On March 13, in a response to a court’s request for additional briefing, the CFPB requested a federal judge to levy $43 million in fines and restitution against the owner of a debt-relief company. The court previously issued a judgment of liability against the company and its owner for violating the CFPA and Telemarketing Sales Rule (TSR) for allegedly assessing illegal fees and making false promises to student loan borrowers. The CFPB argued the owner should be responsible for paying restitution and fees for consumer harm given that the company is insolvent.
The court asked for supplemental briefing to address whether two recent U.S. Supreme Court cases limit the court’s ability to impose penalties against the company’s owner. Specifically, the court asked whether Liu v. SEC limits potential restitution to the company’s net profits. The Bureau argued because the remedy sought here is legal (rather than equitable) in nature, the penalty should be “based on the defendant’s net revenues, not its profits.” The court also asked whether under SEC v. Jarkesy, the CFPB’s requested civil penalty may implicate the owner’s constitutional right to a jury trial. The CFPB argued Jarkesy was inapplicable here because the issue of personal liability was decided by a federal court rather than an administrative proceeding. The Bureau also argued that under different Supreme Court precedent, the “right to a jury trial does not extend to the assessment of civil money penalties,” given that Congress expressly delegated authority to federal courts to impose civil penalties in the text of the CFPA.
