June 12, 2013 Articles

First Federal Charges Brought Following Referral from CFPB

The first indictment has been brought stemming from the controversial bureau created by the Dodd-Frank Act of 2010.

By Jill Baisinger and Erin Yates

On May 7, 2013, the U.S. Attorney for the Southern District of New York and the inspector-in-charge of the New York office of the U.S. Postal Inspection Service jointly announced the first indictment stemming from a referral from the Consumer Financial Protection Bureau (CFPB). The CFPB was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Pub. L. No. 111-203, § 1011, 124 Stat. 1376, 1964 (2010) (to be codified at 12 U.S.C. § 5491). Dodd-Frank was established to protect consumers from “unfair, deceptive, or abusive” financial practices. Pub. L. No. 111-203, § 1031, 124 Stat. 1376, 2005 (to be codified at 12 U.S.C. § 5531).

The indictment brings mail-and-wire-fraud charges against Mission Settlement Agency, which holds itself out as a debt-settlement-services provider; the individual who “operated and controlled” Mission but who allegedly used its proceeds to run a Brooklyn nightclub; and three of Mission’s employees. This indictment marks a milestone in establishing the legitimacy of the CFPB, which has been the subject of controversy almost since the day it was proposed, and sets the tone in what is likely to be an active enforcement environment.

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