Make us your home page

Troubled Tampa-based LM Funding faces class action lawsuit

The fortunes of LM Funding have fallen sharply since the Tampa debt collection company went public in 2015. A judge recently ruled that dozens of condominium associations can collectively sue the company. [File photo courtesy of Nasdaq]

The fortunes of LM Funding have fallen sharply since the Tampa debt collection company went public in 2015. A judge recently ruled that dozens of condominium associations can collectively sue the company. [File photo courtesy of Nasdaq]

A judge has ruled that dozens of condominium associations can collectively sue a Tampa debt-collection company, potentially a major blow to the already-troubled company's prospects.

Miami-Dade Circuit Judge John H. Thornton recently certified a class-action lawsuit that accuses LM Funding of deceptive trade practices and charging illegally high interest rates.

Founded in 2008 at the start of the foreclosure crisis by Tampa lawyer Bruce Rodgers and his wife, Carollinn Gould, LM Funding advances condominium associations money for maintenance and repairs in exchange for the right to collect delinquent fees, interest and late fees from unit owners.

But in a lawsuit filed in Miami-Dade County, the Solaris at Brickell Bay Condominium Association says that while LM Funding purports to "buy" the rights to delinquent accounts, it actually operates as a lender charging interest in excess of the 25 percent allowed by state law.

In 2011, LM Funding gave Solaris a $140,458 advance but later collected $198,410 on the accounts. When Solaris terminated the contract, LM Funding demanded an additional $395,605 for what it said was the value of uncollected accounts and the interest that had accrued on them.

"Thus a debt of less than $150,00 became a debt of nearly $600,000 in less than three years," according to the suit.

Solaris also alleges that LM Funding entered into "materially similar" contracts with other condominium associations and that their claims could best be handled on a class-action basis.

On Dec. 5, the judge agreed and certified a class that could include 325 or more condo associations.

Lawyers for Solaris will also represent other members of the class.

In a statement, Rodgers predicted that LM Funding will get the suit dismissed and continue in business "for years to come."

"The allegations in the complaint mistakenly recharacterize our business model as a loan, rather than as a business that takes on the risk of collecting delinquent dues from individual condo units," Rodgers said.

He added that the judge should remove himself from the case because his wife is partner in the law firm that filed the suit.

Class-action lawsuits are relatively common, especially in cases in which a defective product harms thousands of people. Although not familiar with the LM Funding lawsuit, one expert said that certification as a class is "a very important watershed" in any litigation and can increase the pressure on the defendant to settle.

"What you have is a single litigation with a lot of aggregated claims and potentially a fairly large damage recovery," said William H. Page, a professor at the University of Florida's Levin College of Law. "That's not to say it's good to face an enormous number of individual lawsuits, but it sounds like it may be that some of these condo associations wouldn't file at all unless in the form of a class action."

LM Funding has struggled since it went public in October 2015 and raised about $10 million in an initial public offering. In September, the company announced that it was cutting staff and slashing salaries, including those of Rodgers, who went from $385,000 to $269,500, and Gould, who went from $150,000 to $84,000. Its president left the company.

At the time, Rodgers said the company was collecting on fewer accounts.

In its third-quarter 2016 filing with the federal Securities and Exchange Commission, LM Funding said that it lost $914,180 on revenues of slightly more than $1 million. After going public at $10 a share in 2015, its shares have fallen sharply, closing Monday at $4.65 apiece.

Contact Susan Taylor Martin at smartin@ or (727) 893-8642. Follow @susanskate.

Troubled Tampa-based LM Funding faces class action lawsuit 12/20/16 [Last modified: Wednesday, December 21, 2016 11:23am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. No toll lanes north of downtown Tampa in three of four interstate proposals


    TAMPA — Express lanes may not be coming to downtown Tampa after all. Or at least not to the stretch of Interstate 275 that goes north through Bearss Avenue.

    Seminole Heights resident Kimberly Overman discusses the new interstate options with V.M. Ybor resident Chris Vela (left), Hillsborough County Commissioner Pat Kemp and HNTB consultant Chloe Coney during a Tampa Bay Express meeting Monday night at the Barrymore Hotel. [CAITLIN JOHNSTON  |  Times]
  2. Pinellas grants St. Pete's request to add millions to pier budget

    Local Government

    Times Staff Writer

    The Pinellas County Commission has granted St. Petersburg Mayor Rick Kriseman's request to dedicate millions more toward the city's new pier.

    The St. Petersburg City Council on Thursday  voted 7-1 to appropriate $17.6 million for the over-water portion of the Pier District. This is a rendering of what the new Pier District could look like. [Courtesy of St. Petersburg]
  3. Pinellas licensing board loses support for staying independent

    Local Government

    CLEARWATER –– The Pinellas County Construction Licensing Board on Monday lost its strongest supporter for staying independent.

    State Sen. Jack Latvala, a Clearwater Republican running for governor, said Monday that he will no longer support any legislation to keep the Pinellas County Construction Licensing Board independent. This photo was taken in August. [SCOTT KEELER | Tampa Bay Times]
  4. Triad Retail Media names Sherry Smith as CEO


    ST. PETERSBURG — Triad Retail Media, a St. Petersburg-based digital ads company, said CEO Roger Berdusco is "leaving the company to pursue new opportunities" and a member of the executive team, Sherry Smith, is taking over.

    Sherry Smith is taking over as CEO at Triad Retail Media, the company announced Monday. | [Courtesy of Triad Retail Media]
  5. Two new condo projects for same street in downtown St. Pete

    Real Estate

    ST. PETERSBURG — It lacks the panache and name recognition of Beach Drive, but 4th Avenue N in downtown St. Petersburg is becoming a condo row in its own right.

    Bezu, a condo project planned at 100 4th Ave. N in downtown St. Petersburg, will have 24 units including a three-level penthouse with infinity pool.
[Courtesy of Clear ph Design]