The Consumer Financial Protection Bureau penalized a man $1 this week, for illegally exchanging veterans’ pensions for high-interest “cash advances.” Mark Corbett claimed in sworn statements to the bureau that he had an inability to pay any fine of greater value, and the bureau accepted $1 as payment for making illegal, high-cost loans to former members of the armed forces.
Somehow, two other state regulatory agencies, in Arkansas and South Carolina, assisted in the extraction of a single dollar bill from Corbett.
This is not the first time during the Trump administration that CFPB has taken an inability to pay into account to reduce a fine for violations of consumer protection law. Under the previous acting director, current acting White House chief of staff Mick Mulvaney, this type of reduction was so widespread that it came to be known as the “Mulvaney discount.” The American justice system rarely treats impoverished defendants with such mercy.
Mulvaney has since been replaced by a confirmed director, his former aide Kathy Kraninger. The discount, however, has remained.
“It looks like the Trump-appointed political leadership at the CFPB is letting a person who preyed on veterans get away with a slap on the wrist,” said Will Corbett, a litigation counsel with the Center for Responsible Lending, a consumer advocacy group, in a statement.
A slap on the wrist for eight years of scamming veterans might be something like $10,000. This is more like a handshake.
Since 2011, Mark Corbett served as an agent for companies that the CFPB declined to name, calling them the “Doe companies.” That almost certainly indicates a future enforcement action against those companies. But companies do not violate laws; people do. And while Mark Corbett was not required to admit or deny the facts or legal conclusions in the consent order, CFPB’s findings were detailed and substantial.
On websites he operated, Mark Corbett marketed a deal for veterans with retiree or disability pensions. He set them up with offers from the Doe companies to purchase some or all of those future pension payments in exchange for a lump sum. Veterans would then use an online portal to redirect pension payments to a bank account controlled by one of the Doe companies. If veterans only sold part of their pension, the Doe companies would reimburse a portion of the payment every month. This was virtually the only source of the Doe companies’ consumer-side business revenue.
It’s also completely illegal. Under federal law assigning veterans’ pensions to a third party is prohibited. In fact, several veterans complained to Mark Corbett that the transactions were illegal; according to those veterans, he denied it.
These deals effectively operated as loan products, with an up-front payment exchanged for installment payments. For that reason, Mark Corbett was required to inform customers of the interest rate, which he never did, insisting instead in written materials that “this is not a loan. … [Y]ou are selling a product for a set price.”
Moreover, after promising to issue the lump sum payment by a set date, the companies would often miss this deadline, sometimes by up to several months, even as veterans signed away their pension benefits.
In a consent order, CFPB lays out this deception, accusing Mark Corbett of brokering illegal contracts with misleading terms, often without even delivering the promised funds to consumers in a timely fashion. It’s unclear how much money Corbett earned from this activity over an eight-year period, but it’s a virtual certainty that it was more than $1.
And yet, that was the ultimate fine.
“Having an inability to pay based on sworn financial statements provided to the Bureau on November 8, 2018, Respondent must pay a civil money penalty of $1 to the Bureau,” the order reads.
In a darkly hilarious denouement, CFPB left in all the boilerplate language included with larger fines. So the consent order intones that $1 dollar must be paid within 10 days of the effective date, and thereafter distributed to the Civil Penalty Fund to compensate victims of financial crimes. Mark Corbett is prohibited from taking a fat tax deduction for paying out that 100-cent penalty, and “to preserve the deterrent effect of the civil money penalty,” he cannot use this greenback as an offset toward any future federal fines. And if Mark Corbett defaults on this four-quarter obligation, interest will accrue. The CFPB even asks for Mark Corbett’s taxpayer ID number, so that they can track him down if he fails to cough up the 10 dimes he owes. The bureau reserves the right to send Mark Corbett into collections for the dollar, and report the delinquency to credit reporting bureaus.
The $1 order also says nothing about whether veterans who suffered losses would receive restitution, although that could be resolved in a future enforcement with the Doe companies.
In an interview, freshman Rep. Katie Porter, D-Calif., a new member of the House Financial Services Committee and a consumer protection expert, expressed dismay over the $1 fine for scamming veterans. “We should, on a bipartisan basis, be able to say our military veterans should not be cheated,” Porter said.
Asked about declines in enforcement at the CFPB and other financial regulatory agencies, Porter responded, “After President Trump’s election, there’s no reason to think that those working in consumer financial services decided to begin complying with the law at an unheard-of rate.”
In addition to being out a buck, Mark Corbett is banned from brokering sales of veterans’ benefits ever again.
CFPB did not respond to a request for comment.