WHO GETS IT?: $144MM Up For Grabs as Merchants Bank of Indiana Sues Account Holders and CFPB In Unusual Interpleader Action

Add a comment

Really fun one for you all ahead of the weekend.

A guy named J. PAUL REDDAM apparently holds bank accounts through his various entities with over $144MM on deposit at Merchants Bank of Indiana.

Reddam was apparently sued by the CFPB– along with his entities Cashcall, Inc. Absolutely Zero Corporation, and others–and lost to the tune of over $130MM.

He appealed. He lost again.

Now he’s pursuing a motion to vacate judgment. But the CFPB has had enough. It has knocked on Merchants Bank’s door and asked for the money it is owed.

Reddam has directed the bank not to pay.

Both sides are threatening legal action.

What’s the third-largest bank in Indiana to do?

Sue everybody in sight to get clarity.

In a new lawsuit in interpleader the bank has essentially agreed to pay the money to whoever the court determines is entitled to it. (Usually a plaintiff in interpleader has to deposit the money with the court– but Merchants is asking to hold on to it for the time being. We’ll see how it goes.)

The lawsuit notes inconsistent demands. The CFPB has directed payment since more than 60 days has run since the Supreme Court denied cert to review the Ninth Circuit’s ruling against Cashcall. See CFPB v. CashCall, Inc., 135 F.4th 683 (9th Cir. 2025), cert. denied, 224 L. Ed. 2d 160 (Mar. 2, 2026).

But Cashcall’s lawyers sent a letter saying they “intended to file a motion pursuant to Federal Rule of Civil Procedure 60(b) to vacate the Amended Judgment and demanding that Merchants “maintain the status quo and refrain from taking any action to transfer, liquidate, close, re-register, or otherwise dispose of any collateral in or associated with the Pledged Account” absent joint instructions or a court order.”

Yep, pretty inconsistent.

Merchants’ GC allegedly told the CFPB of the inconsistency and the CFPB threatened to take “all appropriate actions” against Merchant (which is not a very nice thing to say to a bank caught in the middle here.) So the bank just sued everybody and will let the court figure it out.

Filing is here for the curious: Interpleader Complaint

A complaint in interpleader is a nice move here by the bank. We used to file these all the time back when I did bank operations cases– been a little while so nice to get a refresher.

The larger issue, of course, is just how badly a regulator like the CFPB can hurt you. One day you have $144MM in the bank– the next your bank is suing you to figure out who owns the money in your account.

Be safe and smart. If you have questions about regulatory obligations be sure to work with GOOD and CAPABLE counsel. Cashcall was on the wrong side of this equation– and this is where they ended up.

Chat soon.

Discover more from TCPAWorld

Subscribe to get the latest posts sent to your email.

Categories:

Published by Eric "Czar" Troutman

The Czar of TCPAWorld Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance. He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems. Eric has built a national litigation practice based upon deep experience, rigorous analysis and extraordinary responsiveness. Eric and his team feel equally at home litigating multibillion dollar telecommunications class actions in federal court as they do developing and executing national litigation strategies for institutions facing an onslaught of individual TCPA matters. They thrive in each of these roles – delivering consistently excellent results – while never losing sight of the client experience. While many firms now tout TCPA expertise, Eric has been there from the beginning. He built one of the country’s first TCPA-only defense teams and began serving as national TCPA counsel for his clients nearly a decade ago. This perspective allows him to swiftly develop the right litigation strategies for dealing with recurring problems, without wasting time on tactics that are bound to fail. Eric’s rich historical perspective and encyclopedic knowledge of the TCPA landscape also make him an invaluable resource to institutional compliance teams struggling to comply with the shifting regulatory landscape. No task is too small – or too big. Indeed, Eric and his team have helped build TCPA-compliant systems and processes for some of the largest and most complex corporate entities in the country. He commonly works with in-house compliance counsel to build and implement enterprise and business-line specific TCPA solutions, performs TCPA audits and drafts and reviews proposed TCPA policies and procedures. He and his team also have the technical expertise necessary to assist call centers seeking to develop TCPA-resistant call path architecture or to modify existing telephony and software integration to better insulate from potential TCPA exposure. Eric has built a reputation for thought leadership. An avid blogger and speaker, he has been at the forefront of the industry’s effort to push for clarity and a return to sanity for the TCPA for years. He was selected to advocate for the financial services industry on important TCPA issues before the Federal Communications Commission and co-authored the nation’s only comprehensive practice guide on TCPA defense. In his spare time, Eric leads defense teams representing banks and other financial services companies in consumer finance litigation matters. He has experience representing clients in UCC, TILA, RESPA FCRA, CCRA, CLRA, FDCPA, RFDCPA and FCCPA claims, as well as in fraud and bank operations issues.

Leave a Reply