On September 19, the Consumer Financial Protection Bureau filed a complaint, together with a proposed consent order, against Top Notch Funding II, LLC, Rory Donadio, and John “Gene” Cavalli, alleging that the defendants engaged in deceptive practices in offering loans to consumers who are awaiting payments from settlements or victim compensation funds.  These consumers include September 11 first responders, former National Football League players who sustained  neurological injuries from the sport, and victims of the Deepwater Horizon oil rig explosion and oil spill.  Top Notch is headquartered in Verona, New Jersey, with Donadio as its owner and CEO.  Cavalli is Donadio’s business associate and is based in New York City.

The complaint alleges that Donadio authorized Cavalli to recruit customers for Top Notch using a variety of methods, including solicitation through phone calls, websites, and social media.  The loans allegedly were offered to beneficiaries of settlements or victim compensation funds, who had been formally approved to receive payment.  Top Notch would agree to provide those consumers with small portions of the expected payouts, with a larger amount to be repaid to Top Notch  after the consumers actually received their compensation payments or awards.

Top Notch allegedly deceived these consumers by:

  • Misrepresenting the actual cost of the loans by advertising that the loans would have an annual percentage rate of 2% and a 1% interest rate, although every loan brokered by Top Notch had higher rates;
  • Telling consumers in marketing materials and other communications that proceeds could be received in as little as one hour, when in fact funds were not available that quickly, and often took weeks to receive; and
  • Representing that Top Notch had offices in all 50 states with legal, financial, and accounting professionals on staff, while Top Notch had no offices and no professionals on staff.

If the proposed consent order is entered by the court, Top Notch, Donadio, and Cavalli would be prohibited from offering or providing these loans to consumers awaiting settlement or victim compensation payments.  The proposed order would also require Top Notch and Donadio to jointly pay $60,000 into the CFPB’s Civil Penalty Fund, and Cavalli to pay $10,000 into the Civil Penalty Fund.