Judge won’t allow CFPB to vacate settlement in ‘unjust’ Townstone case
Yesterday a federal judge rejected a joint motion to vacate a $105,000 fine paid by Pacific Legal Foundation client Townstone Financial in a settlement, even though the government admits the fine never should have been paid. Vacating the settlement would open a “Pandora’s Box,” the judge said, calling the government’s reversal on the case “breathtaking” but “unpersuasive.”
Both the Consumer Financial Protection Bureau and Townstone Financial, a small Illinois-based lending company, were seeking to vacate their settlement over bogus discrimination charges against Townstone. The charges stem from Townstone’s radio show: In a lawsuit filed by CFPB in 2020, the federal agency claimed Townstone made comments that would “discourage” black applicants from applying for loans. (For example, the hosts described Chicago’s South Side as a “war zone.” The CFPB called that a discriminatory comment because the South Side is a majority-black neighborhood.)
After seven years of dealing with the CFPB’s pursuit (a three-year investigation and four-year lawsuit), Townstone and its owner, Barry Sturner, reached a settlement in 2024 and paid a $105,000 fine. But the case was so clearly a miscarriage of justice that in March 2025, CFPB leaders released a press release calling its own case “abusive” and “unjust.”
“This was a flagrant misuse of government resources to destroy a small business that did nothing wrong,” CFPB Senior Advisor Dan Bishop said. “For the crime of protected political speech, this firm was targeted and harassed for years by this rogue agency.”
The CFPB and Townstone filed a joint motion to vacate the 2024 settlement and return the fine. “We are righting this wrong and protecting the First Amendment,” Bishop said.
But because of this week’s ruling, the settlement and fine will (for now) stand. The judge said he agreed with the American Civil Liberties Union’s argument that vacating the settlement would “erode public confidence in the finality of judgments.”
Steve Simpson, director of Separation of Powers litigation at Pacific Legal Foundation, responded to the ruling:
The court, like many in the media, seemed fixated on the actions of two Trump administrations in this case. Lost in the shuffle is evidence of an agency bent on punishing a company for its speech. We hope Congress is willing to take a closer look at the case. We are evaluating our options, and we look forward to continuing to fight for ultimate justice for our client.
