The group of companies known as StuDebt, Student Debt Relief Group, SDRG, Student Loan Relief Counselors, SLRC, and Capital Advocates Group was raided by the FTC in a consumer crackdown.
The court appointed a Receiver to takeover the companies during this period of the asset freeze and court control.
The initial Receiver report is typically a good overall look at the situation the Receiver walked into. And this report is no different.
The Receiver discovered a number of issues during the raid, including on-screen text messages between employees.
This message may be a bit difficult to read but it is worth struggling through. If this is a reflection of the environment salespeople are consumers were dealing with, it’s no wonder complaints were being generated and regulators took notice.
This line from the chat should alarm everyone inside and outside the debt relief industry, “And I’ll make you richer _ I want you to out there and I want you to RAM Forgiveness Programs down your clients throats. Till they fucking choke on it and enroll.”
The chat appears to encourage telemarketing for the student loan assistance programs to “be telephone fucking terrorists!”
The Receiver summary of discoveries said:
- The Receivership Defendants telemarketed their student debt relief programs to thousands of consumers and successfully enrolled about 27,000 consumers for nearly $22 million in sales, of which about 43% was cancelled or returned.
- The sales and marketing operation presents itself as a document preparation company and/or an enrollment facility, while providing information that confuses consumers as to the actual role it plays.
- The company operates in a high-pressure direct sales environment.
- Consumers are sold a service to obtain a consolidation or restructuring of student debt. Consumers are set up on a payment plan to pay for this service even though it is offered at no charge by the Department of Education.
- Consumer complaints in the form of notification to the Receivership Defendants by the Better Business Bureau, various States’ Attorneys General, other state offices and the Consumer Financial Protection Bureau.
- Affiliated entities were formed for the purpose of opening new accounts, holding assets and acting as successors to the Receivership Defendants.
- Encrypted internal messaging service and messages.
The court document describes the raid by the Receiver by saying, “On September 20, 2017 the Temporary Receiver met with the property manager at 11766 Wilshire Boulevard, Los Angeles and served her with a copy of the Temporary Restraining Order (Order). The Temporary Receiver confirmed the Receivership Defendants were currently occupying suites 310 and 405.
The Temporary Receiver entered the two suites concurrently. Individual defendant Salar Tahour (Mr. Tahour) was present in suite 310, along with approximately 25 employees. The Temporary Receiver explained why the Temporary Receiver was there. Mr. Tahour stated that he needed to speak with his attorney and declined to cooperate. He then instructed the employees present not to cooperate and to go home. Mr. Tahour then left the office.
Upon entry into suite 405 the Temporary Receiver asked to speak with Mr. Tahour and provided the names of the Receivership Defendants. Workers present stated that they did not know either Mr. Tahour or the Receivership Defendants. The Temporary Receiver was told that the business conducted at that site was document processing. Shortly thereafter, the Temporary Receiver addressed the approximately 50 workers present, advising them of the nature of the temporary receivership and the Temporary Receiver’s powers and duties. During remarks to the employees, as the Temporary Receiver was describing the duty that the employees had to cooperate with the Temporary Receiver under the Order, the Temporary Receiver observed a man standing directly in front of the Temporary Receiver looking at his cell phone. He appeared to be communicating via text or e-mail on his phone. He interrupted the Temporary Receiver and stated, in substance, that no one had to cooperate with the Temporary Receiver’s representatives and all workers should leave the office. In response to the Temporary Receiver’s inquiry, he identified himself as Brian Silver (Silver). The Temporary Receiver later located a business card with Silver’s name on it, identifying him as Regional Manager for Student Loan Financial Aid. Based on the Temporary Receiver’s prelilminary analysis, the Temporary Receiver has determined that Student Loan Financial Aid is either a ficticious business name for the Receivership Defendants or is an affiliated entity of the named Receivership Defendants.
After Silver’s second instruction to the employees to leave, none of the workers who were then present cooperated with the Temporary Receiver. Only four employees partially filled out information on the questionnaire provided by the Temporary Receiver. Some employees chose to write their name and phone number on the form while some tore the questionnaire up and/or threw it away. One employee who arrived after Silver’s remarks agreed to fill out a questionnaire and answer a few of the Temporary Receiver’s questions before leaving.
After Mr. Tahour and all of the employees left the offices, the Temporary Receiver took exclusive custody, control and possession of the premises and had the locks changed.”
A number of affiliated entities were incorporated in California during 2017, which also opened bank accounts soon after the formation. These affiliated entities were formed for the purpose of opening new accounts, holding assets and acting as successors to the Receivership Defendants. These entities include Collegiate Financial, Premier Processing Group, AT Financial Advisors, GDL Financial, and Brentwood Parcels LLC.
In addition to the entities named in the Complaint, the Temporary Receiver believes the following entities have been set up as successors, assigns subsidiaries and/or affiliates. This information comes from documents located on site and from other sources.
Premier Processing Group
o described as a document preparation company
o Described as a financial services company
AT Financial Advisors
o Information pertaining to this company was located on site
o Mail addressed to the Wilshire Blvd. Regus office suite
o A “Knowledge Center website” referenced in a script titled “Compliance Call Script Finance” discussed below
o Ownership obscured through a Panamanian company (Exhibit 24)
o A third party finance company referenced in a script titled “Compliance Call Script Finance” discussed below
o Appeared as ‘Suspended” on the California Secretary of State’s Business Entity website (Exhibit 25)
Capital Advocates Group (Exhibit 26)
o Documents pertaining to this company were located on site
o Mr. Tahour listed as its CEO
o Dissolved on April 25, 2016 based on the California Secretary of State website
Business Systems and Operations
“The Temporary Receiver determined the training, sales and marketing activities were concentrated in suite 405, which is the larger of the two suites. Suite 310 was also being used for sales and marketing in addition to administrative functions including the processing of payments for the fees charged by the Receivership Defendants as well as any payments for fees that are returned unpaid by the consumer’s bank or credit card company. Mr. Tahour’s office was located in suite 310, which contained closed circuit monitors overseeing suite 405 via multiple cameras. Mr. Tahour not only declined to speak with the Temporary Receiver, but he erased the information on a white board in his office before he could be prohibited from doing so. Suite 405 included approximately 76 desks for telemarketers and one desk for Silver.”
The Receiver Located a Modification of Debt Relief Programs
Apparently someone salespeople were pushing a debt validation approach to student loan accounts. This is a blending of the recent debt validation efforts for accounts other than student loans and a student loan assistance program. The court documents describe the program by saying:
“Debt Validation Script (Exhibit 28)
This script appears to be more current than the “Outbound” script as it references a newer company known as SLF Aid:
This script is more aggressive than the older one and strives to inflame the consumer over the injustice of lender wrongdoing and “exploit” consumer hardships to “turn them against lender easily.”
The telemarketer is instructed to make reference to “lawsuits against these lenders” regarding “predatory loan disbursement, abusive collection practices” and invite the consumer to discuss how the loan has affected his or her credit.
The lender is further vilified with the statement “These lenders destroy the American economy with corporate greed.” They send loan proceeds directly to the schools rather than to the consumers so these lenders can “get a profit out of it.”
The telemarketer presents a solution to the consumer’s victimization by offering to assist with:
Building and maintaining good credit, or
Saving money on the loans, or
Resolving the debt quickly.
These choices are then abandoned in the script and the telemarketer introduces the term “debt validation” as a program guaranteed to resolve the debt within 2-5 years and while the consumer pays approximately half of what is owed. According to the script, this program contains the following features:
The consumer must make the decision to stop making loan payments and instead pay the Receivership Defendants to have the debts invalidated.
The Receivership Defendants will dispute the debt.
After six months, by law, the lender must charge off the debt and close the account.
The debt is sold for 5% of its value because the lender cannot guaranty the debt is valid.
The new owner of the debt cannot pursue the debt as they have no paperwork.
The Receivership Defendants take over all correspondence between the consumer and the debt’s owner(s) and the accounts become “uncollectible and unenforceable.”
Although this results in an initial drop in the consumer’s credit score, once this is finalized, negative remarks are invalid over time and the credit score improves.
The original predatory lender is not hurt as they exploit a loophole in the tax code so they don’t really lose any money when the consumer stops paying.
The telemarketer then lets the consumer know how much money will be saved by entering into the validation program instead of repaying the loan obligation.
Similar to the instructions in the older script, this newer script instructs the telemarketer to obtain the consumer’s details and the consumer’s login credentials. The consumer is then put on hold and told the underwriting department will evaluate the consumer’s information. The telemarketer actually uses this time to fill information into the Receivership Defendants’ CRM system. The telemarketer then notifies the consumer that they have been “officially approved” by the underwriting department for the debt validation program.
Enrollment documents are e-signed and the consumer is told to call Pan American Consulting who is “also … holding the Validation Account.” Further, the consumer is instructed to forward any correspondence from the lender or creditor to Pan American Consulting.”
State Actions Discovered
“The Temporary Receiver located various complaints against the Receivership Defendants in Mr. Tahour’s office. These complaints included violations of the Telephone Consumer Protection Act and failing to respond to requests for refund for incomplete work.
The consumer complaints were comprised of complaints filed by consumers with a variety of entities, including but not limited to:
Commonwealth of Virginia
o Small Claims action against American Counseling Center Corp Server/Salar Tahour
o Complaint for Damages for telephone solicitation in violation of various Virginia identification of telephone solicitor requirements; unwanted telephone solicitation
Attorney General, State of Mississippi
o Complaint filed with the Office of Consumer Protection against StuDebt/SDRG
o Consumer began to complete on-line application, then decided not to proceed. He states he was misled that the company was a government agency.
o He states his account was debited $690. He requested refund.
o State of Mississippi notified StuDebt without response.
Attorney General, State of North Carolina
o Consumer complaint filed against Student Debt Relief Group
o Consumer states she was misled into paying for consolidation assistance.
Superior Court of California, County of Los Angeles
o Complaint filed against American Counseling Center
o Cites violation of the Telephone Consumer Protection Act
State of Maryland, Office of the Attorney General, Consumer Protection Division
o Complaint filed against EPPS at Defendant’s site
o Consumer states company gave her a “forgiving student loan” and she paid a fee to get a $39 payment for 10 years with the balance of the loan forgiven.
o When consumer checked with her credit union, she was told the company had done nothing for her.
Consumer Financial Protection Bureau
o Notification to SLRC that it would like a designated point of contact to respond to consumer complaints
The Receiver also discovered a private messaging service used by people involved. The Receiver said “Discussions between individuals revealed candid conversations between employees regarding practices of the Receivership Defendants. The conversations discuss agents lying to consumers, charging a higher amount than agreed to, consumers stating they had not authorized any charge, consumer’s cancelling after discovering the Receivership Defendant is not a federal agency, and consumers encouraged to lie to obtain assistance. The Temporary Receiver believes that Mr. Tahour and his management team, Silver and Trigueros, are aware of subjects being discussed in these chats as they periodically participate in them, as evidenced in Exhibits 32, A, C and G.”
As shown above, the most alarming chat message discovered is described by the Receiver:
“This message by the senior executive assistant to Mr. Tahour is a rallying call to telemarketers emphasizing pressure to sell without regard to ethical conduct. “Strattonites” refers to the pop culture term for the infamous brokers described in Jordan Belfort’s book “The Wolf of Wall Street” about a penny stockbroker who ran a pump and dump firm called Stratton-Oakmont on Long Island.”
See those little black boxes? They are called telephones (computers). I’m gonna let you in on a little secret about those “telephones”. They’re not gonna dial themselves! Okay? Without you they’re just worthless. Like a loaded M16 without a trained Marine to pull the trigger. And in the case of the telephone. It’s up to each and every one of you, my highly trained Strattonites, my killers. My killers who will not take no for an answer! My [f-word] warriors who’ll not hang up the phone until their client either buys or [f-word] dies! Now, if anyone here thinks I’m superficial or materialistic. Go get a job at [f-word] McDonalds. Because that’s where you [f-word] belong! But before you depart this room full of winners I want you to take a good look at the person next to you. Go on. Because sometime in the not-so-distrant future you’re pullin’ up to a red light in your beat-up old [f-word] Pinto. And that person’s gonna pull up right alongside you in a brand new Mercedes. So you list to me and you listen well. Are you behind on your credit card bills? Good. Pick up the phone and start dialing. Is your landlord ready to evict you? Good. Pick up the phone and start dialing. Does your girlfriend think you’re a [f-word] loser? Good. Pick up the phone and start dialing! I want you to deal with your problems. By becoming successful! All you have to do today … is pick up that phone. And speak the words that I have taught you. And I’ll make you richer..I want you to out there. And I want you to RAM Forgiveness Programs down your clients’ throats. Til they [f-word] choke on it til they choke on it and enroll. That’s what I want you to do. You’ll be ferocious! You’ll be relentless! You’ll be telephone [f-word] terrorists! Now. Let’s knock this Mother[fword] out of the park!!!
Have a Productive Day Guys…”
The Receiver gathered and handed to the court more documents related to this effort by the FTC.
This section of the Receiver report contains a lot of documentation. It identifies Brian Silver and Kenneth Nicki as regional managers for Student Loan Financial Aid.
It also contains sales scripts and telemarketing guides, along with enrollment process and guides.
It also contains the chat screenshots.
Feel free to read the 110 pages in the second part of the Receiver report by clicking here.