Federal indictments of a lawsuit-scam ring offer fresh proof that New York needs to crack down on “legal lenders.”
The group of lawyers and doctors allegedly filed $31 million worth of fraudulent slip-and-fall claims in hundreds of bogus lawsuits against New York City businesses — funded by the legal-lending sharks, who imposed interest rates of 50 percent to 100 percent for loans to “clients” to cover the litigation costs.
The ring hired the homeless and mentally ill to fake injury and even undergo surgery — with the lawyers, docs and lenders winding up with most of the cash.
But funding fraud is far from the only evil of this industry. For example, two different lenders — LawBuck$ and MFL Case Funding — demanded $2.1 million in 2018 to repay loans of just $21,300 to a dead Brooklyn woman and her estate.
The year before, the state Attorney General’s Office went after RD Legal Funding for exploiting 9/11 first responders by charging interest rates up to 250 percent.
This virtually unregulated industry preys on the vulnerable, cashing in on their distress — and also enables outrageous nuisance suits that should never see the courthouse door, blackmailing victims (including city government) into settling rather than bear the expense of trial.
State Sen. Anna Kaplan (D-North Hills) has two bipartisan bills to rein in these abuses — including setting a ceiling on interest rates to prevent blatant usury — but can’t get the legislation out of committee, thanks to the industry’s lobbying power.
Notably, a Florida-based litigation-funding firm this year gave $100,000 to the New York State Trial Lawyers Association to fight such reforms.
It’s outrageous that the Legislature’s Democratic leaders are protecting the perpetrators of such sleaze.