Debt Buyer/Debt Collection Companies and Their Principals Settle FTC Charges
March 24, 2004
FTC Alleges CAMCO, RM Financial, and their Principals Violated Fair Debt Collection Practices Act
Companies that the Federal Trade Commission alleges have threatened and harassed thousands of consumers to get them to pay old, unenforceable debts or debts they did not owe have agreed to settle charges that their abusive and deceptive collection practices violated federal law. The settlement prohibits the companies’ alleged abusive debt collection practices in the future, require disclosures to consumers of their rights in the companies’ collection notices and communications with consumers, and requires the companies and their principals to pay a $300,000 civil penalty.
The FTC charged that Capital Acquisitions and Management Corp. (CAMCO), its subsidiary, RM Financial Services, Inc., and four principals, engaged in systematic and widespread violations of the Fair Debt Collection Practices Act (FDCPA). The FTC charges that the principals of the companies were directly involved in the alleged law violations.
CAMCO is a “debt buyer” – a company that buys old debts well past the statute of limitations and attempts to collect them. Most of the debts are unenforceable in court and are also so old that they are beyond the reporting periods allowed under the Fair Credit Reporting Act. Some of the debts CAMCO allegedly attempted to collect were already discharged in bankruptcy or had been paid. The FTC charged that in their attempt to collect these debts, the companies engaged in abusive and deceptive collection practices, including:
- Harassing consumers at their workplaces;
Discussing consumers’ debts with third parties;
Continuing to communicate with consumers after consumers had notified them that
they did not owe the money and did not wish to be contacted again;
Using obscene or profane language;
Calling consumers continuously with the intention of annoying and abusing them;
Falsely representing the amount and legal status of the debts;
Misrepresenting themselves as attorneys;
Threatening imprisonment, seizure, garnishment, attachment or sale of property or
wages with full knowledge that such action could not legally be taken;
Threatening to take action that could not be legally taken, including threatening to disclose the debts to consumers’ employers and threatening to report the debt
to consumer reporting agencies even though the debts are past the credit reporting periods; and
Ignoring consumers disputes of the charges and continuing to harass them after consumers requested verification of the debts.
The settlement with CAMCO, RM Financial, Reese Waugh, Jerome Kuebler, Scott R. Franson, and Mario Bianchi prohibits these deceptive and illegal practices. It further requires the defendants to pay a civil penalty in the amount of $300,000. It requires that all written collection materials sent to consumers contain disclosures about consumers’ rights under the FDCPA, provide an address and phone number consumers can use to contact the companies, disclose that the FTC enforces the FDCPA, and disclose ways to contact the FTC. It also contains certain recordkeeping and bookkeeping requirements to allow the FTC to monitor compliance.
“The Commission is accepting this settlement,” said Chairman Timothy J. Muris, “because there is ample evidence of the defendants’ liability. We are reviewing our civil penalty program to determine whether the overall range is appropriate. As part of this review, we will give additional scrutiny to the level of civil penalties in the future.”
FTC Asks Court to Halt Illegal CAMCO Operation
December 8, 2004
Company Uses Threats, Lies, and Intimidation to Collect “Debts” Consumers Do Not Owe
In the face of more than 2,000 consumer complaints, the FTC has asked a U.S. District court to order a halt to the harassing, intimidating, deceptive, and illegal ‘debt collection’ practices of Capital Acquisitions & Management (CAMCO). At the agency’s request, the court has frozen the assets of the company and its principals and appointed a receiver to oversee the corporate records and assets, pending trial. The FTC will seek a permanent halt to the illegal threats and lies the defendants use to attempt to collect “time-barred” debts – debts so old that they are beyond the statute of limitations, and cannot appear on credit reports – and debts consumers never incurred and did not owe.
In March 2004, the FTC charged that CAMCO, RM Financial, and their principals were threatening and harassing thousands of consumers to get them to pay old, unenforceable debts or debts they did not owe. The agency alleged that their abusive and deceptive collection practices violated federal law, including the Fair Debt Collection Practices Act. The companies and individuals paid a $300,000 civil penalty to settle the FTC charges, and were barred from engaging in abusive, deceptive, and illegal collection practices in the future.
In the eight months since that settlement, the FTC has received more than 2,000 consumer complaints about CAMCO’s illegal tactics – three times more than the agency received in the two years before the settlement.
In papers filed with the court, the agency charged that as much as 80 percent of the money CAMCO collects comes from consumers who never owed the original debt in the first place. Many consumers pay the money to get CAMCO to stop threatening and harassing them, their families, their friends, and their co-workers.
According to the FTC, CAMCO buys old debt lists that frequently contain no documentation about the original debt and in many cases no Social Security Number for the original debtor. CAMCO makes efforts to find people with the same name in the same geographic area and tries to collect the debt from them – whether or not they are the actual debtor. In papers filed with the court, the FTC alleges that CAMCO agents told consumers – even consumers who never owed the money – that they were legally obligated to pay. They told consumers that if they did not pay, CAMCO could have them arrested and jailed, seize their property, garnish their wages, and ruin their credit. All of those threats were false, according to the FTC.
According to the FTC, grossly abusive behavior, including shouting and profanity, are commonplace tactics with CAMCO. Collectors told consumers:
- We’re “going to hound you ‘til the day you die;”
- We will “continue to hunt you;” and
- “We’ll get you one way or another.”
CAMCO collectors also ignored restrictions on who and when they could call.
The FTC suit asks the court to order a permanent bar on the operation’s illegal activities and order redress for consumers.
In addition to CAMCO, the complaint names RM Financial Services, Inc., Capital Properties Holdings, Inc., Caribbean Asset Management, Ltd., Reese Waugh, Jerome Kuebler, Eric Woldoff, George Othon, and Jeffrey Garrington.
CAMCO’s offices are located in Rockford and Schaumberg, Illinois. RM Financial is based in Marietta, Georgia. Caribbean Asset Management is based in Montego Bay, Jamaica.
Announced Actions for April 12, 2005
April 12, 2005
Commission authorization of the staff to file amended complaints: The Commission has authorized the staff to file an amended complaint in the matter currently pending against Capital Acquisition & Management Company (CAMCO). In December 2004, staff of the FTC’s Midwest Region filed a complaint in U.S. district court against CAMCO and several other defendants alleging violations of Section 5 of the FTC Act and the Fair Debt Collection Practices Act (FDCPA) in connection with their debt-collection practices. Staff subsequently received a temporary restraining order with asset freeze against these defendants, as well as the appointment of a receiver over the defendants’ corporations. Through this action, the staff has amended its original complaint to add David Kapp, Joshua Rausch, Michael Seng, and Billy Martin as defendants in this matter. Each of the newly added defendants was a senior manager of the defendant corporation.
The Commission has authorized the staff to file an amended complaint in the matter currently pending against Bronson Partners, LLC, d/b/a New England Diet Center and Bronson Day Spa. In November 2004, as part of the FTC’s “Operation Big Fat Lie” law enforcement sweep, staff of the Northeast Region filed a complaint against the defendants, alleging that they made false and unsubstantiated weight-loss claims in advertisements for Chinese Diet Tea and the Bio-Slim Patch. Through this action, the FTC is seeking to add Sandra Howard, the spouse of one of the original defendants in this matter, and H&H Marketing, LLC, as relief defendants in the case.
Commission approval of final consent order, hold separate agreement, and hold separate trustee: The Commission has approved and issued a final consent order in the matter concerning Cytec Industries, Inc.’s (Cytec) acquisition of the Surface Specialties Group (SurfaceSpecialties) of UCB, S.A. Under the terms of the consent order, Cytec must divest, by August 27, 2005, assets related to the research, manufacture, and sale of amino resins to a buyer approved by the Commission. As previously announced on March 1, 2005, the Commission issued an order requiring Cytec to hold and operate those assets separately until they are divested, and appointed Richard M. Klein as the hold separate trustee to monitor Cytec’s performance of its obligations under that order. In addition to issuing the order, the Commission has approved a hold separate trustee agreement between Cytec and Klein.
CAMCO To Pay $1 Million to Settle Unfair, Deceptive Debt Collection Practices
December 5, 2006
Capital Acquisitions and Management Corp. and affiliated companies will pay $1 million to settle Federal Trade Commission charges that their debt collection practices violated federal law. The settlement bans the companies from engaging in any future debt collection activities. Previous settlements with eight CAMCO principals and managers also imposed lifetime bans on any future debt-collection activities.
In March 2004, the FTC charged CAMCO, RM Financial, and their principals with threatening and harassing thousands of consumers to get them to pay old, unenforceable debts or debts they did not owe. The agency alleged that their abusive and deceptive collection practices violated federal law, including the Fair Debt Collection Practices Act. The companies and individuals paid a $300,000 civil penalty to settle the charges and were barred from engaging in abusive, deceptive, and illegal collection practices in the future.
In December 2004, the FTC sued the defendants alleging that they continued to use harassing, intimidating, deceptive, and illegal methods to collect “debts” – debts so old that they were beyond the statute of limitations, and could not appear on credit reports – and debts consumers never incurred and did not owe at all. At the agency’s request, the court entered a temporary restraining order, froze the assets of the company and its principals and appointed a receiver to oversee the corporate records and assets, pending trial. The court-appointed receiver shut the business down shortly after the court entered the TRO, and it has not operated since then. The settlement announced today ends the litigation with the corporate defendants and all but one individual defendant.
The settlement bans the defendants from engaging in debt-collection activities or assisting others engaged in debt-collection activities. The defendants will give up $1 million in ill-gotten gains to the FTC. The settlement also contains certain record keeping and bookkeeping provisions to allow the agency to monitor compliance with its order.
The parties named in the FTC complaint include Capital Acquisitions and Management Corp.; RM Financial Services, Inc.; Capital Properties Holding, Inc.; Caribbean Asset Management, Ltd., Reese Waugh, Jerome Kuebler, Eric Woldoff, George Othon, Jeffrey Garrington, David Kapp, Joshua Rausch, Michael Seng, and Billy Martin.
Debt Collector Settles With FTC for Abusive Practices
March 12, 2007
The final defendant in a case that brought a $1 million settlement with the Federal Trade Commission in December for illegal debt collection practices has agreed to settle FTC charges that he threatened and harassed consumers to get them to pay old, unenforceable debts or debts they did not owe.
Under the settlement, Joshua Rausch is prohibited from engaging in debt collection activities or assisting others engaged in debt collection activities. If he has misrepresented his financial condition, a $15 million judgment, representing the minimum amount of consumer injury, will be imposed against him.
Rausch was among several individual and corporate defendants, including Capital Acquisitions and Management Corp. (CAMCO), charged with violations of the Federal Trade Commission Act and the Fair Debt Collection Practices Act. The other individuals are subject to the same prohibitions under previous settlements reached with the FTC. In December 2006, pursuant to a settlement entered by the court involving the FTC, CAMCO, and CAMCO’s largest creditors, CAMCO agreed to pay $1 million in ill-gotten gains to the FTC.
CAMCO, which was permanently closed by the court-appointed receiver in December 2004, was a “debt buyer” – a company that buys and attempts to collect delinquent debts. Most of the debts that CAMCO attempted to collect were well past the statute of limitations, and therefore unenforceable in court. Many of the debts also were more than seven years old, and therefore beyond the credit reporting period allowed under the Fair Credit Reporting Act.
The other parties named in the FTC complaint are RM Financial Services Inc., Capital Properties Holding Inc., Caribbean Asset Management Ltd., Reese Waugh, Jerome Kuebler, Eric Woldoff, George Othon, Jeffrey Garrington, David Kapp, Michael Seng, and Billy Martin.
Temporary Restraining Order
Stipulated Order – Against Defendants Reese Waugh. Jerome Kuebler, Eric Woldoff, George Othon and Jeffrey Garrington
Stipulated Order – Against David Kapp
Stipulated Order – Against Joshua Rausch