Mean Actors and Loopholes

A former client called me, desperately seeking help for his sister whose bank accounts had been frozen. They live outside of NY, where I practice law. Her bank accounts are frozen and a company called ML Funding is emptying her accounts. They deposited $17,000 in her account a week ago, and now they have a judgment from the Queens County, New York Supreme Court, Civil Term, for over $40,000.

How is this possible? Apparently because of a loophole where this qualifies as selling a future contract and not as a loan (or outright malicious theft).

The problem for the creditor is big though: There is no discernible contract. And even if there were a contract, the creditor would have violated it in multiple ways.

The contract suggests the creditor’s extreme skittishness (banking usernames and passwords(!), permission to view anytime, requirement that debtors can not change passwords or other access info without telling creditor), giving the strong feeling that the creditors know exactly how this will play out.

They anticipate a breach, blame it on the debtor, hand it over to a lawyer (seemingly complicit) who activates the confession of judgment, freezes bank accounts, runs up legal fees and employing the heavy and long hand of the law, fleeces the debtor.

This is exactly what happened in this case. And apparently it is mostly legal so the same actors keep repeating this scheme to the unhappiness of many debtors who I definitely see as victims (struggling, desperate and susceptible in many ways).

Call your state representative to make sure this does not keep happening.

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