A Brooklyn firm that advances money to plaintiffs in anticipation of winning their lawsuits charges interest rates that would make a loan shark blush, court papers reveal.
LawBuck$, based in Borough Park, is demanding $116,000 to repay $4,000 in loans it made to a man who successfully sued the city in a police-brutality case, according to court documents.
The judge who heard the brutality case is due to rule tomorrow on whether the loan agreements — one at 58 percent annual interest and the other at an astounding 70 percent, compounded monthly over five years — are legally enforceable.
Brooklyn Supreme Court Justice Ellen Spodek hauled LawBuck$ into court to defend the incredible terms of the agreements with Joseph Gill, who is getting around $350,000 from the city for a 2006 false arrest that left him with serious back injuries.
Joshua Pollack, Gill’s lawyer, told The Post Spodek was skeptical about LawBuck$’s prospects.
“She basically said, ‘This is usurious, and if not usurious, it’s unconscionable,’ ” Pollack recalled.
“She said LawBuck$ is preying on the poorest people in the community — the people who need the money the most.”
Gill, 29, was thrown against a car by cops who thought he had committed a robbery. After the robbery victim said Gill was not the thief, police still brought him to the station house in handcuffs and gave him a disorderly conduct summons.
A Brooklyn jury decided cops violated Gill’s civil rights and awarded him $365,000, including $300,000 for pain and suffering, according to court papers.
The city was on the hook for attorneys’ fees as well, and settled the entire case for $500,000, Pollack said.
“It’s unfair to make me pay a ton of money like that,” Gill said. “I never wasn’t going to pay, but that’s just ridiculous.
“I feel horrible. It’s disgusting.”
Advancing money against future lawsuit winnings is a murky and largely unregulated business. Often people involved in suits, especially those who were injured, need to borrow money for living and medical expenses.
The lending firms check with litigants’ lawyers to gauge the viability of the lawsuits and lend only to those who have a good shot at winning — often at jaw-dropping interest rates. The high rates are possible because, unlike regular loans that are subject to limits on interest, the advances need only be paid back if the borrower wins the suit.
One personal-injury lawyer said the companies won’t advance plaintiffs money unless the lawyer gives a rundown on the case, creating a possible conflict of interest — lawyers who refuse to participate could lose their clients.
LawBuck$ had offered to settle for about $90,000, but changed tack, refusing to negotiate further and then demanding the full $116,000, Pollack said.
Mark Tamoshunas, who represents LawBuck$, declined to comment.
In court papers, however, Tamoshunas defended the loans as legitimate and demanded Pollack be sanctioned for bringing a “frivolous motion” to void the contract.
Gill, who needed to borrow from other lenders to pay for back surgery and has been working odd jobs since, said he hopes to use whatever money he has left to go back to school.
But, he said, “LawBuck$ won’t let me get on with my life.”