Latest Posts
Home > Debt Articles > Morgan Drexen Sued by CFPB. Take That!

Morgan Drexen Sued by CFPB. Take That!

Recently the debt settlement company Morgan Drexen sued the Consumer Financial Protection Bureau, CFPB, hoping they would be declared unconstitutional and disbanded. For more, see this and this.

Today the CFPB turned around and unloaded their long-term investigation into Morgan Drexen and filed suit against them.

I’ll review the entire lawsuit tomorrow but for now, here is what the CFPB had to say.

“The Consumer Financial Protection Bureau (CFPB) today filed a lawsuit in federal district court against a Nevada corporation, Morgan Drexen, Inc., and its president and chief executive officer, Walter Ledda, for charging illegal upfront fees and deceiving consumers. The company falsely claims that it does not charge consumers upfront fees for debt-relief services and falsely represents to consumers that they will become debt free in months if they work with Morgan Drexen.

“This company took advantage of people who were struggling,” said CFPB Director Richard Cordray. “The company charged consumers illegal fees and deceived them about the services provided. We will hold them accountable for these actions.”

Morgan Drexen is a nationwide debt-settlement company that was founded by Mr. Ledda in 2007. Mr. Ledda maintains a 93 percent stake in the company and plays an active role in the company’s business strategies and practices.

The CFPB alleges that the defendants have violated the Telemarketing Sales Rule and the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Telemarketing Sales Rule prohibits deception in telemarketing. It also generally prohibits debt-relief providers from charging a fee for any debt-relief service until it has actually settled, reduced, or otherwise altered the terms of at least one of the consumer’s debts. The Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits deceptive acts or practices in the consumer financial marketplace.

When consumers sign up for Morgan Drexen’s services, the company presents them with two contracts, one for debt-settlement services, and the other for bankruptcy-related services. Based on its investigation, however, the Bureau’s believes that little to no bankruptcy work is actually performed for consumers. Consumers are nevertheless charged fees.

The CFPB believes the bankruptcy-related contract is a ruse designed to disguise the illegal upfront fees the company is charging consumers for debt-relief services as bankruptcy-related fees. The Bureau’s investigation has revealed that, since October 2010, more than 22,000 Morgan Drexen consumers have enrolled in this program. These consumers have been charged millions of dollars in upfront fees for debt-relief services.

The CFPB also alleges that Morgan Drexen has violated both the Dodd-Frank Act and the Telemarketing Sales Rule by making the following false and misleading claims in its advertisements:

  • No upfront fees: The company claims that consumers will not pay upfront fees for debt-relief services, when, in reality, they typically pay hundreds, if not thousands, of dollars in upfront fees.
  • Debt free in months: Morgan Drexen claims that consumers will be “debt free in months” when, in fact, only a tiny fraction of consumers who work with the company ever become debt free.

Through this lawsuit, the Bureau seeks to stop the unlawful practices of Morgan Drexen and Mr. Ledda. The Bureau has also requested that the court impose penalties on the company and Mr. Ledda for their conduct and require that restitution be paid to consumers who have been harmed.

Morgan Drexen Sued by CFPB. Take That!
Get Out of Debt Guy – Twitter, G+, Facebook

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Morgan Drexen Sued by CFPB. Take That! by

Share This and Spread the Word

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.
  • EffLedda

    This lawsuit will get tossed by a judge till there is a determination on the other lawsuit. The CFPB will look like fools and the judge will most likely remind them 1 foot in front of the other.
    BTW Ledda just bought a ridiculous mansion in Newport Beach boasting 14 bedrooms and a 80ft Yacht. Looks like he plans to spend that money and go for broke. After all he’s banging a Porta-Potty. Google for more.

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.

Close

I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.


  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.