Last week the FTC announced that on March 20th the U.S. District Court for the Western District of New York finalized orders to permanently ban seven debt collection companies and three individual defendants from the bebt collection industry. The order against Travell Thomas and his company 4 Star Resolution, LLC., his CFO Maurice Sessum, and Charles Blankely III of Merchant Recovery Service, Inc., and affiliated companies comes as a joint effort from the New York Attorney General office and the FTC during February 2015. They are banned from debt relief business of buying and selling debt, and profiting from their previous consumers personal information they had collected. Additionally the individuals are charged $30 million by the courts in behalf of the Commission and Attorney General.
In the original complaint the FTC and Attorney General office claimed the defendants violated the Fair Debt Collection Practices Act by, “threatened consumers with lawsuits, arrest, imprisonment, seizure of property, or garnishment of wages if consumers did not make immediate payments on purported debts.” They used abusive language and did not provided any proof of debt. To bring about this threats they alluded to be acting on behalf of courts and authorities, and claimed to be attorneys and other legal figures. They used two dozen fictitious name to carry out these threats. Additionally they contacted third parties, employers, and families of the victims, which were all against the law.
The Stipulated Order for Permanent Injunction and Monetary Judgement resulted in a $30 million charge against the Thomas, Sessum, and the affiliated companies. Blakely and Merchant Recovery Service were imposed a $18,789,000 judgement. If the defendants do not surrender $1 million and other assets, or if they misrepresented their financial situation, the full judgement will become due immediately. In addition the order imposes compliance reporting, and 20 years of reporting of any change in addresses, phone numbers, and other personal identifiable information. In addition, 20 years of entity monitoring for the companies and record keeping of all accounting operations and Compliance Monitoring by the plaintiffs (FTC and NYAG) of all defendants.
This joint effort is a long standing partnership between the FTC and other agencies that help protect consumers. In 2015, Jessica Rich, Director of the FTC’s Bureau of Consumer Protection stated, “The Federal Trade Commission is pleased to work with the New York State Attorney General to stop abusive debt collectors,” to which Attorney General Schneiderman responded, “Today’s action should make it clear that nobody is above the law, and when shady debt collectors engage in illegal and abusive business practices, they will be held accountable. . . I am pleased to partner with the FTC to stand up for consumers against these bad actors.”
FTC and NY Attorney General Lock Up Defendants in 2015
The list of defendants from the 2015 case include Thomas and his companies, 4 Star Resolution LLC, Profile Management, Inc., International Recovery Service LLC, Check Solutions Services Inc., Check Fraud Service LLC, Fourstar Revenue Management, LLC and Blakely III of Merchant Recovery Service in a second complaint filed against Vantage Point Services LLC.
In April 20, 2017 the Southern District of New York announced that Thomas was sentenced to 100 months in prison for being the “mastermind behind the largest criminal debt collection scheme ever charged.” He defrauded consumers of $31 million between 2010 and 2015. He plead guilty in November 2016. In July 7, 2017 the Southern District of New York announced that Sessum was sentenced to seven and a half years in prison for being, “a driving force behind the largest criminal debt collection scheme ever prosecuted.”