September 16, 2015 - 4:40 pm
CARSON CITY — A Las Vegas company that provides immediate and upfront financial help to individuals with pending personal injury lawsuits is now in limbo after a state agency reversed course and recently told the firm that it would have to be licensed under a Nevada law covering installment loans.
As a result of the change in position, InjuryLoans.com filed a lawsuit against the Nevada Financial Institutions Division for what owner Adam Stokes said would be severe financial hardship and loss of a significant investment.
The lawsuit, filed Friday in Clark County District Court, says that the company initially applied for a license with the agency for a high-interest rate business but was told in January to withdraw its application because funds provided to clients were not loans in the sense that there would be no recovery if the personal injury lawsuit did not ultimately favor the client.
But five months after starting operations and investing $1.5 million, the lawsuit says the Financial Institutions Division rescinded its decision and is now requiring the company to be licensed, putting it in limbo because it cannot provide assistance without first obtaining the license required in state statute for installment loans.
The July letter to the company provides no explanation for the change of position, only noting that InjuryLoans relied upon “erroneous information” contained in the initial letter sent by the agency.
“The FID’s inconsistent and unreasonable interpretation and application of NRS licensing requirements … have worked to decimate Injuryloans’ cashflow, exacerbate Injuryloans’ liabilities, and suffocate Injuryloans’ business, business opportunities and potential for growth,” the lawsuit says.
In a statement, Stokes said: “There is now an impression in the community that we’ve been operating illegally, without a license. We were operating without a license because the FID told us we didn’t need one. I respect the FID’s authority, and always seek to comply with all applicable rules. That is why I reached out to them before starting my business. I had their blessing to operate without a license.”
The complaint says that since the commencement of business operations, Injuryloans has experienced an extremely high demand from persons with pending personal-injury cases for the financial assistance the company provides. This assistance has helped Injuryloans’ clients to avoid eviction and obtain needed car repairs and allowed them to stay afloat financially so their attorneys can fight for a larger recovery.
“Insurance companies know that injured parties in financial need will ultimately settle for less if they can prolong the lawsuit,” said Josh Reisman, attorney for InjuryLoans.com. “My client provides bridge support to these individuals so that they can be treated fairly. This support comes at great risk to the company because there is no guarantee that the suit will be successful.”
InjuryLoans.com is seeking a declaratory judgment that the company does not need to be licensed as required by the FID, an injunction preventing the FID from criminally prosecuting the company and its owner, and damages for the destruction of InjuryLoans.com’s business.
The agency could not immediately be reached for comment.
The situation mirrors another case in 2009 when the division initiated proceedings against a similar business run by “Pawn Stars” reality show star Rick Harrison. The agency dropped its action after Harrison showed that his business providing cash to plaintiffs in lawsuits did not require a license.
Contact Sean Whaley at firstname.lastname@example.org or 775-687-3900. Find him on Twitter: @seanw801