NEW YORK – New York and federal authorities sued a company Tuesday that they say scammed sick 9/11 responders and NFL players who are receiving payouts for concussion-related injuries.
In the lawsuit, the New York attorney general and the Consumer Financial Protection Bureau allege that New Jersey-based RD Legal Funding and its founder Roni Dersovitz lured 9/11 responders who are struggling with cancer and respiratory illness as well as former NFL players with brain injuries into costly advances on their settlements.
Authorities said the company contacted the responders and former NFL players when it found out about their settlements, but before the people were actually paid. RD Legal Funding allegedly advertised that it could "cut through red tape" to get victims their money faster, but in fact had no legal ability to do so.
"The alleged actions by RD Legal — scamming 9/11 heroes and former NFL players struggling with severe injuries — are simply shameful," New York Attorney General Eric Schneiderman said in a statement.
Terence Healy, a lawyer for Dersovitz with the firm Hughes Hubbard, had no immediate comment on the lawsuit.
Authorities say the company charged interest rates as high as 250 percent and high fees on the advances, collecting millions of dollars in interest and fees. Authorities did not say how many people were allegedly victimized or release the names of any of the NFL players.
In one case, authorities said, a 9/11 responder was awarded $65,000 from the Zadroga 9/11 Health and Compensation Act, and RD Legal advanced her roughly $18,000 on her settlement, but she ended up repaying $33,800 to RD Legal six months later due to fees and interest.
New York attorney Michael Barasch, who represents roughly 10,000 police officers, officer workers and other people affected by 9/11, said one of his clients was victimized by RD Legal. A NYPD officer who was awarded a multimillion-dollar settlement for the injuries he sustained, borrowed $355,000 from RD Legal to cover his expenses before getting his full settlement. When the officer received his full payout 18 months later, RD Legal allegedly charged the officer more than $500,000 in interest and fees on top of the $355,000 originally owed.
"When he told me what happened, it sounded like usury," Barasch said. When Barasch refused to pay RD Legal, he and his NYPD client were sued for breach of contract.
Barasch said "dozens" of 9/11 first responders, only a few of them his clients, were allegedly victimized by RD Legal.
The Securities and Exchange Commission has an unrelated case pending against Dersovitz and a hedge fund he runs called RD Legal Capital. That complaint claims Dersovitz used investor funds to purchase stakes in high-risk investments that were not disclosed clearly to his investors. Dersovitz is fighting that SEC complaint, saying he did disclose his practices to investors.