- Key insight: CashCall claims the CFPB abandoned a proposed settlement agreement and then demanded payment of a $134 million judgment.
- What's at stake: The high-cost installment lender says the case should be dropped because the Trump administration has shifted priorities and dismissed similar actions against other companies.
- Forward look: Four recent Supreme Court decisions also undermine the legal foundation for the CFPB's case against it, CashCall claims.
High-interest lender CashCall Inc. has asked a California court to overturn a massive
On Thursday, CashCall and its owner, J. Paul Reddam, filed
CashCall also claimed that continued enforcement of the $134 million judgment against the company "is no longer equitable," under the federal rules of civil procedure, according to CashCall's attorney Reuben Cahn, a partner at Bienert Katzman Littrell Williams. At the first meeting to negotiate the case, Paoletta said the case "would not have been brought under the bureau's current administration."
The CFPB did not respond to a request for comment.
Last year, the U.S. Court of Appeals for the Ninth Circuit affirmed the district court's nine-figure judgment against CashCall, rejecting the company's final procedural challenges, including its claim that it had the right to a jury trial. That had seemed to mark the end of the lender's long-running dispute with the CFPB.
But negotiations with top CFPB officials apparently continued. And now CashCall claims that Paoletta had been willing to dismiss the case, with the CFPB keeping $10.3 million that CashCall already paid under a previous agreement in 2018. CashCall says that Paoletta was temporarily willing to cut the civil penalty from $33 million to $10 million, waive an additional $24 million in interest, and give any redress not provided to consumers back to CashCall, rather than to the Department of Treasury.
CashCall's attorney described an "extensive back-and-forth" between its counsel and Paoletta and Victoria Dorfman, a senior legal advisor at the CFPB, including "multiple in-person meetings" in Washington, D.C.. Dorfman is also a senior associate general counsel at the Office of Management and Budget, where she works with both Paoletta and OMB Director Russell Vought, the CFPB's acting director.
"The bureau provisionally accepted a complete settlement framework on terms it itself prescribed—before abandoning that framework, on the eve of moving against defendants' collateral, without any articulated policy basis," the filing states. "Continued enforcement reflects considerations extrinsic to the bureau's legitimate consumer-protection mandate and is punitive and malicious in character."
In its motion Thursday, CashCall also asked the California court to dismiss the CFPB's case against the company, based partly on a sweeping
Specifically, Paoletta said in the memo that the agency would avoid duplicative state enforcement and halt all oversight of nonbanks, which CashCall claimed changed the CFPB's policy, and should prompt the court to dismiss the case.
"The bureau has publicly and formally repudiated the enforcement posture that produced this case," Cahn, CashCall's attorney, said in the court filing. "The bureau has since maintained an enforcement posture against CashCall that is inconsistent with its position in every materially comparable matter resolved during the same period."
CashCall has paid more than $140 million in parallel state settlements and private class-actions on the very same loans that the CFPB seeks to compensate harmed consumers, the company said.
"A further distribution is not restitution at all but a double recovery and an undeserved windfall," the company said.
CashCall described how the
"Consistent with that revised posture, the bureau has, since January 2025, voluntarily dismissed enforcement actions or vacated settlements against SoLo Funds, Navy Federal Credit Union, Capital One, Walmart, Zelle, Rocket Homes, Heights Financial, Townstone Financial, and Reliant Holdings," the motion states. "No policy basis — either in the Paoletta Memorandum or otherwise — has been articulated for distinguishing this matter from the actions the Bureau has dismissed or unwound in the same period. Nor has the Bureau identified any factual or legal development between its provisional acceptance of the settlement framework and its May 1, 2026 reversal that would explain its abandonment of an agreement it had itself elicited."
Further, CashCall cited recent landmark Supreme Court decisions as providing a basis for dismissing the judgment.
CashCall claimed that the Supreme Court's 2024 decision in Loper Bright Enterprises v. Raimondo had a bearing on its case because the high court overturned the 40-year-old Chevron deference doctrine and found that federal courts can no longer defer to government agencies' interpretations of ambiguous laws.
It also cited the Supreme Court's 2024 decision in SEC v. Jarkesy, which invalidated the Securities and Exchange Commission's process for levying fines via the administrative hearing process.
CashCall claimed the cases "have materially altered the doctrinal foundation on which the bureau's liability and remedial theories were constructed."
The CFPB originally sued CashCall in 2013, alleging a "rent-a-tribe" scheme in which the Orange, Calif.-based CashCall used a tribal entity as a front to evade state usury laws and licensing requirements. CashCall had partnered with Western Sky Financial, an entity located in South Dakota on the Cheyenne River Sioux Tribe's land, to issue high-interest consumer installment loans that were collected by CashCall and its affiliates.
The CFPB, under then-Director Richard Cordray, claimed the loans were illegal under state law due to the federal prohibition on "unfair, deceptive, or abusive acts or practices," known as UDAAP.
