For those who may have used a company named Strategic Student Solutions, you may already be aware the company and affiliated companies were shuttered by the Federal Trade Commission for a bunch of bad alleged behavior.
The court documents in this case might as well be a second rate cable network movie script.
Dave Green was the guy personally named in the FTC action along with Strategic Credit Solutions, Strategic Debt Solutions. Strategic Doc Prep Solutions, Student Relief Center, and Credit Relief Center.
Apparently Green was represented by the law firm of Greenspoon Marder. Unfortunately Greenspoon Marder wants nothing to do with Green and wishes to be released “based on irreconcilable differences that arose between Defendants and Greenspoon that make it impossible for Greenspoon to continue to represent Defendants’ interests in this matter.”
I thought Greenspoon was the firm of last resort for most of the debt relief industry. What an interesting development.
At the same time Greenspoon Marder wanted out of their relationship with Green and the Defendants, they asked the Court to allow payment of their fees from frozen funds. Basically the Court came back at that time and said, “LOL, No.” Request denied.
Public records say, “Mr. Green recently requested that Greenspoon prepare work product for him in a separate proceeding in which it has never represented and does not represent him or any of the Corporate Defendants. Moreover, the Receiver has recently leveled accusations of criminal conduct by Mr. Green, which potentially changes the nature of Greenspoon’s representation.” – Source
Then the FTC took exception with the desire for Greenspoon Marder to get paid. The Court said, “Greenspoon Marder is not entitled to be paid from consumers’ frozen funds. Courts in the 11th Circuit have held that parties “may not use their victims’ assets to hire counsel to help them retain the fruits of their violations.”
Here the is twist in the plot of this B rated made for TV movie. The CFTC makes the argument, “Greenspoon Marder’s difficulty receiving remuneration from consumer funds is particularly unsympathetic in this case because there was an asset freeze in place prior to the law firm entering its appearance. Given the existence of an asset freeze, an attorney would be aware that the Defendants’ ability to pay future legal fees might be temporarily impeded, at least until the Individual Defendant has found a new job.2 As stated previously in this Court, “[m]aintaining the asset freeze is also not unfair to the…Defendants’ attorneys because these attorneys knew that the Court’s Temporary Restraining Order…froze the…Defendants’ assets before the attorneys agreed to represent them, and therefore these attorneys assumed the risk of not getting paid.” – Source
I’m not a lawyer but there seems to be some logic to that argument.
In additional court documents the FTC paints a picture for a new show I’d like to call “What Not to Do If You Are Caught by the FTC.” The FTC filings say, “After being served with this Court’s order, Defendant Green has violated the Order on no less than four occasions: (1) by transferring $250,000 from a bank account subject to the asset freeze to his mortgage servicer to apply to his home mortgage; (2) by attempting to move over $107,800 subject to the asset freeze from one of his accounts to his mortgage servicer; (3) by attempting to divert consumer-facing phone numbers used to effectuate the scam to a different phone line under a new company name; and (4) by attempting to transfer over $202,000 from a bank account held overseas to his mortgage servicer.”
In Court documents it looks like Green was trying to payoff the mortgage on his house in Florida.
- “On May 18, 2017, the day after receiving the order, Defendant Green transferred $250,000 from one of his accounts to A&D Mortgage, which holds the mortgage on his residence, to apply those funds to his home mortgage, That transfer was processed and the funds are no longer liquid.
- On May 19, 2017, Defendant Green attempted (unsuccessfully) to withdraw $107,800 from one of the accounts subject to the asset freeze.
- On May 22, 2017, Defendant Green requested that FreeVoice, a telecommunications provider servicing Defendants’ consumer-facing telephone numbers, copy his existing systems to a new corporate name, “Credit Repair USA.”
- On May 22, 2017, Defendant Green transferred $202,679.15 from an overseas account in the name of DG Call Sales Solutions to A&D Mortgage, again to apply the money to the mortgage on his personal residence. Defendant Green is the CEO of DG Call Sales Solutions.”
The FTC goes on to say, “In addition to the volumes of evidence previously submitted by the FTC in supported of its TRO Motion, the FTC has discovered the following evidence of statutory violations, based on a limited and expedited review of hard copy and electronic documents found in Defendants’ business premises.” Not good.
The FTC then states what new information they would have presented in the second show of season one of this proposed Netflix show.
“Defendants Misled Consumers Into Believing That Monthly Payments Were Being Applied To Their Loan Balances, And That Their Loans Could Be Forgiven In Three Years”
This is a great example of selling a product that confuses consumers and leads them to believe you are delivering a benefit or service they are not getting. If the same complaints are showing up over and over it is a sales process issue, not a consumer issue.
The FTC said, “An electronic spreadsheet of consumer complaints kept by Defendants confirms that this was a prevalent and recurring issue, as processing employees reported the following:
- “Cx called in to say she was under the impression that the $49.99 was
going towards her loan and after she had finish paid [sic] the $49.99 her
loans will be forgiven.”
- “Cx said [asked] if the payments she are [sic] making is going towards her
- “Cx called in to say she [sic] still receiving bills from her servicer ECMC
and she thinks SSS should be taken care of her loans. Cx want to know if
the money she is paying to SSS is going towards her loan.”
- “[Customer] called in to say when she got enrolled in the program at first
she had the impression that the fee she was paying to SSS will be going
towards her loan and after 4 months Fed Loan contacted her to let she [sic]
know that she had a past due amount and that was when she notice [sic]
the money was not going towards her loan.”
- “Client called in to say she spoke with some one to say if the money she is
paying is not going towards her loan she don’t want to do this. Client also
states that she’s under the impression that we are paying off her loans.”
- “[C]lient say that she wants a document to say how much she will be
paying towards her loan as she was advised that 233.00 would go towards
The sales process appears to have been leading to these complaints which put the company on the FTC radar. The documents say, “Indeed, Defendants’ internal documents reveal that they consciously fed this misunderstanding. One document exhorting sales reps to “CLOSE, CLOSE, CLOSE” states that “Strategic student solution makes the good faith payment [to the creditor or servicer] out of fees we charge.” In reality, consumers testified that Defendants did not make any payments to their creditors or loan servicers.[Defendants’ sales representatives were incentivized by a commission schedule to sign up consumers for their student loan modification service.]”
The FTC says they uncovered evidence that “Green was aware of consumers’ mistaken understanding of Defendants’ fee collection practices. On one call, he personally discussed the issue with an aggrieved consumer who was receiving collection notices from her loan servicer and promised to set up payment forwarding to the loan servicer, agreeing that the consumer “shouldn’t have to think about it.” And despite Green’s insistence that Defendants’ fee collection practices are “all explained in [consumers’] contract,” consumers are not given a chance to read Defendants’ unclear, inconspicuous disclaimers buried in the contract after they are given Defendants’ deceptive sales pitch. One call representative hurried a disabled veteran to sign the contract and said that he was “trying to scream through this [the sign up process]” after the disabled veteran said “I’m dosed up right now” after taking medication.”
The three year belief of forgiveness does appear to be supported with transcripts of sales calls. I’m sure Green and Defendants will say they made it clear the three years worth of payments was for their fees, but reading the sales transcripts it does not appear clear to me.
One of the sales rep transcripts says, “It shows that after the first three months, your payments will go down to $50 for 36 months, and then it will go down to zero on the 37th month and will stay that way for the duration of the loan based on your current situation. And it’s staying the same and whatever is left after is totally forgiven.” By the way, the first three months for this consumer were $266 a month.
In another transcript the consumer states what they believe they heard the sales rep say and the exchange goes like this:
Consumer: So that means — so that means — I’m sorry, so that would be 199.66 for three months and then 49.99 for three years.
Sales Rep: Right.
Consumer: After that, I don’t have to pay anything and then my student loan will be cleared?
Sales Rep: Very good, you did it well, yes.”
The FTC says, “Defendants made similar misrepresentations, and fielded similar complaints, regarding their supposed ability to deliver complete loan forgiveness to consumers within three years. (PX25 Atts. X (customer “was going to report us to the Virginia Attorney General as we are a scam and a fraud as no one can forgive a person’s loan in 3 years”); CC (customer claims that Defendants promised her loan forgiveness in three years); EE (“client say [sic] that she was advised that she would pay us and her loan would be forgiven after 3 years”); cf. (PX25 Att. II at 9:8-14, stating that payments “will go down to zero on the 37th month and will stay that way for the duration of the loan . . . and whatever is left after is totally forgiven.”))
The FTC says Green and companies had an inkling things were not running smoothly with his companies, “Here, the FTC has gathered additional evidence demonstrating Green’s knowledge of the wrongdoing. This includes individual customer complaints, private lawsuits, and state law enforcement inquiries. There is also evidence that Green was tracking other federal law enforcement proceedings against student loan modification businesses. Indeed, Defendants had articles in their files summarizing a complaint by the Consumer Financial Protection Bureau (“CFPB”) alleging misconduct similar to that alleged here – namely, illegal upfront fees and recurring monthly payments that the defendants, unbeknownst to their victims, kept for themselves. (PX25 Atts. I, J; see also PX25 Att. H (excerpt of news article found in Defendants’ premises with the following line highlighted: “[b]y law, these [student debt consulting] companies must renegotiate settle, or reduce at least one debt before collecting fees for the service.”)) Indeed, Green had two such CFPB complaints sitting on the printer in his office during the immediate access. (PX25 Atts. M and N.) And Green had open on his computer the BBB profile page for Defendant Strategic Debt Solutions, LLC, showing a “D-” rating, (PX 25 Att. FF), and was personally involved in efforts to remove negative online feedback regarding his businesses, and post positive feedback as a replacement, (PX25 Att. V (Green writing to an overseas service provider that he wants to “replace” bad BBB and Google customer reviews on his website with good reviews; also stating “I am interested in your service if it can be effective in removing from Google negative postings and also if it can add positive feed backs [sic]”); see also PX25 Att. BB (provider outlines strategy “to do Positive Review Marketing (with rotation of internet IP & positive statements)”). Green also had, on his desk, a letter from one of his payment processors advising him that Defendant Strategic Debt Solutions had an excess “unauthorized return rate for ACH activity.” (PX25 Att. O.) High ACH return or chargeback rates are a strong indicator of fraud.” – Source
Documents show some of the online information Green wanted to get removed from the Internet were some of the posts on the GetOutOfDebt.org site.