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Victim Compensation Fund

When Getting Sued Feels Good

January 31, 2017 | Michael Barasch

Before you get the wrong idea, I’ll admit that getting sued is usually not something to be particularly happy about. As a rule, it’s expensive, stressful, and time consuming. But, believe it or not, there are times when getting sued actually feels kind of good. When the lawsuit affords us the opportunity to take on a company that is exploiting 9/11 victims, it feels better than good.

Mike Barasch and the Barasch McGarry law firm are being sued by a financial lending company, because we refused to release funds to pay the exorbitant interest it is demanding from one of our 9/11 clients. Far from feeling unhappy about it, we are very motivated to take on a company that we believe is preying on the 9/11 community.

We represent Elmer Santiago, a disabled NYC Police Officer who suffered career-ending respiratory injuries as a result of his toxic exposure during the WTC rescue and recovery operations. Forced to retire without any benefits, Officer Santiago had no income for years and he ultimately found himself in a desperate situation. He needed to find housing for his family.


Several years ago, there was an 18-month delay between getting a Victim Compensation Fund (VCF) award determination letter and receipt of the VCF award payment. Officer Santiago decided to use the award letter as collateral to borrow $355,000 from a company called RD Legal Funding. With the money that was lent to him, he bought a modest home in Florida and moved his family to the warmer climate so that he would be able to breathe easier. He believed that he had borrowed the money from a reputable company, and that he would be charged the 19% interest that was in the loan document. Nineteen percent is a substantial amount of interest on what is essentially a risk-free loan. But it is in line with what other lawsuit lending companies charge. However, when Officer Santiago finally received his award payment, he learned, to his utter shock, that the lending company was demanding payment of $855,000 based on a 67% interest rate! In a word. Outrageous.

Appalled, Barasch told RD Legal that its lending agreement with Officer Santiago, and the interest rate it was seeking, had the appearance of violating both NYS and Federal criminal usury laws. Barasch promptly re-paid RD Legal $355,000, the amount that it had lent Officer Santiago. He then told the lending company that if it ,didn’t dramatically reduce its $505,000 demand for interest, he would ask the Department of Justice (which oversees both the Victim Compensation Fund and the Consumer Financial Protection Bureau [CFPB]) and the NYS Attorney General’s office to determine the permissible amount of interest.

Both the CFPB and the NYS AG’s office were willing to investigate RD Legal’s lending practices. AG Eric Schneiderman was quoted as saying that the lending company’s practice of giving advances to first responders seeking settlements appeared to amount to a high-interest loan that violated state law. While the practice of giving loans to accident victims who have lawsuits can be risky for a lender, VCF claimants who have received an award letter are entirely different. The key difference between lending to someone in a car accident who brings a lawsuit versus lending to a 9/11 claimant who has a VCF award, is that car accident lawsuits aren’t guaranteed, while VCF awards are guaranteed.


Last week, feeling the heat from both investigations, and from being ordered by the AG’s office to pay back $1.6 million to other 9/11 victims, the lending company sued the Attorney General and the CFPB. The Attorney General called the lawsuit “frivolous” and said RD Legal “exploited and shortchanged 9/11 victims,” according to the Daily News. The company maintains that the advances are “purchases of future settlement money,” not “loans.” It argues that it should be permitted to charge high fees because it takes on “the risk” that a settlement may never be reached. However, both Schneiderman and Barasch pointed out that RD Legal incurred no risk since the VCF awards are guaranteed by the Federal Government.

So, despite being in the middle of a lawsuit, Michael Barasch feels confident that he is doing the right thing. “It’s comforting to know that I’m on the same side of a lawsuit as the Attorney General and the CFPB. While it may be expensive for me to defend this lawsuit, it’s worth it. Officer Santiago was a victim of the 9/11 terrorist attacks. I’m not going to let him be a victim twice,” said Barasch.

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