A handful of law firms, two with Orange County ties, allegedly charged tens of millions of dollars in illegal fees to consumers seeking debt relief, the Consumer Financial Protection Bureau contends in a federal lawsuit.
Named in the lawsuit are Howard Law in Anaheim, Williamson & Howard in Irvine, and the Williamson Law Firm, along with attorneys Vincent Howard and Lawrence Williamson and Morgan Drexen Inc., all of which ran debt relief operations. Morgan Drexen Inc. was shuttered in 2015 following a CFPB lawsuit.
“The defendants exploited consumers who were already suffering financial difficulties by tricking them into paying steep, illegal fees,” said CFPB Director Richard Cordray, in a statement. “We put a stop to this scam once already, and we intend to do it again.”
Debt settlement scams typically target people with credit card debt, promising to reduce the amount owed. According to the Federal Trade Commission, many companies try to collect fees before they have settled your debt, which is illegal, and fail to explain risks involved. a
The FTC advises never doing business with a company that: charges fees ahead of time; touts a new government program; guarantees it can make debt go away; tells you not to talk with creditors without explain the consequences; or tells you to stop all debt collection calls and lawsuits.
The CFPB opened in 2011. It has filed 14 suits against debt relief service providers and two payment processors. Some suits named multiple companies.
Neither attorney immediately returned requests for comment.
Debt relief providers are prohibited from charging a fee until they have settled, reduced or change the terms of a client’s debt, according to the CFPB.
The defendants collected tens of millions of dollars in fees without settling any debts, according to the bureau.
The defendants also allegedly assisted illegal debt practices by Morgan Drexen and its president and chief executive officer, Walter Ledda. In 2015, the CFPB secured a judgment against Ledda for participating in the unlawful debt relief operation. In 2016, the CFPB secured a judgment against Morgan Drexen for the same conduct.
Contact the writer: hmadans@ocregister.com or Twitter: @HannahMadans
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