.
"Dodd-Frank has made it impossible for bankers to function," Trump told Reuters earlier this year. "It makes it very hard for bankers to loan money for people to create jobs, for people with businesses to create jobs. And that has to stop."
Democrats have said they would resist changes to the law.
"This lawsuit is proof of the critical work the CFPB is doing, and evidence that any effort to undermine its legitimacy serves only to harm consumers," said Rep. Elijah E. Cummings, who has become a leading voice on the lead-paint settlement issue.
"Access Funding took advantage of lead-paint poisoning victims in Baltimore, and the company and its advisers deserve to face the full force of law," the Baltimore Democrat said in a statement.