$1 fine from CFPB for scammer of veterans’ pensions

The Trump appointee leading the Consumer Financial Protection Bureau, Kathy Kraninger, has overseen the fine of Mark Corbett after it was determined that he sold veterans deceptive, high-interest loans. He was fined $1.

The Center for Responsible Lending, reporting on the fine, pointed out that the CFPB said in late 2018 that lenders to military personnel would no longer be monitored for compliance with the Military Lending Act, meant to protect veterans and soldiers from predatory lending practices.

Then-acting director Mick Mulvaney said at the time that under Dodd-Frank, the CFPB had no authority to audit lenders for compliance with the Military Lending Act, reversing Obama administration interpretation of the law and causing protests from Democrats and the Pentagon.

A few weeks ago, the CFPB’s Kraninger requested Congress give the CFPB ”clear authority” to “supervise” lenders for compliance with the Military Lending Act.

Esquire highlighted the size of the $1 penalty for Corbett in excoriating the actions of the CFPB under Mulvaney, whose policy of reducing fines for violations of consumer protection laws “had become so widespread that it came to be known as the ‘Mulvaney discount.’”

The report also lamented the fact that the policy has apparently survived Mulvaney’s departure from the agency.

Military.com reported that in a consent order, the CFPB found that Corbett’s actions “were deceptive and unfair and likely caused ‘substantial injury’ to veterans.” But apparently the CFPB  felt that telling him to stop, fining him $1 and ordering him to cooperate with an ongoing investigation was sufficient punishment, citing Corbett’s sworn statement about inability to pay more of a fine.

The scheme took advantage of veterans who sought loans or pension sales. Corbett found investors interested in buying veterans’ income streams in exchange for “a payment ranging from a few thousand to tens of thousands of dollars; in exchange, [the veterans] would repay a much larger amount by signing over to investors all or part of their monthly pension or disability payments, typically for five to 10 years.”

The veterans were not told, incidentally, about either the interest rates—as much as 40 percent in one case currently before a district court judge in South Carolina—or Corbett’s commission. One of the veterans suing Corbett and others in South Carolina, Chad Wright, gave up his pension to stave off homelessness for his family.

The contracts compelled vets to go into their Department of Veterans Affairs or Defense Finance and Accounting Service online portal and send their benefits directly into an investor-controlled bank account.

If the contract was for just part of a pension, the companies would get the veterans’ whole direct deposit or monthly allotment and then send part of it back to the veterans’ accounts.

Federal law says that “veterans’ pension payments are unassignable” — and this was noted in the consent order.