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Legal Helpers Debt Resolution Backend Relationship and CDS Client Services in Appellate Court

On October 24, 2011, Richard Epstein of Greenspoon Marder filed an appeal regarding Callow v. CDS CLIENT SERVICES, INC. a/k/a CDS DEBT RESOLUTION a/k/a CAPITAL DEBT SETTLEMENT, a California Corporation; MARK PENSO, individually; DAVID HENSON, individually; iVISTA ENTERPRISE INC., a/k/a ! VISTA ENTERPRISES, INC. a California Corporation, doing business under the fictitious name ZERODEBT USA; LENNY B. SPANGLER, individually; KELLI RUNDLE.

It appears the Defendant’s are trying to get this to stay in Federal Court rather than being moved to the state court in Washington State.

I’m not really going to talk about the overall case other than to say it is a claim the Defendant’s violated the Washington Consumer Protection Act.

What I do want to share is information contained in the appeal that is interesting about Legal Helpers Debt Resolution and the affiliate/marketer relationship.

From the appeal:

“…Defendants are contractually affiliated with Legal Helpers Debt Resolution, LLC (“Legal Helpers”), the lead defendant in the Smith Case; and (2) Plaintiff’s claim here arises from a written contract she made with Legal Helpers, not any contract she made directly with CDS.17 For reasons unstated but evidently a matter of litigation strategy – as Plaintiff’s counsel here are also Plaintiff’s counsel in the Smith Case – Plaintiff did not sue Legal Helpers in this case. But the conduct in which CDS allegedly engaged which Plaintiff seeks to enjoin here, which, in fact, CDS provided only under its contract with Legal Helpers, was conduct contractually due to Plaintiff by Legal Helpers pursuant to the contract Plaintiff signed with Legal Helpers. So, any injunctive relief entered against CDS would necessarily directly and inescapably impact Legal Helpers.”

“In the Smith Case, discovery revealed the number of Legal Helpers clients residing in Washington and the dollar volume of the services Legal Helpers provided to those clients. The clients include, like Plaintiff here, those for which Legal Helpers engaged CDS to perform certain non-legal services. That information was provided to Plaintiff’s counsel – as Plaintiff’s counsel in the Smith Case – as interrogatory answers. Those interrogatory answers, the contents and accuracy of which were not disputed either in the Smith Case or here, are the evidentiary basis for the statistical information upon which Defendants based their jurisdictional amount computation.”

“Indeed, the interrogatory answers in the Smith Case proffer that seven hundred and thirty-one (731) Washington residents retained Legal Helpers from the period of September, 2009 through July, 2011.19 As stated in the Response, during that period, Legal Helpers clients paid the Firm $2,285,259.72.”

“From the viewpoint of Defendants, the amount in controversy far exceeds $75,000.00. Because Legal Helpers and Defendants will all be directly and adversely impacted by the request injunction – their business in Washington will be destroyed – because of the application of Rule 65(d)(2)(C), CDS may justifiably cite to Legal Helpers’ past business figures to determine the economic impact of the injunction going forward. These numbers offer concrete historical data on the amount earned by Legal Helpers, an amount that averaged nearly $100 thousand per month over a twenty-three (23) month period. As such, these figures are relevant and reliably predictive of the economic impact of this injunction on Defendants, an amount that, as early as the first month following the entry of the injunction, may exceed the $75,000 threshold. – Source

Pages From Original Complaint

Legal Helpers Debt Resolution Backend Relationship and CDS Client Services in Appellate Court
Legal Helpers Debt Resolution Backend Relationship and CDS Client Services in Appellate Court

Legal Helpers Debt Resolution Backend Relationship and CDS Client Services in Appellate Court
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Guest

    Thank you for posting the current lawsuit information in Callow Vs CDS Client services that “melds” the information between my lawsuit and Legal Helpers. I had no idea that what this Debt settlement company was doing was not legal in Washington State.These “companies” do not care about their clients they care about making money off of people who are desperate. It sickens me to know that these people are still out there and still scamming people. I now see this “DRO” or Debt Relief Options” that is very similar to “Legal Helpers”, they’ve just changed around the wording of their spiel. They are taking advantage of the economic situation and making millions. I am hoping to have some impact even if it is only in Washington State. However, getting the word of warning out to the public is too late as these sleeze balls continue to scam.
    I appreciate the efforts you make posting the information on your website, thank you for that!!
    I am thankful that the Scott Law group was successful in blocking CDS in moving the suit to Federal Court.
    Please keep up the good work you do!

  • http://twitter.com/fraudsniffer CMS

    That is some serious money when you break it down.

    That equates to $3,126 paid per customer. If we could get the breakdown between front end/back end splits, as well as dates of those enrollments showing how many of those people paid fees upfront after 10/27/10 that would be some interesting data to crunch. I’d bet the front end is on no less than a 50% split.

    CreditCards.com says the average US consumer has 4 credit cards as of June 2008.
    Money.Cnn.com says the average balance in Seattle is $4,877 as of march of this year.

    (estimated) $14,260,348 in enrolled debt based on the statistics I found. Divide the dollar amount they were paid by my estimated total debt enrolled. 15% on the button. Legal Helpers hasn’t strayed from N@T10nw1de numbers one bit when you break it down.

    I wonder how many people actually got a settlement that equated to more in savings than the fees they paid?

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