allegation

California joined 21 other states and the District of Columbia Monday in a lawsuit that seeks to prevent the federal Consumer Financial Protection Bureau from being defunded and closed by the Trump administration.

The legal action filed in U.S. District Court in Eugene, Ore. accuses Acting Director Russell Vought of trying to illegally withhold funds from the agency by unlawfully interpreting its funding statute. Also named as defendants are the agency itself and the Federal Reserve’s Board of Governors.

“For California, the CFPB has been an invaluable enforcement partner, working hand-in-hand with our office to protect pocketbooks and stop unfair business practices. But once again, the Trump administration is trying to weaken and ultimately dismantle the CFPB,” California Attorney General Rob Bonta said, in a press conference to announce the 41-page legal action.

The agency did not immediately respond to a request for comment.

Established by Congress in 2010 after the subprime mortgage abuses that gave rise to the financial crisis, the agency is funded by the Federal Reserve as a method of insulating it from political pressure.

The Dodd-Frank Act statute requires the agency’s director to petition for a reasonable amount of funding to carry out the CFPB’s duties from the “combined earnings” of the Federal Reserve System.

Prior to this year that was interpreted to mean the Federal Reserve’s gross revenue. But an opinion from the Department of Justice claims that should be interpreted to mean the Federal Reserve’s profits, of which it has none since it has been operating at a loss since 2022. The lawsuit alleges the interpretation is bogus.

“Defendant Russell T. Vought has worked tirelessly to terminate the CFPB’s operations by any means necessary — denying Plaintiffs access to CFPB resources to which they are statutorily entitled. In this action, Plaintiffs challenge Defendant Vought’s most recent effort to do so,” the federal lawsuit states.

The complaint alleges the agency will run out of cash by next month if the policy is not reversed. Bonta said he and other attorney generals have not decided whether they will seek a restraining order or temporary injunction to change the new funding policy.

Prior to the second Trump administraition, the CPFB boasted of returning nearly $21 billion to consumers nationwide through enforcement actions, including against Wells Fargo in San Francisco over a scandal involving the creation of accounts never sought by customers.

Other big cases have been brought against student loan servicer Navient for mishandling payments and other issues, as well as Toyota Motor Credit for charging higher interest rates to Black and Asian customers.

However, this year the agency has dropped notable cases. It terminated early a consent order reached with Citibank over allegations it discriminated against customers with Armenian surnames in Los Angeles County.

It also dropped a lawsuit against Zelle that accused Wells Fargo, JP Morgan Chase, Bank of America and other banks of rushing the payments app into service, leading to $870 million in fraud-related losses by users. The app denied the allegations.

Monday’s lawsuit also notes that the agency is critical for states to carry out their own consumer protection mission and its closure would deprive them of their statutorily guaranteed access to a database run by the CFPB that tracks millions of consumer complaints, as well as to other data.

Vought was a chief architect of Project 2025, a Heritage Foundation blueprint to reduce the size and power of the federal bureaucracy during a second Trump admistration. In February, he ordered the agency to stop nearly all its work and has been seeking to drastically downsize it since.

The lawsuit filed Monday is the latest legal effort to keep the agency in business.

A lawsuit filed in February by National Treasury Employees Union and consumer groups accuses the Trump administration and Vought of attempting to unconstitutionally abolish the agency, created by an act of Congress.

“It is deflating, and it is unfortunate that Congress is not defending the power of the purse,” said Colorado Attorney General Philip Weiser, during Monday’s press conference.

“At other times, Congress vigilantly safeguarded its authority, but because of political polarization and fear of criticizing this President, the Congress is not doing it,” he said.

Los Angeles City Councilman John Lee repeatedly violated the city’s gift laws in 2016 and 2017, accepting freebies during a lavish trip to Las Vegas and at multiple restaurants in L.A., a judge said in a filing released Friday.

In a 59-page proposed decision, Administrative Law Judge Ji-Lan Zang concluded that Lee committed two counts of violating a law governing the size of gifts a city official can receive and three counts of violating a law requiring that such gifts be publicly disclosed.

Zang recommended a $43,730 penalty for Lee, who represents the northwest San Fernando Valley and was chief of staff to then-City Councilmember Mitchell Englander at the time of the alleged violations. However, the judge did not agree with allegations by city ethics investigators that Lee misused his position or helped Englander misuse his position.

In 2020, federal prosecutors accused Englander of accepting $15,000 in cash from businessman Andy Wang, lying to FBI agents and obstructing their investigation into the 2017 Vegas trip. Englander ultimately pleaded guilty to a single count of providing false information to the FBI and was sentenced to 14 months in prison.

The five-member Los Angeles City Ethics Commission is scheduled to make a determination on Wednesday, deciding both the number of violations Lee committed and any financial penalties to impose on him.

The commission has the power to accept or reject Zang’s recommendations. Ethics investigators have recommended that the commission take a more punitive approach by fining Lee about $138,000 and holding him responsible for all 10 counts.

The Lee case revolves around gifts — mostly food and alcohol but also hotel stays, transportation and $1,000 in gambling chips — provided by three men who have sought to do business with City Hall: Wang, who peddled Italian cabinets, “smart home” technology and facial recognition software; architect and developer Chris Pak; and lobbyist Michael Bai.

The judge issued her report six months after a multi-day hearing on the allegations against Lee, who replaced Englander on the council in 2019.

During those proceedings, Lee denied that he improperly accepted gifts, saying he made a good faith effort to pay his own way and, in some cases, declined to eat during meals. For example, he testified that he did not remember eating during his meetings at Yxta and Water Grill, both of which are in downtown L.A.

Zang, in her report, called those denials “not credible,” describing his testimony as “evasive and self contradictory.” She said Lee’s testimony also was in conflict with information he gave the FBI during its investigation into Englander, as well as testimony from other witnesses.

“It strains credulity to believe that [Lee] would join Englander, Bai, and Wang for lunch at Yxta and dinner at Water Grill without eating any food during the meals,” she wrote.

Ethics investigators have accused Lee of receiving an assortment of gifts during the 2017 Vegas trip with Englander and several others. Lee and a group of friends stayed at the Aria hotel and spent an evening at the Hakkasan Nightclub, according to the city’s allegations.

At the hotel restaurant, Blossom, Wang ordered a dinner worth nearly $2,500 for the group, which included Englander, Lee and several others, sending out servings of shark fin soup, Peking duck and Kobe beef, according to the judge’s summary of events.

Lee testified that he arrived at the restaurant in time for a dessert of bird’s nest soup, tasting it and deciding he did not like it, the judge said in her filing.

At Hakkasan later that night, Wang purchased three rounds of bottle service for the group for around $8,000 apiece, while Pak paid for a fourth round at a cost of $8,418.75.

“Each round of bottle service was served with fanfare, as female VIP hostesses brought bottles of alcohol to the table with flashing lights,” the judge wrote.

That night, at least 20 other club patrons went to Wang’s booth and drank alcohol at the table, according to the judge’s filing.

Lee was never charged by federal prosecutors and has said he was unaware of wrongdoing by Englander. In a filing submitted last week, his attorneys said that investigators incorrectly calculated the value of the gifts, including the bottles of alcohol, whose contents were distributed among many people.

Lee gave Wang $300 in cash as reimbursement for his drinks, withdrawing money from an ATM in Las Vegas to cover those expenses, his lawyers said.

In their reply to the city, Lee’s attorneys contend that the statute of limitations has expired on the city ethics counts. They have also pushed back on the recommendation from city ethics investigators that Lee pay a $138,000 penalty.

“Such inflated numbers are not grounded in reason, have no basis in the record, no support in the governing law, and no place in a fair and impartial enforcement system,” they wrote in their filing.

Englander previously agreed to pay $79,830 to settle a similar Ethics Commission case over the gifts he received.

Ethics investigators have accused Lee of committing 10 counts of violating city laws — two counts of accepting gifts in excess of the legal limit, three counts of failing to report those gifts on his public disclosure forms, four counts of misusing his position and one count of aiding and abetting Englander’s misuse of his position.

In 2016, the legal limit on gifts to city officials was $460 per donor. The following year, it was $470.

In Englander’s 2020 federal indictment, Lee was mentioned not by name, but instead referred to as “City Staffer B.” Despite his legal troubles, he won reelection in 2024.