Respondents Use Fifth Circuit Ruling to Attempt to Quash CFPB Subpoena

A consulting company and its chief executive officer have filed a motion in federal court in New Jersey seeking to quash a subpoena and to prevent the CEO from being deposed today by the Consumer Financial Protection Bureau, using the recent ruling from the Fifth Circuit Court of Appeals that the CFPB’s funding structure is unconstitutional.

A copy of the motion, filed by Apex Advising and Christopher Gonzales, non-parties in the case of CFPB v. Daniel A. Rosen, Inc., d/b/a Credit Repair Cloud, and Daniel Rosen, can be accessed by clicking here.

The subpoenas were served on Gonzalez and Apex Advising on October 10. The subpoenas want all documents and communications between Apex and its clients, according to the motion. One of the subpoenas requested more than 100,000 call recordings, which would take more than 34,000 days to review before producing them, according to the motion.

Because the CFPB is “using unconstitutional funding to issue and enforce” the subpoenas, the respondents are entitled to “a rewinding of [the Bureau’s] action” as a remedy, and that remedy is to quash the subpoenas, according to the motion.

“Allowing the deposition to take place would essentially divert taxpayer money into the pockets of an agency that is structured in violation of the Constitution,” the motion argues. “For this reason alone, the deposition cannot take place and the subpoena must quashed.”

The Fifth Circuit ruled last month in a case that the manner in which the agency is funded is unconstitutional and invalidated a rule on payday lending that was issued back in 2017 and was subsequently amended in 2020. The agency receives its funding through the Federal Reserve Board and is not subject to the Congressional appropriations process.

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