Victims of lead-paint poisoning who lost millions in deals with a Chevy Chase company may be able to get more money back than they initially expected, after the Maryland Court of Special Appeals said new lawsuits against the company can go forward.
That decision allows Maryland Attorney General Brian E. Frosh (D) and the Consumer Financial Protection Bureau to pursue cases against Access Funding, which bought nearly $18 million worth of structured settlement payments from lead-paint victims for pennies on the dollar between 2013 and 2015.
One hundred of the victims filed suit against Access Funding in 2016 and agreed to a settlement deal of $750,000, about 4 percent of what Frosh says they are owed. The agreement precluded the victims from seeking additional restitution, either on their own or through government watchdog agencies.
Frosh challenged the agreement in court.
“The decision allows us now to seek an order requiring Access Funding and its owners to give back what they took from victims,” Frosh spokeswoman Raquel Coombs said in a statement. “And, in so doing, to meaningfully enforce the law in a case involving egregious misconduct directed at extraordinarily vulnerable people.”
A spokesman for the CFPB, which has a separate case pending, did not respond to a request for comment.
Raymond L. Marshall, a lawyer who represents some members of the class, said the 2-to-1 Court of Special Appeals ruling this week is “very detrimental to the victims” because there is a limited amount of insurance money and legal fees are continuing to climb.
“I don’t know how it’s going to achieve a result that’s better,” he said of Frosh’s suit, adding that lawyers for the class plan to appeal the decision. “I have clients who call all the time asking for their money.”
The members of the class have not received their shares of the $750,000 settlement because the additional cases were pending.
The Washington Post reported in 2015 that Access Funding was buying “structured” settlements from victims of lead-paint poisoning for a small fraction of their value.
The settlements were the sole source of income for many of Access Funding’s victims, most of whom grew up in public housing in Baltimore. They were to be paid out in small increments over decades, ensuring a degree of financial stability for the recipients.
To convince victims, many of them cognitively impaired, to sell their long-term payments for cash upfront, Access Funding employees barraged them with calls and texts and took them out to restaurant dinners, an investigation by Frosh’s office showed.
They directed the victims to a lawyer, Charles E. Smith, who was supposed to provide independent advice but was actually working closely with the company.
Smith is named in the class-action lawsuit and in Frosh’s lawsuit. The executives of Access Funding — Lee Jundanian, Michael Borkowski and Raffi Boghosian, who founded the company in 2012 — were not named in the class-action suit but are named in Frosh’s lawsuit.
For two years, the company’s research department tried to identify “lead paint virgins” as part of what it called its “virgin research project,” emails obtained through Frosh’s investigation show. The aim was to find families or groups of people who had received settlements but had not yet sold them to another company.
Jundanian wrote in an email that he wanted to “truly ‘own’ the lead paint market in Baltimore.”
In the Court of Special Appeals decision, the two-judge majority said the provision in the class-action settlement that precluded the attorney general’s office and the CFPB from seeking additional damages was invalid because “parties can only settle their own claims.”
“The Division and the Bureau weren’t parties to the settlement and their rights to seek restitution was not something the Class could bargain away,” Judge Douglas R.M. Nazarian wrote in his opinion, in which he was joined by Judge Timothy E. Meredith.
Judge Stuart R. Berger wrote in his dissent that because the restitution that the government was seeking for the class members was personal, it is their right to release it.