Starcmpt Case
Starcmpt Case
Starcmpt Case
JONATHAN E. NUECHTERLEIN
General Counsel
ROBIN E. EICHEN
KAREN DAHLBERG
BRIAN N. LASKY
Federal Trade Commission
One Bowling Green, Suite 31 8
New York, NY I 0004
Telephone: (21 2) 607-2829
Attorneys for Plaintiff
FEDERAL TRADE COMMISSION
ERIC T. SCHNEIDERMAN
Attorney General ofthe State ofNew York
JAMES M. MORRISSEY
Assistant Attorney General
350 Main Street, Suite 300A
Buffalo, NY 14202
Telephone: (716) 853-8471
Attorney for Plaintiff
STATE OF NEW YORK
Plaintiffs, Case No . _ __ _ _
v.
Defendants,
Plaintiffs the Federal Trade Commission ("FTC") and The People of the State ofNew
York ("State ofNew York") (collectively, "Plaintiffs") for their Complaint allege:
I. The FTC brings this action under Section 13(b) of the Federal Trade Commission
Act ("FTC Act''), 15 U.S.C. § 53(b}, and Section 814 ofthe Fair Debt Collection Practices Act
relief, rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement
of ill-gotten monies, and other equitable relief for Defendants' acts or practices in violation of
Section 5(a) ofthe FTC Act, 15 U.S.C. § 45(a), and in violation of the FDCPA, 15 U.S.C.
2. The State ofNew York, by and through the Office of the Attorney General
("OAG"), brings this action under New York Executive Law§ 63(12) and New York General
Business Law Article 22-A, § 349, and Article 29-H, § 602, to obtain damages, restitution,
injunctive and equitable relief and penalties ofup to $5,000 for each violation of General
3. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a).
and 1345, and 15 U.S.C. "§§ 45(a), 53(b), and 16927. Subject matter jurisdiction is conferred
upon this Court with respect to the supplemental state law claims of the State of New York by 28
u.s.c. § 1367.
4. Venue is proper in this district under 28 U.S.C. § 139 l{b) and {c), and 15 U.S.C.
§ 53(b).
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 4 of 28
PLAINTIFFS
statute. 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) ofthe FTC Act, 15 U.S.C. § 45(a),
which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also
enforces the FDCPA, 15 U.S.C. §§ 1692-1692p, which prohibits deceptive, abusive, and unfair
6. The FTC is authorized to initiate federal district court proceedings, by its own
attorneys, to enjoin violations of the FTC Act and the FDCPA, and to secure such equitable relief
the refund of monies paid, and the disgorgement of ill-gotten monies. t 5 U.S.C. §§ 53(b),
56(a)(2)(A), and 1692/(a). Section 814 ofthe FDCPA further authorizes the FTC to use all of
the functions and powers of the FTC under the FTC Act to enforce compliance by any person
7. The State ofNew York, by its Attorney General, is authorized to take action to
enjoin (i) repeated and persistent fraudulent and illegal business conduct under New York
Executive Law§ 63(12); (ii) deceptive business practices under New York General Business
Law § 349; and (iii) illegal debt collection practices under General Business Law § 602; and to
obtain legal or equitable relief. including rescission or reformation of contracts, restitution, the
appropriate.
DEFENDANTS
U.S.C. § 1692a(6).
2
Case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 5 of 28
be owed or due, or agents of principal creditors, as defined in Section 600 ofNew York General
Business Law.
Corporate Defendants
10. Defendant 4 Star Resolution LLC ("4 Star Resolution"), also doing business as
Consumer Recovery Group, Four Star Capital Services, Four Star Resolution Services, LLC, and
FS Mediation Group, is a Colorado limited liability company that has held itself out as doing
business from addresses including the following: 1839 Seneca Street, Buffalo, New York; 2400
Seneca Street, Buffalo, New York; 3735 Genesee Street, Cheektowaga, New York; 2800 Walden
Avenue, Cheektowaga,.New York; 4779 Transit Road, Suite 8, Depew, NY; and 4 Robert Speck
Parkway~ Mississaugua, Ontario, Canada. 4 Star Resolution transacts or has transacted business
corporation that has held itself out as doing business from 1839 Seneca Street, Buffalo, New
York. Profile Management transacts or has transacted business in this district and throughout the
United States.
Service"), also doing business as Financial Mediation Group, is a New York limited liability
company that has held itself out as doing business from addresses including the following: 3735
Genesee Street. Cheektowaga, New York; 3806 Union Road, Cheektowaga, New York; and
3843 Union Road, Cheektowaga, New York. International Recovery Service transacts or has
13. Defendant Check Solutions Services Inc. ("Check Solutions Services"), also
doing business as County Check Services, is a Colorado corporation that has held itself out as
3
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 6 of 28
doing business from addresses including the following: 655 Pullman Avenue, Rochester, New
York; 6039 Fallsview Boulevard, Suite 2000, Niagara Falls, Ontario, Canada; and 147-7000
McLeod Road, Niagara Falls, Ontario, Canada. Check Solutions Services transacts or has
14. Defendant Check Fraud Service LLC ("Check Fraud Service"), formerly known
as Check Fraud Services, LLC, also doing business as Check Services and CFS & Associates, is
a Georgia limited liability company that has held itself out as doing business from addresses
including the following: 2905 Jordan Court, Suite B-205, Alpharetta, Georgia; 178 Alpharetta
Highway, Suite 375, Alpharetta, Georgia; 3070 Windward Plaza, Suite F295, Alpharetta,
Georgia, and 12850 Highway 9, Suite 600, Alpharetta, Georgia. Check Fraud Service transacts
or has transacted business in this aistrict and throughout the United States.
15. Defendant Merchant Recovery Service, Inc. ("Merchant Recovery Service"), also
doing business as Mandatory Arbitration Services and POL Recovery Services, is a North
Carolina corporation that has held itself out as doing business from addresses including the
following: 85 I 4 McAlpine Park Drive, Suite 280, Charlotte, North Carolina and an apartment
building in Charlotte, North Carolina. Merchant Recovery Service transacts or has transacted
Management") is a New York limited liability company that was formed on or about March 3 1,
2014, and has held itself out as doing business from addresses including the following: I 839
Seneca Street, Buffalo, New York and 7900 East Union A venue, Suite I 100, Denver, Colorado.
Fourstar Revenue Management transacts or has transacted business in this district and throughout
4
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 7 of 28
Individual Defendants
Service, Check Solutions Services, Check Fraud Service, Merchant Recovery Service, and
Check Solutions Services, Check Fraud Service, and Fourstar Revenue Management. He is or
has been a signatory for the deposit and/or checking accounts at Bank of America, N.A. ("Bank
of America") and RBS Citizens, N.A. ("RBS Citizens") for 4 Star Resolution, Profile
Management, International Recovery Service, Merchant Recovery Service, and Check Fraud
Service. In addition, he is or has been on the payroll of 4 Star Resolution, Profile Management,
International Recovery Service, and Check Fraud Service, and received payments from Merchant
Recove(y Service. Thomas shared or has shared an office with Defendant Maurice Sessum at
1839 Seneca Street, Buffalo, New York, where 4 Star Resolution, Profile Management, and
Fourstar Revenue Management conducted business, and where many ofthe unlawful debt
18. At times material to this Complaint, acting alone or in concert with others,
Thomas has formulated, directed, controlled, had the authority to control, or participated in the
acts and practices of the Corporate Defendants, including the acts and practices set forth in this
Complaint. Thomas resides in this district and, in connection with the matters alleged herein,
transacts or has transacted business in this district and throughout the United States.
manager, and/or officer of some or all of the Corporate Defendants, including 4 Star Resolution,
Profile Management, International Recovery Service, and Check Fraud Service. Sessum formed
Check Fraud Service With Thomas. Sessum is or has been a signatory on deposit and/or
5
Case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 8 of 28
checking accounts for 4 Star Resolution, Profile Management, and International Recovery
Service at Bank of America and RBS Citizens. In addition, he is or has been on the payroll of 4
Star Resolution, Profile Management, International Recovery Service, and Check Fraud Service,
and received payments from Merchant Recovery Service. Sessum shares or has shared an office
with Thomas at 1839 Seneca Street, Buffalo, New York, where 4 Star Resolution, Profile
Management, and Fourstar Revenue Management conducted business, and where many of the
20. At times material to this Complaint, acting alone or in concert with others,
Sessum has formulated, directed, controlled, had the authority to control, or participated in the
acts and practices of the Corporate Defendants, including the acts and practices set forth in this
Complaint. Sessum resides in this district and, in connection with the matters alleged herein,
transacts or has transacted business in this district and throughout the United States.
21. Defendant Charles Blakely Ill ("Blakely") is or has been a principal, owner,
manager, and/or officer of one or more of the Corporate Defendants, including Merchant
Recovery Service. He incorporated Merchant Recovery Service, is or has been a signatory for
the deposit and/or checking accounts at Bank of America and Wells Fargo Bank, N.A. for
Merchant Recovery Service, and is or has been on the payroll of Merchant Recovery Service.
22. At times material to this Complaint, acting alone or in concert with others.
Blakely has formulated, directed, controlled, had the authority to control, or participated in the
acts and practices of Merchant Recovery Service, including the acts and practices set forth in this
Complaint. Jn connection with the matters alleged herein, Blakely transacts or has transacted
6
Case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 9 of 28
COMMON ENTERPRISE
the deceptive, unfair, and abusive acts and practices alleged below. Corporate Defendants,
Thomas, Sessum, and Blakely (collectively, "Defendants") have conducted the business
practices described below through an interrelated network of companies that have (i) maintained
officers and employees in common; (ii) operated under common control; (iii) shared offices; and
24. The Corporate Defendants share common officers and employees. The various
Corporate Defendants' bank records, corporate filings, payroll records, and websites show a
significant number of overlapping officers and employees. For example, Thomas is listed as
CEO and President of 4 Star Resolution, an officer of Profile Management, Vice President of
International Recovery Service, and Vice President of Merchant Recovery Service. In addition,
Recovery Service, and Check Fraud Service, and received payments from Merchant Recovery
Service. Sessum is listed as an officer and manager of both Pro~le Management and
Resolution, Profile Management, International Recovery Service, and Check Fraud Service, and
received payments from Merchant Recovery Service. 4 Star Resolution, Profile Management,
and International Recovery Service have or had at least twenty-five employees in common. 4
Star Resolution, International Recovery Service, and Merchant Recovery Service all share or
shared at least three employees. These three companies also had at least one employee in
common with Profile Management. Merchant Recovery Service and Check Fraud Service also
7
Case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 10 of 28
25 . The Corporate Defendants are owned and controlled by the same individuals.
Check Fraud Service, and Merchant Recovery Service. Sessum is an owner of 4 Star Resolution
and International Recovery Service. ln addition, Thomas incorporated Check Solution Services
and organized 4 Star Resolution and Fourstar Revenue Management. Thomas and Sessum were
26. Most of the Corporate Defendants share physical offices and virtual addresses.
For example, 4 Star Resolution, Profile Management, and Fourstar Revenue Management have
each conducted business at 1839 Seneca Street, Buffalo, New York, where Thomas and Sessum
shared an office and where numerous violations set forth in this Complaint have occurred.
Likewise, 4 Star Resolution, International Recovery Service, and Profile Management have
conducted business at 3735 Genesee Street, Cheektowaga, New York, where numerous
violations set forth in this Complaint have occurred. Most of the Corporate Defendants have
used shared mail drops or virtual offices, including Canadian addresses, as the business
27. The Corporate Defendants commingle their funds. Profile Management received
and processed consumer payments on behalf of International Recovery Service and Check
Solutions Services. Some consumers who paid Fourstar Revenue Management had their checks
deposited into one of 4 Star Resolution's bank accounts. The payroll setup fees for Merchant
Recovery Service were waived by its payroll service, Paychex, which noted at that time that "this
business is basically a child ofParent ... Profile Management." Bank records demonstrate
28. Because these Corporate Defendants have operated as a common enterprise, each
of them is jointly and severalty liable for the acts and practices alleged below. Individual
8
Case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 11 of 28
Defendants Thomas, Sessum, and Blakely have fonnulated, directed, controlled, had the
authority to control, or participated in the acts and practices of one or more of these Corporate
Defendants.
COMMERCE
29. At all times material to this Complaint, Defendants have maintained a substantial
course oftrade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act,
15 u.s.c. § 44.
DEFENDANTS' DECEPTIVE AND ABUSIVE COLLECTION PRACTICES
30. Since at least 2009 and continuing thereafter, Defendants have used deceptive and
abusive tactics to pressure consumers into making payments on purported debts. Defendants'
core t~ctic has been to misrepresent that consumers have committed "bank fraud," "check fraud,"
or another unlawful act related to the debts. Defendants have then claimed that consumers will
face dire consequences - including arrest and imprisonment- unless the charges of fraud are
resolved by making an immediate payment on the alleged debt over the phone. Defendants have
also failed to provide consumers with basic, truthful infonnation about Defendants, and failed to
provide consumers with statutorily-required disclosures and notices that would assist consumers
consumer payday loan and credit card debts, many of which are past the applicable legal statutes
of limitations, and collect payments on their own behalf from consumers nationwide.
instrumentalities of interstate commerce, including telephones, United States mail, and electronic
mail.
9
case 1:15-cv-00112-WMS Document 1 Filed 02/09115 Page 12 of 28
Defendants Use Deception and False Threats to Extract Money from Consumers
consumers and making a series of misrepresentations and threats to convince the consumers to
A typical telephone message informs a consumer of"possible litigation pending" against the
consumer and provides a case number. The message further states that the consumer has 48
hours to resolve the issue and provides a phone number to call back and a code enabling the
consumer to speak with a claims processor. The message then warns that the failure to comply
will result in a complaint "being formalized" with the consumer's residing county.
35. When consumers call the telephone numbers contained in the phone messages,
the) are usually connected to Defendants' representatives, who will sometimes inform the
consumers that they are delinquent on a payday loan or other debt. In numerous instances,
Defendants' representatives have falsely claimed that (i) they are attorneys, investigators,
process servers, court officials, government agents, or criminal law enforcement officials, rather
than debt collectors, and; (ii) they will arrest or imprison consumers, take legal action, gantisb
consumers' wages, and/or seize their property if the consumers do not pay the alleged debts. In
fact, Defendants are private parties and do not have the legal authority to have consumers
arrested or imprisoned for the nonpayment of a private debt. Further, in most instances when
Defendants threatened consumers with legal action, no legal action was subsequently taken, and,
on information and belief, Defendants did not intend to take any such legal action. In many
instances, the claimed debts are beyond the applicable statutes of limitation, which would make
any such action unlawful. ln other cases, consumers are not obligated to pay the alleged payday
10
Case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 13 of 28
loan or other debt at issue because the purported debt was already paid, discharged in
employing the pseudonym "Detective Jeff Ramsay," left a recorded voicemail for a Washington
State consumer ln which he false ly asserted that he was seeking to serve a bench warrant on the
37. On another occasion, Defendants' debt collectors told a consumer that her
husband had committed check and money fraud and that legal action would be taken against the
husband ifthe debt was not repaid within two days. On these calls, one of Defendant's
representatives identified himsel f as " Investigator Kearns'' and fal sely claimed that he was
employed by a government agency with its headquarters in Washington, D.C., but that the
agency was prohibited from providing consumers with its precise location following the events
of September I I, 200 1. In order to underscore the potential adverse consequences from the
consumer' s failure to pay, Investigator Keams falsely threatened the consumer that " It's the
38. Often, when consumers ask for proof of the alleged debts, Defendants'
representatives refuse to provide such proof, and. instead, tell consumers that they will receive
II
case -1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 14 of 28
proof in court or when the debt is paid. Many consumers paid the alleged debts that Defendants
purport to be collecting because they were afraid of the threatened repercussions of failing to
39. Defendants have profited substantially from their unlawful and abusive conduct.
Since January 20 I O. Defendants have collected more than $30 million from consumers for
purported debts.
40. The phone messages that Defendants' representatives leave fot consumers
generally do not identify that the call is being placed by or on behalf of Defendants, but instead
provide an unregistered fictitious company name or fail to reference any company name. In
addition, the messages fail to disclose that the call is coming from a debt collector who is
attempting to collect a debt from the consumer, or that any information obtained from the
41. Likewise, when consumers do speak with Defendants' representatives and ask for
Defendants' name, Defendants' representatives most often do not identify themselves using their
true corporate or limited liability company name. Instead, in numerous instances, Defendants'
names, including, but not limited to, American Asset Management, American Asset Recovery,
Asset Retention Se~ices, Check Services, Check Services International, CFS & Associates, Inc.,
Consumer Recovery Group, County Arbitration. LLC, County Check Services, Debt Resolution
Services, District Restitution Services, Financial Mediation Group, Four Star Capital Services,
Four Star Mediation Group, Four Star Resolution Services, LLC, FS Mediation Group, Global
Management Group, Hansen Law Firm. IRG & Associates, Mandatory Arbitration Services,
12
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 15 of 28
PDL Recovery Services, PMI & Associates, PMR Law Group, and Profile Arbitration
Enforcement.
42. In addition to using fictitious company names, Defendants use spoofed phone
numbers, and the addresses of virtual offices and remote mailboxes in the United States and
Canada in an apparent effort to avoid detection and facilitate their unlawful practices.
43. Pursuant to Section 809(a) of the FDCPA, a debt collector must provide to
consumers in its initial communication, or within five days after that initial communication, a
written notice setting forth certain specifically defined information about the debt, including a
statement that unless the consumer disputes the validity of the debt within thirty days after
receipt of the notice, the debt will be assumed to be valid by the debt collector. 15 U.S.C. §
44. In those instances when Defendants do send a validation notice to consumers, the
required disclosures are in small print, and other statements contained in the notice, such as
threats of legal action within the thirty-day validation period, often overshadow the mandatory
Defendants Use Abusive and Profane Language When Speaking with Consumers
45. During their collection calls, Defendants often use profane language or language
the natural consequence of which is to abuse the hearer, such as calling the consumer a "f_ eking
no good liar,'' "idiot," "dummy,'' ''piece of scum," "thief," "dirtbag," "scumbag," or "loser."
friends, family members, or employers of putative debtors. ln many instances, Defendants have
13
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 16 of 28
disclosed information about a purported debt to these third parties prior to obtaining a final
47. . ln some instances, Defendants have told third parties that putative debtors have
committed "bank fraud," "check fraud," or "identity theft., " and that putative debtors were going
48. For example, Defendants' representatives repeatedly called both the legal
department and human resources department of a Texas consumer's employer, claiming that the
Defendants intended to serve legal papers on the consumer. On another occasion, Defendants'
representative called a friend of a Tennessee consumer about the consumer's debt. The
representative identified himself as a private investigator and claimed that a sheriff would be
visiting the friend's house because the consumer had committed "identity theft" by using the
49. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits ·•unfair or deceptive acts
COUNT I
14
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 17 of 28
enforcement agency;
{b) The consumer has committed "bank fraud, " "check fraud," or another criminal
act;
wages;
server, and is seeking to serve the consumer with legal papers pertaining to a
a lawyer who has reviewed the consumer's case and is preparing a lawsuit
(f) Defendants have filed, or intend to file imminently, a lawsuit against the
consumer.
52. In truth and in fact, in all or numerous instances in which Defendants have made
(a) Defendants' debt collector is not an investigator or officer of the court, is not
(b) The consumer has not committed ' 'bank fraud,'' "check fraud," or another
criminal act;
15
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 18 of 28
(c) Nonpayment of an alleged debt will not result in the consumer's arrest,
wages;
(d) Defendants' debt collector is not a process server, is not working with a
process server, and is not seeking to serve the consumer with legal papers
(e) Defendants' debt collector is not a lawyer, is not employed by a lawyer, and is
not working with a lawyer who has rev iewed the consumer's case and is
(f) Defendants have not filed, and, upon information and belief, do not intend to
Complaint are false or misleai:ling and constitute deceptive acts and practices in violation of
54. In 1977, Congress passed the FDCPA, 15 U.S.C. §§ J692- 1692p, which became
effective on March 20, 1978, and has been in force since that date. Section 814 of the FDCPA,
15 U.S.C. § 1692/, provides that a violation of the FDCPA shall be deemed an unfair or
55. Defendants are "debt collectors" as defined by Section 803(6) of the FDCPA, 15
U.S.C. § 1692a(6).
" means any natural person obligated or allegedly obligated to pay any debt."
16
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 19 of 28
''means any obligation or alleged obligation of a consumer to pay money arising out of a
transaction in which the money, property, insurance or services which are the subject of the
transaction are primarily for personal, family, or household purposes, whether or not such
58. " Location information" as defined in Section 803(7) of the FDCPA, 15 U.S.C.
§ 1692a(7), means "a consumer's place of abode and his telephone number at such place, or his
place of employment.'.
COUNTD
59. Section 805(b) ofthe FDCPA, 15 U.S.C. § 1692c{b), prohibits a debt collector,
without either the prior consent of the consumer, the express pennission of a court of competent
communicating in connection with the collection of a debt with any person other than the
consumer (defined to include the consumer's spouse, parent (if the consumer is a minor),
otherwise penni~ed by law, the creditor, the attorney of the creditor, or the attorney of the debt
60. In numerous instances, Defendants have violated Section 805(b) ofthe FDCPA
by communicating in connection with the collection of debts with third parties other than those
17
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 20 of 28
COUNT III
Harassing Conduct
61. Section 806 ofthe FDCPA, 15 U.S.C. § 1692d, prohibits a debt collector from
engaging in any conduct the natural consequence of which is to harass. oppress, or abuse any
person in connection with the collection of a debt, including by the use of obscene or p.rofane
language or language the natural consequence of which is to abuse the hearer or reader (Section
62. In numerous instances, Defendants have violated Section 806 of the FDCPA by
COUNT IV
63. Section 807 ofthe FDCPA, 15 U.S.C. § 1692e, prohibits a debt collector from
using any false, deceptive, or misleadin g misrepresentation or means in connection with the
(a) falsely representing or implying that the debt collector is vouched for or
affiliated with the United States, any State, or County, such as claiming to be
(b) falsely representing the character, amount, or legal status o f any debt (Section
18
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 21 of 28
U.S.C.§ J692e(3));
(d) falsely representing or implying that nonpayment of a debt will result in the
property or wages of any person, when such action is not lawful or when the
debt collector has no intention of taking such action (Section 807(4) of the
(e) threatening to take action that is not lawful or that the debt collector does riot
intend to take, such as filing a lawsuit, including a lawsuit on claims that are
§ 1692e(5));
U.S.C. § J692e(7));
(g) failing to disclose in the initial communication with a consumer that the debt
the debt collector will be used for the purpose of attempting to collect a debt,
(h) using a business, company, or organization name other than the true name of
19
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 22 of 28
64. In numerous instances, Defendants have violated Section 807 ofthe FDCPA by
COUNTV
send consumers, either within the initial communication with consumers or within five days after
the initial communication, a written notice containing: ( I) the amount of the debt; (2) the name
of the creditor to whom the debt is owed; (3) a statement that unless the consumer, within thiny
days after receipt ofthe notice. disputes the validity of the debt, or any ponion thereof, the debt
will be assumed to be val id by the debt collector; (4) a statement that if the consumer notifies the
debt collector in writing within the thiny-day period that the debt, or any ponion thereof, is
disputed, the debt collector will obtain verification of the debt or a copy of a judgment against
the consumer and a copy of such verification or judgment will be mailed to the consumer by the
debt collector; and {5) a statement that, upon the consumer 's written request within the thirty-day
period, the debt collector will provide the consumer with the name and address of the original
66. In numerous instances, Defendants have violated Section 809{a} ofth e FDCPA by
failing to send consumers a notice containing the information set fonh in paragraph 65 of the
20
case 1:15-cv-00112-WMS Document 1 Filed 02/09115 Page 23 of 28
Complaint or by including statements in the notice that obscured the required FDCPA disclosure
language.
COUNT VI
67. New York Executive Law § 63( 12) empowers the Attorney General to seek
restitution and injunctive relief when any person or business entity has engaged in·repeated
fraudulent or illegal acts or otherwise demonstrates persistent fraud or illegality in the carrying
demonstrated persistent fraud or illegality in the carrying on, conducting, or transaction of their
COUNT VII
69. New York General Business Law§ 349 provides that "[d]eceptive acts or
practices in the conduct of any business[ ... ] in this state are hereby declared unlawful."
70. In numerous instances, Defendants have violated New York General Business
Law § 349 by engaging in deceptive acts or practices in connection with conducting their debt
collection business.
21
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 24 of 28
COUNT VIII
7 1. New York General Business Law § 60 I sets forth a list of prohibited debt
debtor's employer prior to obtaining final judgment against the debtor (N.Y.
(b) Threatening any action which the debt collector in the usual course of its
business did not in fact take (N.Y. Gen. Bus. Law§ 601(7)); and
reason to know that the right does not exist (N.Y. Gen. Bus. Law§ 601(8)).
72. In numerous instances, Defendants have violated New York General Business
COUNT IX
permitted by New York Executive Law§ 63( I 5) in' lieu of the OAG filing a civil action or
executed an Assurance o f D iscontinuance with the OAG related to the unlawful debt collection
practices o f a corporation owned and controlled by Thomas, which has since been disso lved
22
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 25 of 28
74. Paragraph 18 of the Assurance of Discontinuance requires that " for a period of
three (3) years following the date of execution of this Assurance, in the event that [Travell]
Thomas changes a principal place of business, incorporates a new corporation or business entity,
does business under a new name, (collectively, "Change in Business"), he shall infonn the OAG
in writing within thirty (30) days after any such Change in Business."
75. On or around March 31,2014, Defendant Thomas filed with the New York
76. Defendant Thomas did not infonn the OAG in writing of this Change in Business
77. By reason of the foregoing, Defendant Thomas has breached his agreement with
CONSUMER INJURY
78 . Consumers have suffered and will continue to suffer substantial injury as a result
of Defendants' violations ofthe FTC Act, the FDCPA, New York Executive Law§ 63(12), and
New York General Business Law Articles 22-A and 29-H. In addition, Defendants have been
unjustly enriched as a result oftheir unlawful acts or practices. Absent injunctive relief by this
Court, DefendanLc; are likely to continue to injure ~onsumers, reap unjust enrichment, and hann
79. Section 13(b) ofthe FTC Act, 15 U.S.C. § 53(b), and Section 814(a) ofthe
FDCPA, 15 U.S.C. § 1692/(a), empower this Court to grant injunctive and such other relief as
the Court may deem appropriate to halt and redress violations o f an~ provision of law enforced
by the FTC. The Court, in the exercise ofits equitable jurisdiction, may award ancillary relief,
including rescission or refonnat ion of contracts, restitution, the refund of monies paid, and the
23
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 26 of 28
disgorgement ofill-gonen monies, to prevent and remedy any violation of any provision of law
80. New York Executive Law§ 63(12) empowers the Attorney General to seek
injunctive relief, restitution, damages, disgorgement, and other relief when any person or
business entity has engaged in repeated fraudulent or illegal acts, or has otherwise demonstrated
persistent fraud or illegality in the carrying on, conducting, or transaction ofbusiness. New York
General Business Law§ 349 prohibits deceptive business practices and empowers the Attorney
General to seek injunctive relief, restitution, and civil penalties when violations occur. General
Business Law Article 29-H, § 602 empowers the Attamey General to bring an action to restrain
WHEREFORE, Plaintiffs FTC and the State of New York, pursuant to Section I 3(b) of
the FTC Act, 15 U.S.C. § 53(b). Section 814(a) of the FDCPA, 15 U.S.C. § 1692/(a), New York
Executive Law § 63( 12), and New York General Business Law §§ 349, 350-d, and 602(2), and
necessary to avert the Hkelihood of consumer injury during the pendenc~ of this action and to
preserve the possibility of effective final relief, including but not limited to, temporary and
receiver;
B. Enter a permanent injunction to prevent future violations of the FTC Act, the
FDCPA, New York General Business Law Articles 22-A and 29-H, and New York Executive
24
case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 27 of 28
C. Award such relief as the Court finds necessary to redress inj ury to consumers
resulting from Defendants' violations ofthe FTC Act, the FDCPA, New York General Business
Law Articles 22-A and 29-H, and New York Executive Law § 63(12), including, but not limited
to, rescission or reformation of contracts, restitution, the refund of monies paid, and the
D. Pursuant to New York General Business Law§ 350-d, impose a civil penalty of
$5,000 for each violation ofNew York General Business Law Article 22-A; and
E. Award Plaintiffs the costs of bringing this action, as well as such other and
additional relief as the Court may determ ine to be just and proper.
JONATHAN E. NUECHTERLEJN
11
General Counsel
C?~ ecekz
ROBIN E. EICHEN
KAREN DAHLBERG
BRIAN N. LASKY
Federal Trade Commission
One Bowling Green, Suite 3 I8
New York, NY I 0004
Telephone: 212-607-2803 (Eichen)
Telephone: 212-607-282 I (Dahlberg)
Telephone: 21 2-607-28 14 (Lasky)
Facsimile: 2 12-607-2822
Email: reichen@ ftc.gov
Email: kdahlberg@ ftc.gov
Email: [email protected]
Allorneysjor Plaintiff Federal Trade Commission
25
Case 1:15-cv-00112-WMS Document 1 Filed 02/09/15 Page 28 of 28
ERIC T. SCHNEIDERMAN
Attorney General of the State of New York
:r~rfl
JAMES M . MORRISSEY
Assistant Attorney General
350 Main Street, Suite 300A
Buffalo, NY 14202
Telephone: (il6) 85 3-84 71
Facsimile: (716) 853-8414
Email: [email protected]
Allorney for PlaintiffState ofNew York
26