Three years ago, Wells Fargo was required to pay a total $3.7 billion to customers, including over 50,000 Coloradans, after the Consumer Financial Protection Bureau (CFPB) found that Wells Fargo had engaged in systemic fraud including misapplied loan payments, wrongly assessed fees and interest, and harmful auto loan practices.
Coloradans received upwards of $9.5 million in payments to make up for Wells Fargo’s shady practices.
Despite this victory for everyday people, and others like it, Republicans have been trying to shutter the CFPB, ever since it was created in 2010 as part of the Dodd-Frank Act, which was passed in response to the financial crisis and questionable loan and trading practices of 2008.
And now it appears that Republicans, led by President Donald Trump, have succeeded. After returning $21 billion to consumers, the CFPB has been ordered to stand down. The newly installed head of the Office of Management and Budget announced this week that he ordered CFPB, which was originally conceived by U.S. Sen. Elizabeth Warren (D-MA) when she was still a law professor, to suspend all investigations and end all supervision, effectively closing the institution.
“CFPB RIP” tweeted an elated Elon Musk, including a little gravestone emoji. Musk will personally benefit from the demise of the DFPB, according to an ex-CFPB official interviewed on Democracy Now.
So, who wins when a watchdog is struck down in its prime?
People like Ryan Sasson. His company Strategic Financial Systems (SFS) was in the CFPB crosshairs in Federal District court, where CFPB was joined by seven state attorneys general who laid out a case of the worst kind of financial predation. According to court documents and news coverage, the racket went like this: First, SFS sent direct mail ads to people who had fallen behind on their credit card, home equity, and auto loan payments. The advertisement offered low-interest loans for the purpose of debt relief. When the consumer called the number on the ad, they were told by a worker in a call center that they did not qualify for a loan but were encouraged to enter SFS’s debt relief program, as explained in court documents.
SFS allegedly told these people that if they paid them for their expert legal services, they would negotiate with their creditors and wrestle their payments down to something manageable. And, they added, they would defend them if their creditors sued them. Once the debtor had signed up, they were required to pay front-loaded attorney fees and make payments for the debt into escrow.
Under the law, debt relief companies cannot collect money until the debt has been discharged. The exception to that rule is when a law firm is involved in debt relief. SFS designed an elaborate structure to take advantage of that exception. The company had a whole network of “Façade Firms” across the country. According to court documents, “many of the Façade Firms appear not to have physical offices, and instead utilize virtual offices and mailboxes, like UPS Store-rented mailboxes.”
SFS allegedly arranged for a consumer to meet a freelance notary to sign the papers and “once a consumer signed the enrollment documents, an attorney from the assigned Façade Firm contacted the consumer and read a short script welcoming the consumer to the program,” according to court documents. This rote “attorney welcome call” was often the only time the consumer spoke to an attorney in connection with the SFS debt relief program.
So consumers allegedly paid SFS, thinking they were making good on their debt, but SFS let the escrow accrue, waiting for the creditor to reduce their claim to pennies on the dollar and while they waited, took exorbitant fees out of the escrow account while the debtors’ credit scores tanked. Court documents are rife with stories like that of one plaintiff, identified as R. O., who was “charged nearly $10,000 in advance fees between July 2020 and June 2023, and none of his debts were settled.”
SFS made more than $84,000,000 in this debt relief scheme.
If Hollywood ever made a movie about the allegations against SFS, Ryan Sasson could play himself as the head of the multibillion-dollar scheme to defraud the poorest, most vulnerable of the working class. He’s reportedly the stepson of famous Jordan Belfort, who was the model for the movie “The Wolf of Wall Street” and ended up pleading guilty to fraud and money laundering. Sasson followed in his stepfather’s footsteps, if the CFPB’s story is true, finding a way to pile up mountains of money without producing a product or providing a real service. A basic Google search finds him attending yacht parties and standing on industrial carpets in slick offices and thrusting his chin out.
Colorado’s Attorney General Phil Weiser’s office says, “It’s a strong case,” but it won’t indicate whether the CFPB’s demise will affect the outcome. (Colorado and six other states are co-plaintiffs may push forward.) “Unfortunately, we cannot comment on pending litigation,” says Weiser’s communications Director Lawrence Pacheco via email.
With 88 original defendants and 38 intervenors, scattered across the country, and eight plaintiffs in seven states, CFSB had a lead chair on the case, dedicating seven federal attorneys to the effort including the case’s two lead attorneys. It is unknown at this time whether the blow to CFPB will be deadly to the case.
