EXHIBIT A

Case: 1:20-cv-04176 Document #: 135-1 Filed: 11/01/24 Page 1 of 14 PageID #:849
IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Bureau of Consumer Financial Case No. 1:20-cv-04176 

Protection, 

 

Plaintiff,

 v. Judge Franklin V. Valderrama 

 Magistrate Judge Heather K. McShain 

Townstone Financial, Inc., 

 

Defendant.

STIPULATED FINAL JUDGMENT AND ORDER

The Bureau of Consumer Financial Protection (Bureau) commenced this civil 

action against Townstone Financial, Inc. (Townstone) on July 15, 2020, to obtain 

injunctive and monetary relief and civil penalties. The November 25, 2020 Amended 

Complaint alleges that Townstone violated the Equal Credit Opportunity Act 

(ECOA), 15 U.S.C. §§ 1691–1691f, Regulation B, 12 C.F.R. § 1002.4(b), and the 

Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. § 5536(a)(1)(A), in 

connection with Townstone’s offering or provision of Mortgage Loans. 

The Bureau and Townstone agree to entry of this Stipulated Final Judgment 

and Order (Order), without adjudication of any issue of fact or law, to settle and 

resolve all matters in dispute arising from the conduct alleged in the Amended 

Complaint. 

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FINDINGS

1. This Court has jurisdiction over the parties and the subject matter of 

this action. 

2. Townstone neither admits nor denies the allegations in the Amended 

Complaint, except as specified in this Order. For purposes of this Order, Townstone 

admits the facts necessary to establish the Court’s jurisdiction over it and over the 

subject matter of this action. 

3. Townstone waives all rights to seek judicial review, or otherwise 

challenge or contest the validity of, this Order and any claim it may have under 

the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of 

this action to the date of this Order. Each Party agrees to bear their own costs and 

expenses, including, without limitation, attorneys’ fees. 

4. Entry of this Order is in the public interest. 

DEFINITIONS

5. The following definitions apply to this Order:

a. “Board” means Townstone’s duly-elected and acting Board of 

Directors. 

b. “Consumer Financial Product or Service” is synonymous in meaning 

and equal in scope to the definition of the term, as of the Effective 

Date, in section 1002(5) of the CFPA, 12 U.S.C. § 5481(5), and, 

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subject to applicable restrictions contained in the CFPA, includes but 

is not limited to:

i. extending credit and servicing loans, including acquiring, 

purchasing, selling, brokering, or other extensions of credit (other 

than solely extending commercial credit to a person who 

originates consumer credit transactions).

c. “Effective Date” is the date on which the Order is entered by the

Court.

d. “Enforcement Director” means the Assistant Director of the Office 

of Enforcement for the Consumer Financial Protection Bureau, or 

their delegee.

e. “Mortgage Loan” means a loan secured by residential real property 

or a home improvement loan, 12 U.S.C. § 2802(2).

f. “Related Consumer Action” means a private action by or on behalf 

of one or more consumers or an enforcement action by another 

governmental agency brought against Townstone based on 

substantially the same facts as described in the Amended Complaint.

g. “Townstone” means Townstone Financial, Inc. and its successors 

and assigns.

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CONDUCT PROVISIONS

I.

IT IS ORDERED that:

6. Townstone and its officers, agents, servants, and employees, and all 

other persons in active concert or participation with it who receive actual notice of 

this Order, whether acting directly or indirectly, may not engage in any acts or 

practices that violate ECOA, 15 U.S.C. § 1690 et seq., in connection with offering or 

providing Mortgage Loans. 

7. Within 60 days of the Effective Date, Townstone must take the 

following affirmative actions:

a. Maintain a compliance management system that is consistent with 

guidance provided in the Bureau’s Supervision and Examination 

Manual and is reasonably designed to ensure Townstone’s operations 

comply with ECOA;

b. Create, implement, and maintain policies and procedures to test 

Townstone’s compliance with the ECOA; and

c. Require ongoing education and training in applicable federal 

consumer protection laws and the terms of this Order for all 

appropriate employees, with training tailored to individual job duties 

and other roles within the company.

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II.

Role of the Board and Executives 

8. Townstone’s Board has the ultimate responsibility for ensuring that 

Townstone complies with this Order.

9. Townstone’s Board and Chief Executive Officer must: 

a. Authorize whatever actions are necessary for Townstone to assess 

whether Townstone is complying with each paragraph and 

subparagraph of this Order; and 

b. Authorize whatever actions, including corrective actions, are 

necessary for Townstone to fully comply with each paragraph and 

subparagraph of this Order. 

MONETARY PROVISIONS

III. 

Order to Pay Civil Money Penalty 

IT IS FURTHER ORDERED that:

10. Under § 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of

the violations of law alleged in the Amended Complaint, and taking into account the 

factors in 12 U.S.C. § 5565(c)(3), Townstone must pay a total civil money penalty of 

$105,000 to the Bureau. 

11. Within 30 days of the Effective Date, Townstone must pay the 

civil money penalty by wire transfer to the Bureau or the Bureau’s agent in 

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compliance with the Bureau’s wiring instructions.

12. The civil money penalty paid under this Order will be deposited in the 

Civil Penalty Fund of the Bureau as required by Section 1017(d) of the CFPA, 12 

U.S.C. § 5497(d).

13. Townstone must treat the civil money penalty paid under this Order as 

a penalty paid to the government for all purposes. Regardless of how the Bureau 

ultimately uses those funds, Townstone may not:

a. claim, assert, or apply for a tax deduction, tax credit, or any 

other tax benefit for any amount of the civil money penalty paid under 

this Order; or

b. seek or accept, directly or indirectly, reimbursement or 

indemnification from any source, including but not limited to payment 

made under any insurance policy, with regard to any civil money 

penalty paid under this Order. This paragraph will not prevent 

Townstone from receiving capital contributions from its President and 

Chief Executive, Barry Sturner, to enable Townstone to pay the civil 

money penalty to the Bureau under the terms of this Order.

14. In the event of any default on Townstone’s obligation to make payment

under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will 

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accrue on any outstanding amounts not paid from the Effective Date to the date of 

payment, and will immediately become due and payable.

15. Townstone relinquishes all dominion, control, and title to the funds paid

under this Order to the fullest extent permitted by law and no part of the funds may 

be returned to Townstone.

16. The facts alleged in the Amended Complaint will be taken as true and 

be given collateral estoppel effect, without further proof, in any subsequent action by 

the Bureau to enforce the Order or its rights to any payment or monetary judgment 

under the Order.

17. Townstone acknowledges that its taxpayer-identification number, which 

Townstone previously submitted to the Bureau, may be used for purposes of 

collecting and reporting on any delinquent amount arising out of this Order, in 

accordance with 31 U.S.C. § 7701.

18. Within 30 days of the entry of a final judgment, order, or settlement in

a Related Consumer Action, Townstone must notify the Enforcement Director of the 

final judgment, order, or settlement in writing. That notification must indicate the 

amount of redress, if any, that Townstone paid or is required to pay to consumers and 

describe the consumers or classes of consumers to whom that redress has been or 

will be paid. 

19. To preserve the deterrent effect of the civil money penalty in any

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Related Consumer Action, Townstone may not argue that Townstone is entitled to, 

nor may Townstone benefit by, any offset or reduction of any monetary remedies 

imposed in the Related Consumer Action because of the civil money penalty paid in 

this action or because of any payment that the Bureau makes from the Civil Penalty 

Fund. If the court in any Related Consumer Action offsets or otherwise reduces the 

amount of compensatory monetary remedies imposed against Townstone based on 

the civil money penalty paid in this action or based on any payment that the Bureau 

makes from the Civil Penalty Fund, Townstone must, within 30 days after entry of a 

final order granting such offset or reduction, notify the Bureau and pay the amount of 

the offset or reduction to the U.S. Treasury. Such a payment will not be considered 

an additional civil money penalty and will not change the amount of the civil money 

penalty imposed in this action. 

COMPLIANCE PROVISIONS

IV. 

Reporting Requirements

IT IS FURTHER ORDERED that:

20. Townstone must notify the Bureau of any development that may affect 

compliance obligations arising under this Order, including but not limited to a 

dissolution, assignment, sale, merger, or other action that would result in the 

emergence of a successor company; the creation or dissolution of a subsidiary, 

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parent, or affiliate that engages in any acts or practices subject to this Order; the 

filing of any bankruptcy or insolvency proceeding by or against Townstone; or a 

change in Townstone’s name or address. Townstone must provide this notice at least 

30 days before the development or as soon as practicable after learning about the 

development, whichever is sooner.

21. Within 7 days of the Effective Date, Townstone must:

a. designate at least one telephone number and email, physical, and 

postal address as points of contact, which the Bureau may use to 

communicate with Townstone; and

b. identify all businesses engaged in the provision of Consumer 

Financial Products or Services for which Townstone is the majority 

owner, or that Townstone directly or indirectly controls, by all of 

their names, telephone numbers, and physical, postal, email, and 

internet addresses, and describe the activities of each such business, 

including the products and services offered, and the means of 

advertising, marketing, and sales. 

22. Townstone must report any change in the information required to be 

submitted under Paragraph 21 at least 30 days before the change or as soon as 

practicable after learning about the change, whichever is sooner.

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V.

Order Distribution and Acknowledgment

IT IS FURTHER ORDERED that:

23. Within 7 days of the Effective Date, Townstone must submit to the

Enforcement Director an acknowledgment of receipt of this Order, sworn under 

penalty of perjury. 

24. Within 30 days of the Effective Date, Townstone must deliver a copy 

of this Order to each of its board members and executive officers.

25. Townstone must deliver a copy of this Order to any business entity 

resulting from any change in structure referred to in Section IV, Reporting 

Requirements, and any future board members and executive officers, before they 

assume their responsibilities. 

26. Townstone must secure a signed and dated statement acknowledging 

receipt of a copy of this Order, within 30 days of delivery, from all persons receiving 

a copy of this Order under this Section.

27. Ninety days from the Effective Date, Townstone must submit to the 

Bureau a list of all persons and their titles to whom this Order has been delivered 

under the Section of this Order titled “Order Distribution and Acknowledgment” and 

a copy of all signed and dated statements acknowledging receipt of this Order under 

Paragraph 26.

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VI.

Recordkeeping

IT IS FURTHER ORDERED that:

28. Townstone must maintain or create the following business records: All 

documents and records necessary to demonstrate full compliance with each provision 

of this Order.

29. All documents and records must be maintained in their original 

electronic format. Data should be centralized, and maintained in such a way that 

access, retrieval, auditing and production are not hindered.

30. Townstone must make the documents identified in Paragraph 28

available to the Bureau upon the Bureau’s request.

VII.

Notices

IT IS FURTHER ORDERED that:

31. Unless otherwise directed in writing by the Bureau, Townstone must

provide all submissions, requests, communications, or other documents relating to 

this Order in writing, with the subject line, CFPB v. Townstone Financial, Inc., Case 

No. 1:20-cv-04176, and send them by email to Enforcement_Compliance@cfpb.gov:

ATTN: Enforcement Director

Bureau of Consumer Financial Protection 

Office of Enforcement 

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VIII.

Compliance Monitoring

IT IS FURTHER ORDERED that:

32. Within 14 days of receipt of a written information request from the 

Bureau, Townstone must submit the requested information, which must be made 

under penalty of perjury; provide sworn testimony; or produce documents. 

33. For purposes of this Section, the Bureau may communicate directly 

with Townstone, unless Townstone retains counsel related to these communications. 

34. Townstone must permit Bureau representatives to interview any 

employee or other person affiliated with Townstone who has agreed to such an 

interview regarding: (a) this matter or (b) compliance with the Order. The person 

interviewed may have counsel present.

35. Nothing in this Order will limit the Bureau’s lawful use of compulsory 

process, under 12 C.F.R. § 1080.6.

IX.

Administration

36. The requirements of this Order will remain in effect for five years. 

37. Should Townstone seek to transfer or assign all or part of its operations

that are subject to this Order, Townstone must, as a condition of the transfer or 

assignment, obtain the written agreement of the transferee or assignee to comply 

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with all applicable provisions of this Order. Nothing in this Order will be construed 

to prevent Townstone from dissolving or ceasing its operations. 

X. 

Retention of Jurisdiction

IT IS FURTHER ORDERED that:

38. The Court will retain jurisdiction of this matter for the purpose of

enforcing this Order. All pending motions are hereby denied as moot. 

IT IS SO ORDERED

DATED this _____ day of ________________ 2024. 

___________________________________________ 

Hon. Franklin V. Valderrama 

UNITED STATES DISTRICT JUDGE 

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