A tipster sent in a copy of a contract they purport to be from Thomassen Law Group for debt settlement services. Their concern was over the fees being charged.
Thomassen Law Group appears to be charging a fee that is not directly linked to the performance of debt settlement services. Most companies are not allowed to do this following the passage of the FTC Telemarketing Sales Rules for debt relief companies. I’m not sure how Thomassen Law Group is justifying this but possibly they are claiming that since they are a “law firm” they would then be exempt from the rules.
They do claim the fee charged, which is 5% of the debt enrolled, is a retainer.
Just yesterday I covered a settlement between the State of North Carolina and the Consumer Law Group where the State did not feel arms length relationships between a local lawyer and the purported debt settlement law firm met their standards. While not admitting any guilt, in the case, Consumer Law Group paid $600,000 to the State of North Carolina to settle charges. I do see that Thomassen Law Group lists they provide services in North Carolina as well. – Source
One claim of the tipster was that an attorney in California, Emilio Francisco, was actually behind Thomassen Law Group. It was an allegation I was not going to mention until I noticed that the link that takes you to the page on the Thomassen Law Group site (http://vcwsolutions.com/thomassenbck/lawyers-list.php) was actually for a domain vcwsolutions.com. – Source
According to public domain records vcwsolutions.com is owned by none other than:
Emilio Francisco
17532 Von Karman
Irvine, CA 92614
Francisco has an F rating with the BBB and is listed under “Debt Relief Services – non-compliant with FTC Rule.” – Source
Francisco also has a pending action against him by the California State Bar. The action states:
Respondent’s firm provided debt negotiation/reduction services. In general terms, the written retainer agreement with respondent’s clients was that the clients agreed to pay 10% of the total debt to be negotiated, plus earned fees of 15% of the amount by which the debt was reduced at the time of settlement. A projected monthly payment schedule was provided, the firm’s 10% fee was to be paid to the firm from those payments prior to any portion of the clients’ payments being used to negotiate and resolve the debts. The contingency portion of the fee was to be paid to the firm after a particular debt was negotiated. Further, if it became necessary to respond to a lawsuit in another state, the firm charged an additional $350 for the work of the outof-state attorney. The client was free, however, to hire any attorney the client chose in the other state.
It was found that “By failing to adequately supervise his employee debt analyst, by not arranging for Jewell to speak with an attorney prior to retaining the firm, and by failing to provide Jewell with legal advice regarding his specific situation and regarding the potential advantages of filing for bankruptcy as opposed to engaging in debt reduction, Respondent repeatedly failed to perform legal services with competence in willful violation of Rules of Professional Conduct, rule 3-110(A).”
In additional consumer complaints included it states, “By failing to promptly refund the $6,794.83 advanced fee to the Murrays that had not been eamed, Respondent failed to refund promptly any part of a fee paid in advance that had not been earned in willful violation of Rules of Professional Conduct, rule 3-700(D)(2).” – Source
There may be more to this relationship. One poster on DebtConsolidationCare.com stated:
You are absolutely right. Thomassen Law Group (A+ BBB rating) takes the initial info, then turns your file over to Emilio Francisco’s group of Debt Reduction Law Ctr. (F Rating with BBB). I found out by accident when I asked for an email address and they gave me one for the Debt Reduction group.. They never returned phone calls, never spoke to my creditors on my behalf. – Source
But I Digress
I have no knowledge about the relationship, if any, between the two firms. I just found it very interesting that the background domain names that power the Thomassen Law Group site are owned by Emilio Francisco with his recent background.
Thomassen Law Group has an A+ rating with the BBB. – Source
I did write about Thomassen Law Group before, click here.
Back to the client agreement sent in by the tipster.
I found it interesting that the agreement appears to state the legal representation to “make an answer and appearance on behalf of the Client” is included at what appears to be no additional charge.
There appears to be an advanced fee required for these debt settlement services since “The initial portion of retainer fee (First month’s payment) must be paid to activate this agreement.”
The non-refundable fee is 5% of the debt enrolled. This is called a retainer fee and the payment of the fee “does not depend on the amount of work performed or the results obtained.” Additionally the “retainer fee shall be paid by Client in advance of performing the services and will be satisfied in the first months of the Client’s program.”
This seems to clearly state that before any debt settlement services are performed the client must pay 5% of their debt in a non-refunable fee.
The agreement also says the consumer will have to pay 20% “of the amount by which the debt is reduced at the time of settlement.” What it does not say is that the reduction is not calculated on the initial balance enrolled but could be calculated from the inflated balance created by additional creditor fees and penalties.
In an example where a consumer owes $50,000 and the average settlement is 40% of the debt I would estimate the fees in this case would be:
Retainer: $2,500
Settlement Fees Assuming Inflated Balance of 15% = $57,500: $6,900
Approximate Total Fees: $8,500
The client is asked to understand that no guarantee of of the outcome of the negotiations can be give. The fact the retainer is non-refundable is explained again but this time we learn that the client settlement account won’t even be established until the non-refundable retainer fee is paid.
Update: 1-28-2012
I have received the additional Thomassen client agreement.
