Global Client Solutions and Rocky Mountain Bank & Trust Said to Have Aided and Abetted Debt Settlement Companies to Violate Statute

A regulator friend of mine just forwarded me a copy of the State of Washington amicus brief filed in a class action case I reported about previously. The case is Carlsen v. Global Client Solutions and Rocky Mountain Bank & Trust. – Source

The State of Washington weighed in on the matter and make some strong statements that do not shield escrow companies of potential liability when working with debt settlement companies that violate the law.

Brief Summary

Everything below is from the amicus brief filed. You can read the full brief here.

  • Washington says Debt Adjusting Act and fee limits apply to the debt settlement companies that Global Client Solutions and Rocky Mountain Bank & Trust work with and serve.
  • State there is a private cause of action against Global and Rocky if the helped debt settlement companies violate the Debt Adjusting Act.
  • States that aider and abettors can be civilly liable for assisting others to violate the Debt Adjusting Act.
  • States holding Global and Rocky accountable is important.
  • Debt settlement companies are debt adjusters and statutory fees in Washington apply to them.
  • There is an implied cause of action under 874A and Bennett against Global and Rocky for aiding and abetting debt settlement companies that violate the debt adjusting act.
  • Helping debt settlement companies violate the Debt Adjusting Act can also result in aiding and abetting liability.
  • “If Global and Rocky provided the means and instrumentality to violate the law, then they should be liable under consumer protection law.”
  • “A party shall be responsible for the fault of another person…where both were acting in concert…”
  • Civil aiding and abetting liability can lie against Global and Rocky for any of four reasons.”


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48 thoughts on “Global Client Solutions and Rocky Mountain Bank & Trust Said to Have Aided and Abetted Debt Settlement Companies to Violate Statute”

  1. This shows how clueless you are. No success based debt settlement company would defend LHDR, everyone knows they are hiding behind the attorney model to circumvent FTC rules and all that’s left are either success based companies or Attorney models. We have not charged upfront fees for the past 3 years, well before FTC changes. I’m defending trust companies like Global and NoteWorld because they have nothing to do with what upfront debt settlement companies did.

    Let’s just agree to disagree because I dont think one can argue that the same results would have taken place if LHDR’s clients were told to self save and send in their “retainer fees”.

  2. I agree Calculator, attorneys on both sides will argue interpretation, not ignorance. If I’m not mistaken both Global and Noteworld have come out against up front fee models. Noteworld will allow for the attorney model but only if it’s signed off by the attorney. LHDR will claim they are a law firm and therefor exempt, they will probably argue that the FTC doesn’t have governing authority over them also. It’ll be interesting to see how this plays out. Make no mistake, I am not a fan of LHDR or the attorney model, I just dont think holding Global or Noteworld accountable makes sense.

  3. Exactly.

    The changes to Debt Manager that enabled it to use the LHDR model revolved around adding the ability to use more than 1 set of login info for the GCS interface. This modification allowed “normal” clients to be under the “normal” company and others to go into GCS under the company’s LHDR account. Until this modification, all clients were sent using the same GCS interface login info, no ability to use different login info per client.

    Any investigation/audit that goes back to mid-2010 will verify this.

    Not a case of DS companies doing something on their own without GCS knowledge/help.

  4. The TSR addressed escrow services and provides for their use by legitimate players offering the debt settlement service. My read of it says escrow service providers can bill monthly etc…

    Those companies found in violation of the TSR, and where it can be established that substantial assistance was provided to those violators, and where it can be established that the assistance was provided by someone (an entity) who knew and/or had the responsibility to know the system/service was built to avoid compliance….. well, that just may turn out to suck for some people.

    Not much room for claiming ignorance when/if we are talking about a large law firm(s), lawyers, industry veterans, established escrow providers etc….

    The more I look and learn about this stuff, I am left to wonder how anyone thought this would not end badly.

  5. The friend of the court brief in Washington is specific to that state and contemplates aiding an alleged impermissible act that predates federal rule changes. The acts and actions of the escrow provider in question are not related to LHDR.

    I do think Vend has brought up a very real concern for Global as relates to the TSR changes and having provided substantial assistance. The strict interpretation would, in my opinion, reach to escrow services. The Frankenstein that was built with LHDR, Nationwide, Eclipse and a host of other participants can likely be proven to have been done so as to circumvent compliance with the TSR. If actions by regulators are taken with a wide range view, and if GCS customized the standard package in order to provide energy to the bolts of the monster, it will not be seen as favorable to any arguments they may raise to insulate themselves as a simple escrow service provider.

    I am only of the butter knife variety in the drawer. If I can see it, so can others.


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