Category Archives: Lawsuits

Unifund CCR Partners v. Zimmer, 2016 VT 33 (March 11, 2016)

Supreme Court of VermontUnifund CCR Partners, a debt buyer, was in the business of purchasing large portfolios of charged-off debts from original debt holders in the hope of eventually collecting from the original debtors. Unifund asserted the right to judgment against defendant David Zimmer for charged-off debt in the amount of $2453.22, plus costs and statutory pre-judgment interest of 12% under 12 V.S.A. 2903, for a credit card account opened in defendant’s name with Citibank. Unifund also alleged that defendant was unjustly enriched in that amount “by virtue of non-payment on an account.” At trial, Unifund asserted that it was authorized to collect the debt by a series of limited assignments, from Citibank to Pilot Receivables Management, LLC (Pilot) on June 18, 2012, and from Pilot to Unifund CCR LLC (UCL) and UCL to Unifund, both on June 1, 2013. To establish standing to enforce the underlying debt, Unifund offered testimony of Brian Billings, who spoke in support of the assignment from Citibank to Pilot, and Elizabeth Andres, who spoke in support of the assignments from Pilot to UCL and UCL to Unifund. The trial court found these documents to be inadmissible as hearsay because Unifund had failed to establish the necessary foundation for their admission. The trial court also found that, even if the assignments were admissible as a business record under Rule 803(6), Unifund had failed to establish standing. Unifund raised four arguments on appeal: (1) that documents proffered to establish the assignment of defendant’s debt were not admissible as business records; (2) that the assignment of the right to collect is itself sufficient for standing; (3) that Unifund sufficiently established the terms of the contract between defendant and Citibank, including the contractual interest rate; and (4) that Unifund demonstrated a basis to recover for unjust enrichment. Finding no reversible error in the trial court’s analysis and judgment, the Supreme Court affirmed.

Source: Vermont Supreme Court

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Complaint – CFPB v. Frederick J. Hanna & Associates, P.C., et al. (July 14, 2014)

CFPBToday, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit in a federal district court against a Georgia-based firm, Frederick J. Hanna & Associates, and its three principal partners for operating a debt collection lawsuit mill that uses illegal tactics to intimidate consumers into paying debts they may not owe. The Bureau alleges that the Hanna firm churns out hundreds of thousands of lawsuits that frequently rely on deceptive court filings and faulty or unsubstantiated evidence. The CFPB is seeking compensation for victims, a civil fine, and an injunction against the company and its partners.

“The Hanna firm relies on deception and faulty evidence to drag consumers to court and collect millions,” said CFPB Director Richard Cordray. “We believe they are taking advantage of consumers’ lack of legal expertise to intimidate them into paying debts they may not even owe. Today we are taking action to put a stop to these illegal debt collection practices.”

The Hanna firm focuses exclusively on debt collection litigation, and its three principal partners, Frederick J. Hanna, Joseph Cooling, and Robert Winter, play an active role in the company’s business strategies and practices. The firm performs debt collection activities and typically files lawsuits if those efforts do not lead to collections.

The CFPB alleges that the firm operates like a factory, producing hundreds of thousands of debt collection lawsuits against consumers on behalf of its clients, which mainly include banks, debt buyers, and major credit card issuers. Between 2009 and 2013 the firm filed more than 350,000 debt collection lawsuits in Georgia alone. The CFPB further alleges the defendants collected millions of dollars each year through these lawsuits, often from consumers who may not actually have owed the debts.

The CFPB alleges that the defendants violated the Fair Debt Collection Practices Act (FDCPA). Among other things, the FDCPA prohibits making misrepresentations to consumers, and specifically prohibits misrepresenting to a consumer that a communication is from an attorney. The CFPB also alleges that the defendants violated the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits deceptive acts or practices in the consumer financial marketplace.

Violations alleged in the CFPB’s complaint include:

  • Intimidating consumers with deceptive court filings: The firm files collection suits signed by attorneys when, in fact, the lawsuits are the result of automated processes and the work of non-attorney staff, without any meaningful involvement of attorneys. The resulting lawsuits misrepresent to consumers that they are “from attorneys.” This process allows the firm to generate and file hundreds of thousands of lawsuits. One attorney at the firm, for example, signed over 130,000 debt collection lawsuits over a two-year period.
  • Introducing faulty or unsubstantiated evidence: The firm uses sworn statements from its clients attesting to details about consumer debts to support its lawsuits. The firm files these statements with the court even though in some cases the signers could not possibly know the details they are attesting to. In a substantial number of cases, when challenged, the firm dismissed lawsuits. Since 2009, the firm has dismissed over 40,000 suits in Georgia alone, and the CFPB believes it does so frequently because it cannot substantiate its allegations.

Through this lawsuit, the Bureau seeks to stop the alleged unlawful practices of the Hanna firm and its three principal partners. The Bureau has also requested that the court impose penalties on the company and its partners for their conduct and require that compensation be paid to consumers who have been harmed.

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Source: CFPB

Complaint – Moya v. JPMorgan Chase & Co., et al. (March 11, 2014)

Berger & Montague, P,C.Sacks, Weston, Petrelli, Diamond & Millstein, LLCJones Gillaspia Loyd, LLPA class action lawsuit has been filed on behalf of credit card Grossman Roth, P.A.customers of JPMorgan Chase against whom Chase obtained default judgments using allegedly robosigned and fraudulent affidavits. The lawsuit, Moya v. JPMorgan Chase & Co., et Scott + Scott, LLPal., No. 1:14-cv-20922 (S.D. Fla.), was filed in the United States District Court for the Southern District of Florida, and is brought on behalf of all credit card borrowers in the United States who have been sued by or on behalf of Chase to collect on a credit card debt and had the court enter a default judgment based on a robosigned affidavit submitted by Chase.

Specifically, the case alleges that Chase and its subsidiaries created and participated in a scheme of generating and robosigning affidavits on a mass scale that did not involve adequate controls to ensure that the information in the affidavits was correct and based on the affiant’s personal knowledge. The complaint further alleges that the affidavits were then notarized by a notary who falsely attested to witnessing the affiant’s execution of the affidavit. Chase then submitted these affidavits by the thousands to state courts in order to obtain default judgments against its credit card borrowers who were past due on their credit card bills. Once the default judgment was obtained, the complaint alleges that Chase aggressively pursued post-judgment remedies such as garnishing wages, levying bank accounts and assessing post-judgment interest.

Lawsuits with similar allegations against Chase have been filed by the California Attorney General and the Mississippi Attorney General. Under pressure from regulators, Chase halted its collection litigation operation in 2013.

“Chase has profited from its abuse of the legal system,” said Shanon J. Carson of Berger & Montague, P.C., one of the attorneys representing the plaintiff. “It is ironic that Chase would hold borrowers to the letter of the law in fighting collections, but has attempted to use its power and resources to obtain an unfair and unjust advantage against its customers, which must be addressed.” “This practice is widespread,” said Joseph Cohen of Scott + Scott, Attorneys at Law, LLP, who also represents the plaintiff. “A company of Chase’s size and sophistication either is or should be aware that its scheme was unlawful. We look forward to vindicating the rights of credit card borrowers who have been subject to these wrongly-obtained default judgments.” Edward Millstein of Sacks Weston Petrelli Diamond & Millstein LLC, also representing the plaintiff, said “the relief sought in this lawsuit will bring justice to thousands of borrowers. Borrowers who have been affected by Chase’s robosigning policies and practices should be made aware of their rights.

The lawsuit seeks an order by the court requiring Chase to cease using robosigned affidavits, and provide notice to class members of Chase’s misconduct so borrowers can take steps to reopen their cases and expunge the default judgments. The lawsuit further seeks reimbursement of all monies unlawfully taken by Chase following the default judgments such as through wage garnishments, attachment of bank accounts, and asset seizures.

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Source: Berger & Montague, P.C.

Complaint – State of Mississippi v JPMorgan Chase & Co. (December 17, 2013)

Mississippi Attorney GeneralIn a complaint filed in state court December 17, 2013, Mississippi Attorney General Jim Hood accused JPMorgan Chase & Co., of making false demands for debt, filing unverified documents in court and selling debt to others backed by false affidavits.

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Complaint – State of Colorado v. United Credit Recovery, LLC (November 25, 2013)

Colorado Attorney General

Colorado Attorney General John Suthers announced that the Consumer Credit Unit of his office filed a civil lawsuit against United Credit Recovery (UCR), its principal and director, Leonard Potillo (D.O.B. 06/26/65), as well as against GTF Services and Standley & Associates, alleging that they sought to pass off fraudulent bank documents in their attempt to collect on outstanding debts and engaged in deceptive trade practices that harmed consumers.

“UCR faked bank officer signatures on documents to orchestrate a debt-for-sale scheme from which they handsomely profited,” explained Suthers. “The scheme involved thousands of individual accounts totaling tens of millions of dollars,” Suthers continued.

According to the complaint, UCR purchased consumer debt from Wells Fargo and US Bank and then used account information provided by the banks to create hundreds of thousands of fake affidavits purporting to describe and to verify debt owed by consumers. UCR profited by using the fake affidavits in collecting on the debt and in reselling debt to third-party debt collectors.

In addition to using the affidavits for its’ own collection purposes, UCR sold accounts of Colorado consumers to other agencies and distributed the falsely-created affidavits to those agencies. GTF, one such agency, is alleged to have used the affidavits through the debt-collection law firm Standley & Associates, who filed the affidavits in more than 300 debt collection lawsuits against consumers in Colorado.

The fabricated affidavits have assisted in the collection of money from Colorado consumers by being filed in court as evidence of the amount owed and by being presented as validation of the debt directly to Colorado consumers.

The complaint was filed pursuant to the Colorado Consumer Protection Act and the Colorado Fair Debt Collection Practices Act with the Denver County District Court.

Colorado’s complaint asks the courts to completely compensate or restore to their original position, all consumer injured by the defendants.

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Source: Colorado Attorney General

Complaint – California v. JPMorgan Chase & Co., et al. (May 09, 2013)

California Attorney GeneralOn May 9, 2013, Attorney General Kamala D. Harris filed an enforcement action against JPMorgan Chase & Co. (Chase) alleging that the bank engaged in fraudulent and unlawful debt-collection practices against tens of thousands of Californians.

The suit alleges that Chase engaged in widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period.

“Chase abused the judicial process and engaged in serious misconduct against California credit card borrowers,” Attorney General Harris said. “This enforcement action seeks to hold Chase accountable for systematically using illegal tactics to flood California’s courts with specious lawsuits against consumers. My office will demand a permanent halt to these practices and redress for borrowers who have been harmed.”

From January 2008 through April 2011, Chase filed thousands of debt collection lawsuits every month in the State of California. On one day alone, Chase filed 469 such lawsuits in California. The Attorney General’s complaint against Chase alleges that, to maintain this pace, Chase employed unlawful practices as shortcuts to obtain judgments against California consumers with speed and ease that could not have been possible if Chase had adhered to the minimum substantive and procedural protections required by law.

“At nearly every stage of the collection process, Defendants cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits,” the complaint states.

Chase used California’s judicial system as a mill to obtain default judgments, the suit alleges, using illegal tactics to flood the state’s court system in order to secure default judgments and garnish wages from Californians.

The alleged misconduct includes:

  • Robo-signing: Chase illegally robo-signed various litigation filings, including sworn documents, declarations, and verified complaints, without reviewing the relevant files or bank records or even reading the documents before signing.
  • “Sewer Service”: Chase failed to properly serve notice of debt collection lawsuits against consumers while claiming they had been served as required by law. This practice, known as “sewer service,” deprives the consumer of any notice of the lawsuit.
  • Filing Irregularities: Chase haphazardly assembled its official legal filings. For example, Chase failed to redact consumers’ personal information in attachments to filings, potentially exposing them to identity theft and in violation of California law. In addition, when asking courts to enter default judgments against consumers, Chase consistently swore under penalty of perjury that the consumers were not on active military duty. In fact, Chase never checked. This deprived servicemembers of important legal protections to which they are entitled while on active duty.

The suit was filed in Los Angeles Superior Court.

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Source: California Attorney General