December 8, 2010
From "Debt Relief" To Bar Charges
The Illinois Administrator has filed a complaint alleging misconduct on the part of an attorney involved in a national debt relief practice. The charges arise from the following alleged facts:
1. Between 2005 and 2010, Respondent and Philip Manger, an attorney licensed in New York and residing in Connecticut, were the two members of the Credit Collections Defense Network ("CCDN"), a Nevada limited liability corporation. Manger, who was not licensed to practice law in Illinois, was the managing member of CCDN.
2. Between 2005 and 2010, Respondent and Manger together operated CCDN as an entity providing legal services to consumers nationwide relating to consumer credit card debt and other debt collection matters.
3. Specifically, CCDN offered its potential clients the opportunity to use its "Debt Reconciliation Program" in order to validate existing consumer debts; restore their credit; and, where applicable, seek redress for alleged violations of the Fair Debt Collection Practices Act.
4. Between 2005 and 2010, CCDN conducted its operations at several different locations, including, between approximately 2005 and 2009 a residence in Cattaraugus, New York, which it designated as the "CCDN Support Center." Between approximately 2009 and 2010, the "CCDN Support Center" was located at an office suite in Brick, NJ. Further, various promotional materials created by Respondent or Manger for CCDN gave the address for CCDN's headquarters as 7144 North Harlem Ave, Suite 323, Chicago, which was a private mailbox located at a UPS Store.
5. Between 2005 and 2010, CCDN had several employees, including two paralegals who worked from their home in Ohio, and a manager of the "CCDN Support Center" who had, prior to being employed by CCDN, owned and operated a lawn-care service in Florida.
6. Between 2005 and 2010, CCDN received payments in amounts between $2,500 and $4,800 from at least 2,219 clients seeking its assistance with relation to credit card debts and other debt collection matters, including, but not limited to, CCDN's assistance in communicating with original creditors in relation to validation or invalidation of debts.
7. Between 2005 and 2010, Respondent, together with Manger, drafted and revised materials given by CCDN's agents or employees to its clients relating to the Debt Reconciliation Program, including a document entitled "Debt Reconciliation Program Enrollment Manual" ("the Enrollment Manual").
8. Respondent knew that the Enrollment Manual stated, inter alia, that the Debt Reconciliation Program purported to involve three phases: Phase I (Credit Restoration); Phase II (Reconciliation); and Phase III (Federal Lawsuit). Respondent further knew that the Enrollment Manual stated that the Debt Reconciliation Program was to continue for 24 months after the customer or client began participating in the program.
9. Between 2005 and 2010, the sole "credit restoration" service CCDN provided to its clients was to refer its clients to The Fulfillment Center, a Delaware business entity in which neither Respondent nor Manger participated. At no time during Respondent's participation in the operation of CCDN did CCDN take action to challenge any information on its clients' or clients' credit reports, or otherwise "monitor" any such reports.
The attorney is alleged to have engaged in multiple acts of dishonesty, misleading communications concerning his servicers and splitting fees with a non-lawyer.
These charges may reflect an increasing regulatory interest in such practices. (mike Frisch)
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