New York and Illinois Challenge Trajector Medical’s Bankruptcy Over Alleged Fraud

New York and Illinois attorneys general are seeking to block Trajector Medical’s financial restructuring, arguing that money held by the unaccredited veterans’ disability benefits consulting firm is the proceeds of “illegality and fraud,” not corporate property. Their joint filing in the U.S. Bankruptcy Court for the Middle District of Florida threatens Trajector’s attempt to use Chapter 11 protection amid growing civil litigation and regulatory crackdowns across the country.

The state law enforcement officials allege that Trajector amassed massive cash reserves through systemic fraud and predatory billing. During a bankruptcy hearing after their filing, Trajector counsel Edward Peterson declined to answer specific questions about the investigations and said the company denies all allegations.

Central to the states’ investigations is Trajector’s automated dialing system, called “CallBot.” According to state investigators, it systematically called Department of Veterans Affairs (VA) automated benefits hotlines and entered veterans’ Social Security numbers to bypass security protocols. By effectively posing as the veterans, the software allegedly tracked changes in their disability compensation ratings in real time. When it detected an increase, Trajector sent invoices demanding thousands of dollars, whether or not its consulting services had contributed to the higher rating.

Dustin Ingram, a former Army Ranger who served two combat tours in Afghanistan, recalled receiving a $4,500 bill. He refused to pay and accused the company of using unauthorized database access to extract money from veterans. Some clients, however, have reported satisfaction with Trajector’s services in raising their disability ratings.

Trajector acknowledges in its contracts that it lacks VA accreditation. Under Title 38 of the United States Code, only VA-accredited individuals — including those affiliated with recognized Veteran Service Organizations (VSOs), as well as claims agents and attorneys — may assist veterans in preparing and presenting disability claims. Federal statutes require initial claims assistance to be free. Trajector has routinely charged fees of up to $20,000, often demanding five times the monthly value of a benefits increase.

The company expanded as VA disability filings surged, driven partly by the 2022 PACT Act’s expansion of healthcare and benefits for millions of veterans exposed to burn pits and environmental toxins. By 2025, Trajector Medical and its 21 corporate affiliates had more than 450 employees, approximately $280 million in combined annual income and some $405 million in assets. The network includes businesses focused primarily on VA disability claims and a secondary operation processing Social Security claims.

Despite that income, Trajector faced a severe cash-flow crisis. It filed for Chapter 11 five days before the repayment deadline on a five-year, $75 million Deutsche Bank credit facility issued in 2021. Nearly $63 million remained outstanding. The debt also divided co-founders Jim Hill and Gina Uribe over how to handle it; Trajector sued Uribe in May 2026. Uribe, a nurse practitioner with an ownership stake, earns $197,000 a year without bonuses.

Hill, Trajector’s chief executive and a Navy veteran, receives a $600,000 annual base salary and is eligible for performance bonuses of $600,000 each quarter, bringing his potential annual compensation to $3 million. In September 2025, less than a year before the bankruptcy filing, he and his wife bought a $5.75 million oceanfront estate in Saint Augustine, Florida, with six bedrooms and seven and a half bathrooms. Trajector later identified the private residence as its “principal offices” in bankruptcy petitions, though it is not listed as a corporate asset. Its main operational headquarters is 80 miles away in Gainesville. Spokesperson Steve Zenofsky said the home purchase and bankruptcy filing were entirely unrelated.

State regulation has added to the pressure on the business. Trajector suspended services in 23 states where new local laws raised regulatory risks, contributing to a 60 percent revenue decline in the first half of 2026 compared with the previous year. In February, California enacted strict civil penalties for unaccredited entities charging veterans for benefits assistance. A federal judge, by contrast, struck down a Louisiana law in early 2024 that sought to legitimize unaccredited consultants by capping their fees at $12,500.

The differing state approaches follow a change in federal law. In 2006, amid the wars in Iraq and Afghanistan, Congress passed legislation intended to expand veterans’ access to representation. It removed criminal penalties for charging unauthorized fees for initial claims assistance while leaving the prohibition itself in place, stripping federal agencies of their primary enforcement mechanism. Veterans groups say unaccredited firms exploit VA administrative bottlenecks.

National VSOs, including the Veterans of Foreign Wars, have lobbied aggressively for the bipartisan GUARD VA Vets Act, which would restore criminal penalties for unaccredited consultants. Private claims consulting firms have spent heavily lobbying instead for a regulatory framework that would legitimize their services and cap maximum fees. The disagreement has left a long-standing impasse in Washington and a patchwork of state laws.

Trajector’s bankruptcy filing automatically paused two Florida class-action lawsuits accusing it of deceptive trade practices under Section 362 of the U.S. Bankruptcy Code. State law enforcement is exempt from that stay: Section 362(b)(4), the police and regulatory exception, allows attorneys general to continue investigations and initiate civil or criminal proceedings. “The bankruptcy court can’t stop them; they can move forward and keep investigating,” said Jennifer Byrd, an attorney representing veterans in the frozen lawsuits.

If New York and Illinois prosecutors prove that Trajector obtained its assets through systemic fraud, the bankruptcy court could find that the funds are not corporate property available to other creditors. That would not guarantee refunds. Bruce Markell, a former federal bankruptcy judge and professor at the Northwestern University Pritzker School of Law, said corporate bankruptcy law gives no priority to consumer-fraud victims. Veterans owed money would likely be general unsecured creditors, behind secured institutional lenders such as Deutsche Bank in the repayment line.