by Structured Settlement Watchdog
Persistence pays in the fight against abusive structured settlement factoring business practices in Maryland.
Following the Maryland Attorney General's criminal indictment of a trio of characters associated with Access Funding this week, the Consumer Financial Protection Bureau (CFPB) has announced a stipulated settlement with Access Funding, a structured settlement factoring company and its principals, including Lee Jundanian, a member of the New York bar, an individual once described as "a visionary" (albeit by a company that was later banned from doing business in Maryland for 7 years on the account of fraud) and who, through Atlantic Solutions LLC and Access Funding successor-in-interest Reliance Funding, was involved with a number of athlete/agent factored cash flow schemes that used the prestige of the athletes like former Virginia Tech and NFL legend Michael Vick and NBA star Paul Millsap as a shiny penny then used by companies like SMA Hub and certain financial advisors to market to investors as annuities, but turned out to be anything but.
Access Funding Background
Access Funding was established in 2012, after Lee Jundanian's 5 year non-compete with Stone Street Capital (now part of JGWPT) was over. In a few short years Jundanian's company became the bête noire of the structured settlement factoring business. It's not hard to see why. If you have the time, read the Access funding sales manual.
Sales Tips Access Funding Provided to Their Salespeople in the Access Funding Sales Manual
- "Upselling is a crucial part of the sales process"
- "The important thing to remember is that the annuitants do not generally have the peace in their lives that comes with financial stability. Take this fact as a positive and take full advantage"
- "Never forget that if they managed their money properly, lived below their means and planned for the future, Access Funding would be out of business tomorrow".
- "It's your job to take them to the promised land and paint the picture of how great life would be like if they had a lump sum to buy things that would solve their problems"
- " The key is to set yourself up for the forbidden fruit" [p 28, "how to do deal with a customer who says they rely on their structured settlement payments for living expenses"]
Access Funding Wheels Come off The Wagon
The summer of 2015 was a disastrous for Access Funding, following Terrence McCoy's blistering Washington Post news reports of Access Funding abusive business practices. The reported target of Access Funding's fountain of business came from mostly black residents of Baltimore City. At the time of his death in April 2015, Freddie Gray of Baltimore, Maryland survived on a “pennies on the dollar” lump sum lead poisoning payment [ see Freddie Gray and Lead Poisoning by Deborah Bailey March 11, 2016, American Society of Public Administration Times]. Access Funding victims were labeled "lead paint virgins" as if ruining the financial futures of these poor people were just a notch on the proverbial bedpost. The utterly horrible stories of Access Funding led to structured settlement factoring reforms in Maryland and the end, at least in name, of Access Funding.
The headline on the Consumer Financial Protection Bureau press release in November 2016 read CFPB Sues Access Funding for Scamming Lead-Paint Poisoning Victims Out of Settlement Money. Bureau Alleges Company Took Advantage of Consumers with Cognitive Impairments.
The Access Funding Timeline
- On November 21, 2016, just four years after the Access Funding was established, the Consumer Financial Protection 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 Derwood Maryland attorney, Charles E. Smith. The Bureau alleges 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 alleges 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. For example see my June 27, 2015 post How Maryland Structured Settlement Protection Act Filed Mary Alice Rose. The CFPB alleges 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 CFPB further alleges 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 CFPB's claim relating to the advances Access Funding offered consumers. The court granted the CFPB’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).
- The CFPB moved for summary judgment on September 4, 2020, which remains pending. On October 23, 2020, based on the parties’ stipulation, the court dismissed the claims against Reliance Funding, LLC.
- On November 18, 2021, the court entered a stipulated judgment and order against Derwood Maryland lawyer Charles E. 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. The order requires the settling defendants to pay $40,000 in disgorgement and a $10,000 civil money penalty. The order also prohibits 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 order also prohibits 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. The case remains pending against Michael Borkowski.
- Read the Stipulated Judgment and Order against Access Funding, LLC, Access Holding, LLC, Lee Jundanian, and Raffi Boghosian Download Access Funding Settlement Stipulation with CFPB signed by Judge 12-17-2021