Morgan Drexen Inc., a Nevada corporation, and Connecticut bankruptcy attorney Kimberly Pisinski filed a constitutional challenge against the Consumer Financial Protection Bureau (CFPB) in July after the bureau began investigating them for alleged illegal debt settlement services. The suit was filed in the U.S. District Court for the District of Columbia.
Morgan Drexen alleged that the CFPB’s structure insulates if from governmental checks and balances in violation of the U.S. Constitution. The lawsuit further alleged that the bureau engaged in abusive practices which included attempts to regulate the practice of law and collect attorney-client protected material. Morgan Drexen asked the court to grant it permanent injunctive relief from the bureau’s investigation and requested that the court declare that the provisions of the Dodd-Frank Act creating the CFPB are unconstitutional.
A month after the company filed suit, the CFPB filed an enforcement action against Morgan Drexen in a federal court in California. The bureau also filed a motion with the D.C. District Court to dismiss Morgan Drexen’s lawsuit against it. The CFPB argued that the company could make its constitutional claim in the pending enforcement action in California.
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