Thousands of U.S. consumers lost at least $3.8 million after a network of Westmont-based businesses coerced them into paying loan debts that they either didn’t owe or owed to others, state and federal agencies said Wednesday.
Illinois Attorney General Lisa Madigan, at a joint news conference with Todd Kossow, the Federal Trade Commission’s Midwest acting director, estimated that Illinois consumers were scammed out of about $1 million by six local companies, including Stark Recovery, Ashton Asset Management, HKM Funding and Capital Harris Miller & Associates.
The FTC and state of Illinois have filed a lawsuit in U.S. District Court in Chicago against the six companies from Westmont, in DuPage County, and their operators, Hirsh Mohindra, Gaurav Mohindra and Preetesh Patel. Neither the three nor their lawyer could be reached for immediate comment. The lawsuit alleges harassing and abusive conduct; false, deceptive or misleading representations to consumers; and violations of the Illinois Consumer Fraud Act, among other things.
Madigan and the FTC said a federal court has temporarily halted the businesses’ operations.
The complaint said that, since at least 2011, the defendants targeted consumers who had received, inquired about or applied for payday loans, typically online.
The defendants then allegedly called consumers, told them they were delinquent on payday loans or other short-term debt, and pressured them into paying debts they either did not owe or that the defendants had no authority to collect.
The FTC and Madigan’s office said they’re not certain how the Westmont parties got consumers’ detailed financial and personal information; possible theories are that the payday loan sites might have been bogus or the sites may have been lead generators that sold the information to unscrupulous parties.
The defendants allegedly used that detailed information, including Social Security numbers, to convince consumers that they immediately owed money to them when in fact they didn’t.
They also allegedly threatened them with lawsuits or arrest and falsely said they would be charged with “defrauding a financial institution” and “passing a bad check.”
Besides harassing consumers with phone calls, the defendants disclosed debts to the consumers’ relatives, friends and employers, the lawsuit said.
In response to the defendants’ repeated calls and alleged threats, the lawsuit said, many consumers paid the debts, even though they may not have owed them, because they believed the defendants would follow through on their threats or they simply wanted to end the harassment.
Tampa, Fla., resident Joshua Rozman, who was at the news conference, said he had taken out two payday loans to pay the rent when one roommate moved out and another lost his job.
In June 2015, he said he began receiving calls from Stark, which claimed that he had defaulted on a $300 payday loan that he took out a few months earlier. The callers said he now owed $800. They knew all of his personal information and threatened legal action.
Rozman said he paid Stark the $230 he had in his bank account and then became suspicious. He checked with his lender and found he didn’t owe anything. The company then got more aggressive and eventually began contacting his sister. He eventually filed a complaint with the FTC
At the request of the Federal Trade Commission and the Illinois Attorney General, a federal court has temporarily halted a Chicago-area operation that allegedly threatened and intimidated consumers to collect phantom payday loan “debts” they did not owe, or did not owe to the defendants. The defendants also allegedly illegally provided portfolios of fake debt to other debt collectors – this is the FTC’s first case alleging that practice.
“It’s illegal to harass people to pay debts they clearly don’t owe, and to sell phony debts to other debt collectors,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We’re proud to partner with the Illinois Attorney General to halt these egregious debt collection practices.”
“Phantom debt collection is one of the most brazen scams today,” Illinois Attorney General Lisa Madigan said. “With the FTC, we are working to protect consumers by shutting down these scam operations.”
According to the complaint, since at least 2011, the defendants used a host of business names to target consumers who obtained or applied for payday or other short-term loans, pressuring them into paying debts they either did not owe or that the defendants had no authority to collect.
The complaint charges that the defendants called consumers and demanded immediate payment for supposedly delinquent loans, often armed with consumers’ sensitive personal and financial information. Defendants also allegedly threatened consumers with lawsuits or arrest, and falsely said they would be charged with “defrauding a financial institution” and “passing a bad check” – even though failing to pay a private debt is not a crime. In addition, the complaint claims that since 2015, the defendants have held themselves out as a law firm with authority to sue and obtain substantial judgments against delinquent consumers.
The defendants also allegedly harassed consumers with improper phone calls, disclosed debts to relatives, friends and co-workers, failed to notify consumers of their right to receive verification of the purported debts, and failed to register as a debt collector in Illinois, as required by state law.
The complaint notes that in response to the defendants’ repeated calls and alleged threats, many consumers paid the debts, even though they may not have owed them, because they believed the defendants would follow through on their threats or they simply wanted to end the harassment.
In addition to illegal collection allegations, the defendants are charged with providing bogus payday loan debt portfolios to other debt buyers, who then tried to collect the fake debts. According to the complaint, the defendants represented that the portfolios included delinquent debts owed to specified lenders and that the defendants had the right to market those lenders’ debts. However, those lenders had not made loans to the consumers identified in the portfolios, or authorized the defendants to market any of their debts.
The defendants are Stark Law LLC, also doing business as Stark Recovery; Stark Legal LLC; Ashton Asset Management Inc.; CHM Capital Group LLC, also d/b/a Capital Harris Miller & Associates; HKM Funding Ltd.; Pacific Capital Holdings Inc., formerly known as Charles Hunter Miller & Associates Inc. and also d/b/a Pacific Capital; Hirsh Mohindra, also d/b/a Ashton Lending LLC; Gaurav Mohindra; and Preetesh Patel.
The FTC and the Illinois Attorney General’s Office thank the Village of Westmont Police Department and Better Business Bureau of Chicago and Northern Illinois for their valuable assistance with this matter.
The Minnesota Department of Commerce took eight actions. It imposed fines of up to $50,000 against Alliant Capital Management LLC, Premier Recovery Group JD and Associates, Mountain West Legal Solutions, Credence Resource Management LLC, Selene Finance, and Credit Protection Association for various violations, including failing to obtain a collection agency license, failing to properly register collectors, and using deceptive, abusive, or unlawful collection tactics. It also obtained a court order placing Weinerman and Associates into receivership for improperly handling client funds, failing to maintain a license, and other violations.
The Colorado Department of Law entered into a stipulated final order against Collecto Inc., d/b/a EOS CAA, imposing a $99,000 penalty for violating notice requirements for consumers and improper credit reporting.
The Pennsylvania Attorney General’s office filed an Assurance of Voluntary Compliance with Foot and Ankle Surgery Center LLC, providing for $7,000 in civil penalties plus costs of investigation for allegedly unlawful collection notices that falsely indicated that they were official court documents or legal papers.
The Indiana Attorney General’s Office entered into an Assurance of Voluntary Compliance with RoTech Holdings Ltd. to resolve allegations that the respondents unlawfully harassed and deceived consumers. The AVC prohibits RoTech from collecting debt from Indiana consumers, and orders it to pay nearly $5,000.
The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division. The court granted the FTC’s request for a temporary restraining order on March 22, 2016.
By: Christopher Koegel, Assistant Director, Division of Financial Practices | Mar 21, 2016 11:19AM
We’ve learned that portfolios of alleged payday loan debts serviced by AMG Services are circulating in the debt collection marketplace. The alleged lenders are USFastCash, 500FastCash, OneClickCash, Ameriloan, United Cash Loans, AdvantageCashServices, and StarCashProcessing. But these alleged debts are bogus. The consumers do not owe the alleged debts, and the lenders have never authorized, assigned, or sold any of their loans for third-party collection.
There can be no doubt that these loans are bogus. The former general counsel of AMG Services signed a declaration under penalty of perjury in the FTC’s lawsuit against Delaware Solutions, stating that USFastCash, 500FastCash, OneClickCash, Ameriloan, United Cash Loans, AdvantageCashServices, and StarCashProcessing loans have never been placed with, or sold to, any third party for collection.
So, what does all of that mean? If you are in possession of one of these portfolios, do not attempt to collect these debts, or try to sell the portfolio to anyone else. If someone tries to sell a portfolio of these debts to you, do not buy it.
If you do attempt to collect on these debts or sell them to someone else, you will likely be violating either the Fair Debt Collection Practices Act, the Federal Trade Commission Act, or both. Indeed, the FTC has already sued one debt collection business for, among other things, continuing to collect on one of these portfolios after being informed by AMG that the loans were bogus.
If you have any information about portfolios of purported USFastCash, 500FastCash, OneClickCash, Ameriloan, United Cash Loans, AdvantageCashServices, or StarCashProcessing payday loan debts being bought, sold, collected upon, or peddled, please contact Michael Goldstein at firstname.lastname@example.org(link sends e-mail) or 202.326.3673.
Defendants Bombarded Consumers with Millions of Unwanted Illegal Recorded Calls
The Federal Trade Commission has brought a federal court action to stop a telemarketing operation that allegedly made illegal robocalls promising consumers energy savings, in an effort to generate leads to sell to solar panel installation companies.
According to the complaint, defendants Francisco Salvat and his companies placed more than 1.3 million illegal pre-recorded telemarketing calls to consumers with phone numbers on the Do Not Call Registry. The defendants allegedly claimed to be attempting to help consumers with their energy costs.
“Mr. Salvat’s companies ignored the Do Not Call Registry and made illegal robocalls,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Breaking the law isn’t a great way for a company to introduce itself to potential customers.”
According to the complaint, the defendants’ prerecorded calls made statements such as: “This is an urgent call about your energy bill,” and “stop the 14% increase coming soon.” Consumers were told to “push one” to lower their electric bill. Those who did were transferred to a telemarketer who asked if the consumer was interested in solar panels.
If the consumer said yes, the telemarketer scheduled an appointment with a private solar installation company and sold the consumer’s information to that company as a customer lead. When consumers asked the defendants not to call them again, the FTC alleges their requests were often ignored.
Based on this conduct, the FTC charged the defendants with violating the Telemarketing Sales Rule by: 1) calling consumers whose numbers are on the DNC Registry; 2) continuing to call consumers who had previously asked not to be called; 3) failing to transmit accurate caller-ID information; and 4) making illegal robocalls. The FTC is seeking a federal court order permanently barring the defendants from the illegal conduct, as well as civil penalties for their telemarketing violations.
The Commission vote to authorize the staff to refer the civil penalty complaint to the U.S. Department of Justice was 4-0. The Department of Justice filed the complaint on behalf of the Commission in U.S. District Court for the Central District of California against defendants: KFJ Marketing, LLC; Sunlight Solar Leads, LLC; Go Green Education; and Francisco J. Salvat, individually and as an officer of each of the three businesses.
NOTE: The Commission refers a complaint for civil penalties to the DOJ for filing when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.
“These defendants bought sensitive personal information from data brokers and used it to steal people’s money,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Misusing sensitive data causes real harm to consumers, and I’m pleased that the court banned the defendants from this conduct.”
The court has imposed a $43,083,720 judgment against Ideal Financial Solutions and its subsidiaries, Steven Sunyich, Christopher Sunyich, Michael Sunyich, and Melissa Sunyich Gardner, and a $36,575,542 judgment against Jared Mosher. The court banned the ringleaders, Jared Mosher, Steven Sunyich and Christopher Sunyich, from marketing, selling and handling any credit-related products or services. It banned all of the defendants from collecting or disclosing consumer account numbers except for transactions expressly authorized by the consumer.
Settlements entered in June 2014 banned Kent Brown and Shawn Sunyich from placing unauthorized charges on consumer financial accounts and collecting and disclosing consumer financial information without the consumer’s express consent. The orders imposed suspended $25 million judgments against each defendant, and Brown was required to liquidate his assets and turn them over to the FTC.
The U. S. District Court for the District of Nevada entered the final judgment against the remaining defendants on February 23, 2016.
Should You Cosign for Your Kid’s College Loans?
Caitlin Kelly 6:30 AM ET (Money)
Only if you know exactly what you’re getting into.
It isn’t easy to get a loan when you’re young and have a low or nonexistent credit score—a situation faced by many college students. So if students need to take out private loans for college, they usually have to ask their parents to cosign for them.
If you’re a parent, should you do it?
Maybe, but only if you know exactly what you’re getting yourself into and if you’re reasonably certain that your child will be able to handle the loan payments when they come due.
“The parent should be financially, mentally, and emotionally prepared to pay back the loan in the case of non-payment, regardless of the situation,” says Jeff Jones, a certified financial planner with Longview Financial Advisors in Huntsville, Ala. “If the parent’s financial situation can’t accommodate the full loan, then cosigning should not be considered.”
That isn’t always an easy conversation, of course.
“Saying no to your children can be difficult at times but if the loan (or non-repayment of it) puts your own financial future at risk then you must say no,” Jones says.
He adds, “When everything goes as planned and the child pays back the loan in full, there isn’t much of a story to tell. When it goes wrong, and the parent has to pay back that loan, relationships are put at risk.”
Another risk to bear in mind is that your financial situation could change for the worse between the time you sign and the day you have to start repaying. You might, for example, lose your job, face costly medical bills, or find yourself forced into retirement years earlier than you’d planned.
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You can’t necessarily assume that your child will be in a financial position to make the payments, either. But one way or another, the lender will want its money and probably come knocking.
“It’s not like the child is the primary borrower and the institution will go after the child first and then the co-signer is on the hook later,” notes Michael Garry, a financial planner in Newtown, Pa. “The cosigner is on the hook immediately—and the scary thing is that they often don’t know when the child misses that first or second or third payment. Some of the damage is done before the cosigner even knows about it.”
Graduates who are having difficulty making their student loan payments do have a number of options. In the case of federal student loans, which don’t require a cosigner, they may be able to sign up for a repayment plan that ties their loan payments to their discretionary income. With private loans, they may be able to refinance at a more attractive rate; they can also refinance federal loans, but they will be giving up some consumer protections, such as the ability to enroll in an income-based repayment plan and the possibility of having the remainder of the loan being forgiven if they work for a certain number if years in a public service job.
Parents who cosign may also have an option to end their obligation after their child has made a certain consecutive number of on-time payments and passed a credit check, if the loan contract allows it. But while this process, called “cosigner release,” has been advertised by many lenders, the Consumer Financial Protection Bureau (CFPB) notes, it has proved disappointing in practice. According to a 2015 CFPB report, more than 90% of people who applied for cosigner release were rejected by their lenders.
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