Harassment
Complaint
Debra M. Persiano
Country: United States
I got a call today at home from a man stating he was a process server for Collin County DA's Office and he is with the Sheriff's office and needed to come serve a warrant on me. I was shocked and asked why? He stated do you live ....are you still at this address are you now at this address and I stated who are you? He again, stated he was from the county going to serve court papers on me today. He gave me a toll free number for what he stated was the county's office which is 1 866.872.6116 gave me a case no. which he called a Cause No. 008307-TX. I called the number was transferred to a Mr. Fisher's office who stated that law suite in the amount of $6,214.24 was filed in Collin Co., Tx and that warrant was out for me. He then after back and forth said let me get more information from my secretary and state this was for an outstanding debt in from Capital One a credit card that I obtained several years back and had disputes over interest charges etc. He stated that if I did not want to go to court or jail that I could pay $1,951.00 in full by end of business today and this matter could be cleared up. I explained that I recently lost my job etc. Anyway, he stated that I needed to call him back by EOB today or they will serve the papers. Ok, so that was a heads up for me. I called the DA's office nothing is filed on me as of today, after searching PMG it is clear that they do not practice best practices for collections and have been in trouble for this before back in 2004. I need someone to give me advise. I want to pay off my debt, I don't want this type of collections to continue this upset me, made my blood pressure raise, this type of collections are not the right thing to do. Had they called and ask to make arrangements or give me an opportunity to clear the matter, rather then threaten me by taken legal action, or harassment stating they are sending a sheriff over today. This is wrong, bad business, and should not continue this company is bad news.
Comments
by the 16 collectors, set forth any evidence that Defendants sent validation notices to consumers or provided verification of the debt to those consumers who disputed their debt. See 15 U.S.C. § 1692g(a). On this issue, the only evidence before the Court are consumer statements that they did not receive validation notices, and/or verification of their debt. See e.g., dkt #4 p.22-23, third Stahl dec. ¶ 16, Att. 8, ¶ 28. In short, the overwhelming evidence establishes that the law violations alleged in the FTC’s complaint were an integral part of Defendants’ business model, that these practices were widespread, and the preliminary injunction entered by the Court was appropriate.
Instead of responding to the evidence presented by the FTC, Defendants rely
on the fall-back argument that there was a low ratio of consumer complaints
relative to the calls made by collectors. Defendants argue that this ratio proves that they did not engage in widespread violations of the FTC Act and the FDCPA. Motion at 9-10. Defendants further claim that they had a credit card charge-back rate, which they claim indicates that most of their collections were in compliance with the law. Motion at 5 n.3. Even assuming arguendo, that Defendants’ numbers regarding the ratios are correct, their argument fails."
FOOTNOTE EXPLAINING THE 105 COMPLAINTS:
"In support of the TRO, the FTC summarized 213 consumer complaints
made to the FTC (see dkt #7 pp. 4-12 (Gale dec. ¶¶ 4-1), and later submitted
numerous Better Business Bureau complaints against a number of other entities
Defendants’ controlled. See dkt 25-1 p.13, #25-8 p. 20."
"Finally, even if Defendants did have a one percent credit card charge-back
rate as they assert, it does not prove they have complied with the law. Indeed, a low charge-back rate makes particular sense in light of the facts of this case. As evidenced by the scripts, consumers who agreed to pay Defendants were under the impression that they were settling a lawsuit. Indeed, Defendants provided consumers with “Offers of Settlement,” some of which stated, “Our client agrees to accept in full the sum of [$_______]. Upon receipt of certified funds and authorized signature, we will file dismissal of the action.” See dkt #25-7 at p. 52.
Consumers who have paid to settle a lawsuit are very unlikely to charge back the settlement payment because doing so would only cause the other party to reinstate the lawsuit. Indeed, one of Defendants’ settlement agreements dated October 11, 2011, just days before they were served with the TRO, contains a note from a consumer confirming that she understood she was settling a lawsuit. The note states: “as agreed you will not continue with this pending litigation as long as commitment is fulfilled . . . [p]lease also provide pending court case # & circuit court papers are filed in [t]hank you for your assistance.” third dec. Stahl ¶ 8, Att.
7. We assert that this is not the type of consumer who would turn around and request a charge back. It simply would make no sense in light of the transaction. Thus, Defendants’ purportedly low charge back rate does not establish that they have complied with the law."
violations were de minimus. They simply have not, and cannot refute the
consumer complaints and the company documents showing that it was Defendants’ pattern and practice to deceive consumers into believing that they were defendants to a fictitious lawsuit. Nevertheless, even if we assume that some of their collections were done legitimately, the potential judgment amount would still likely exceed that amount of money that has been frozen pursuant to the preliminary injunction. The Receiver has stated estimated that the amount of money Defendants have taken in during the time they have been in operation is approximately $21 million. Dkt #30 at p. 4, ¶ 1.3.B. Mr. Begley puts this number at approximately $13 million. Dkt #45-1 p. 8, Begley dec. ¶ 17. Taking Mr. Begley’s total revenue figure of $13 million as a starting point, without conceding its accuracy, even if we assume for the sake of argument that only one fourth of Defendants’ collections were conducted illegally, this would still bring the total judgment amount to approximately $3.25 million. This is in excess of the money that has been frozen, which must be preserved for redress to Defendants’ consumer victims. Moreover, as discussed above, given that the illegal scripts and collector instructions were found throughout their business premises, there is simply no basis to assume that most of their collection business has been conducted in compliance with the law.
The asset freeze imposed by the Court was warranted because the evidence
shows that Defendants are likely to conceal, dissipate, or otherwise divert their assets without an asset freeze. See Johnson v. Couturier, 572 F.3d 1067, 1085 (9th Cir. 2009)."
"The structure of Defendants’ complex web of multiple bank accounts and entities shows that Messrs. Begley and Lunsford sought to insulate themselves
from liability, while allowing them the ability to control the cash flow and divert substantial amounts of money to their personal trusts."
"More importantly, the FTC has presented evidence that Defendants have
already dissipated company assets. For the period Defendants’ have been in
operation, Messrs. Begley and Lunsford have siphoned off over $2.2 million into trusts that they own (dkt # 7 pp. 25-26 (Gale ¶ 45 (calculating over $1.2 million paid to Skyridge Legacy Trust controlled by Begley), Gale ¶ 45 (calculating over $1 million paid to WAL Legacy Trust controlled by Lunsford)), and another $1 million into their personal management and consulting companies. See docket # 7-4 pp. 38-45 (Gale Att. 28), docket #7-4 pp. 47-50, 7-5 pp. 1-3 (Gale Att. 29). With respect to the money in Defendants’ trusts, attorney Samuel Lockhart told this Court that the money had not been diverted or dissipated and was sitting in the bank accounts held by Messrs. Lunsford’s and Begley’s trusts. Not so. Segura dec. ¶¶ 8-10. After the preliminary injunction hearing, the FTC learned
that approximately $787,000 from the bank accounts held by the trusts was
provided to a firm called Brylaw for a Brazilian bond investment. Segura dec. ¶ 10, Att. 3; see also Motion at 15. Demand was made to Defendants to deliver to receiver Richard Weissman documentation regarding the Brazilian bond venture. Segura dec. ¶ 10, Att. 4. Defendants have not provided any documentation concerning the purported Brazilian bond investment, but instead told FTC counsel that this was done pursuant to a “hand shake” deal. Id. ¶ 10. Nor have Defendants executed any documents to effectively transfer control of the purported investment to Mr. Weissman. Id. at ¶ 11. Whether this investment is real or fictional, the result is that $787,000 in money obtained from the defendant business entities is no longer available for consumer redress."
"Defendants Jason Begley and Wayne Lunsford argue that each of them
should be provided $150,000 of the frozen funds because a trial has not been held on the merits and they need the money to care for their families. Motion at 2. Defendants’ request is not supported by the facts of this case, or the applicable law. First, what the motion fails to highlight is that the FTC has already released funds for living expenses for November and December 2011, and is currently in discussion with defense counsel for a potential release of living expenses in January 2012. Segura dec. ¶¶ 12, 13 Att. 5.7 The money released to Defendants for living expenses, which was agreed to by the FTC, was based on actual reasonable and necessary living expenses substantiated by copies of bills provided by Messrs. Begley and Lunsford. Counsel for Defendants and counsel for the FTC went over the expenses line by line and determined which expenses were reasonable and necessary, and which expenses were not. Id. ¶ 12. Money was therefore released to Defendants to pay their property taxes, mortgages, insurance, reasonable car payment, health insurance, and each was provided with a food and household expense allowance, among other things. Id. ¶ 12. The process engaged in by the parties was more than fair and provided Defendants with an adequate amount of money to meet their reasonable and necessary living expenses."
"Their mere wish to rid themselves of the FTC’s interference in their personal lives is simply an insufficient basis to release such significant amounts of money."
"In balancing the equities, the collectors’ interest in receiving payment for calling consumers and menacing them with a fictitious lawsuit does not outweigh the consumers’ interest in full and effective relief. This is especially true where evidence has been presented to show that Defendants deceptively attempted to collect non-existent debts. Dkt #4 p. 19 (TRO Memo), see also dkt #25 p. 10 (supplemental brief in support of the preliminary injunction)."
However, even if we took Defendants’ version of events as true–that their business grew to fast, that they used bad collectors, but did not direct the bad behavior (see dkt 45-1 p.17 (Begley ¶ 38)–the conclusion is the same: Defendants are incapable of running a lawful debt collection business. Thus, Receiver Richard Weissman’s control is needed not only to preserve assets and the status quo for the pendency of the action, but also to ensure that no further violations of the law occur.
Defendants first stated to the FTC that they did not want to continue in the commercial debt collection business on or around December 7, 2011, and have restated that position in their motion. See dkt #45-1 p. 26 (Begley ¶ 53). Segura ¶ 14. Prior to this point, Defendants expressed that they wanted to continue
collecting debt on a scaled-down basis under Mr. Weissman’s supervision, but that
this did not happen because they did not submit a business plan that the Receiver
considered viable or FDCPA-compliant scripts. Segura ¶ 14, Att. 6. Nevertheless,
under either scenario–the no debt collection plan, or the scaled-down plan–it is
clear that the receivership no longer requires leases on eight separate offices
throughout Corona and Riverside. Nor does it require the amount of office
equipment that is currently being held in these idle offices. Though it makes sense,
from an asset preservation standpoint, to scale-down the business operation,
Defendants argue that the Receiver should not be provided the authority to
liquidate any part of the business. Motion at 5. Defendants’ position is
indefensible because forcing the receivership to hold excess unused computers and
furniture until the case is resolved will result in a needless waste of resources that
should be preserved for potential redress and disgorgement.
Defendants’ argument that Mr. Weissman does not have the knowledge or
experience to sell off aspects of the collection business is unpersuasive. First, as
Mr. Weissman’s legal biography makes clear, he does have experience in
“operating and liquidating debt collection agencies” in his prior role as California
State Conservator for the Department of Consumer Affairs. Dkt #15 p.5. Second,
on a call with counsel for the FTC and defense counsel, Mr. Weissman invited
Messrs. Begley and Lunsford to work with him to obtain the best possible sale
price for the portfolio of debt that had not been collected. Segura ¶ 15. Selling the
debt portfolio made sense in light of the fact that Defendants have stated they have no intention of resuming their commercial debt collection business. However, as
of yet, neither defendant has offered to assist Mr. Weissman in this manner. Id.
Defendants should not be allowed to needlessly roadblock the selling of
receivership assets, and Mr. Weissman should be allowed to terminate leases for
offices that are no longer in use, and sell unnecessary office equipment and furniture. Mr. Weissman should also be allowed to seek a purchaser for the yet
uncollected debt portfolio pursuant to prior due diligence regarding the debt
portfolio and the potential purchaser.
Defendants repeatedly state that they have been cooperative and have
provided full information about their business practices and the locations of their
businesses. See e.g., Motion at 11. This is not true. In fact, after the TRO was
served Defendants did not provide information to the FTC or the Receiver about
the five additional offices they operated, which has contributed to the loss of
evidence and receivership assets.
Shortly after the TRO was served on Defendants, counsel for the FTC were
told by counsel for Defendants that the FTC had entered all of their business
premises and that the collections businesses had been essentially shut down by the
TRO. Segura ¶ 2. However, Defendants at the time actually operated at least five additional offices that the FTC and the Receiver did not enter–four in Riverside
and Corona, California and one in Cedar Rapids, Iowa. Segura ¶¶ 3-5. These
additional offices housed collections businesses, which included the entities
County Filing, Inc., Capital Filing, Inc., and Statewide Associates Group, which
Defendants argued were separate entities wholly owned by Defendants’ former
managers. Defendants did not provide the FTC with information about these
additional companies, but argued that the additional companies should not be
under order because they were not owned by Messrs. Begley and Lunsford. Cf.
Segura ¶ 3, Att. 1.
However, we now know from Mr. Begley’s declaration that although it was
Defendants’ plan to sell these additional entities to their managers as part of a turnkey
collection business, no formal agreements were in place, and the plan did not
materialize because of the TRO. Dkt 45-1 pp.16-17. The import of this statement
is that the additional companies were owned and operated by Defendants at the
time the TRO was served. Thus, pursuant to the TRO, Defendants were required to provide the FTC with access to the offices for these companies, and were required
to provide the Receiver with full information about the companies. See dkt #5 p.
17 (TRO Section IX., p. 22 (TRO Secton XII), dkt #5 p. 23 (TRO Section XII.F).
Defendants did not comply with these provisions of the TRO. Instead, Defendants
continued to argue that these entities were wholly separate from Defendants’
business up until the preliminary injunction was entered. This forced the FTC and
the Receiver to make the showing through substantial evidence and analysis that
the additional entities were in fact owned and operated by Messrs. Begley and
Lunsford. See e.g., dkt ## 25 pp.13-14, #30 pp.10-12.
waste of litigation time and resources, but has likely contributed to the loss of
evidence and receivership assets. For example, on or around December 5, 2011,
Mr. Lunsford contacted the property manager at one of the offices stating that there
had been a theft at one of the offices. Segura ¶ 7, Att. 2.8 The fact that some of the
additional offices appeared to be cleared of equipment comports with FTC
investigator Ann Stahl’s observations during her visits of the four additional
offices in late December 2011. See Stahl ¶ 29. This probably would not have
happened had Defendants told Mr. Weissman about those locations back on
October 13, 2011 when the TRO was served. Had Mr. Weissman been informed
about these locations, he would have secured the premises and changed the locks
as he did with all of the other offices when he took over on October 13, 2011.
Moreover, the FTC would have had the opportunity to image the hard drives of the
computers to ensure that no data was lost. In short, Defendants have not
cooperated with Mr. Weissman as touted throughout their Motion (dkt 45-1 p. 2-3
(Begley ¶ 3), p. 4 (Begley ¶ 7), p. 21 (Begley ¶ 44)), but instead their failure to
comply with the TRO has facilitated the spoliation of evidence and loss of
receivership property."
FTC FOOTNOTE:
It is unclear how Mr. Lunsford was aware of the theft, and why he did not
alert the FTC to the incident
Their defense is comical. What happens next? This is getting good.
The IRS is going to eat them up.
Why don't they man up and tell the truth. Their outrageous lies are surely not helping their case. What a bunch of [***].
Cause they agreed to be fooled!
And if you didn't ALWAYS fool them, but maybe some of you sometimes didn't, then some of it wasn't fraud, so the business is OK? Right?
And, oh yeah, "all the debt was legitimate", so it's all OK! You had to get the money you were owed, so whatever is OK! Right?
This horse isn't dead yet. It needs more beating.
Four offices not disclosed, and now their stuff just disappeared in a "theft".
The Swiss would have just locked everyone up while they investigated.
Horse is still twitching.
It needs more beating.
What is this? You call yourself a "debt collector", and you get to just make it all up?
Their whole scheme shows up by fall 2009 in its final form, with separate LLC entities, and the caller/closer split, showing it had already been designed and thought out, evolving primarily by cloning numerous new entities with additional managers (including the final batch of "Filing Services").
Did they somehow think they could get away with it, even scale it up, if they just "did it better", with LLC separation between debt purchase and "resource management" to distance them from the phone extortion, "independent process servers", and similar multi-shell legal cover?
The Dateline series was broadcast shortly before Begley and Lunsford filed a batch of LLC registrations to get this game rolling.
Dateline chatted up LHR's employees on break (NY AG went after them later), and walked into one of Boyland's Buffalo call centers, full of low lifes playing "detective" and making phone threats (many were later prosecuted for larceny).
LHR:
http://www.youtube.com/watch?v=nAlA_BhaqtQ
Boyland:
"Bethesda Maryland Police Department"
http://www.youtube.com/watch?v=Y-K7kuoxRQQ
Undercover walkthru at "Final Claims Asset Locators" call center, getting paid via Western Union.
http://www.youtube.com/watch?v=E-HNWiY1Isw
NY AG prosecutions:
http://www.ag.ny.gov/media_center/2009/sep/sep29b_09.html
Restitution:
http://www.ag.ny.gov/media_center/2010/feb/feb09a_10.html
Note the similarities in entity names:
http://www.bizjournals.com/buffalo/stories/2009/06/22/daily23.html
"...
Central Resource Management, Final Claims Asset Locators, Final Control Asset Locators, Interchange Payment Solutions, Next Step Services, Portfolio Asset Assurance, Silverbay Services, and Teleport
..."
Compare to "Pacific Management", "Atlantic Resource Management", "Portfolio Management Group", several "Services" entities, etc.
Phone thieves and con artists are the real deadbeats.
They never intended to have to pay back any of their easy money ill-gotten gain.
Hypocrites.
Are all these "debt collection" rackets set up and capitalized by a network of portfolio brokers to provide a batch of "accounts" with little or no out of pocket capital from the nominal "owner/manager"?