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Home > Debt Relief Industry > TX Class Action Suit Filed Against Debt Choice, Lexxiom, The Iniguez Law Firm, and Miguel Iniguez, Esq.

TX Class Action Suit Filed Against Debt Choice, Lexxiom, The Iniguez Law Firm, and Miguel Iniguez, Esq.

A tipster (send in your tips here) brought the recently filed class action case in Texas to my attention. Mary Hope v. Debt Choice, Lexxiom, The Iniguez Law Firm, and Miguel Iniguez.

It is yet another case that involves an attorney debt settlement model, back-end servicer, and marketing partner.

On March 22, 2011 Mary Hope filed a class action lawsuit in which it was alleged:

  • This case is about a scheme and conspiracy by Defendants to take advantage of some of the most vulnerable members of society – those who are facing a personal economic crisis and have few options available to them. Defendants prey on consumers who are unable to pay their debts by offering “services” to help reduce the debts. In reality, Defendants provide virtually no services and charge unconscionable amounts to victims like Plaintiff and the class members – all in violation of Texas law.
  • As an example of the Defendants’ abhorrent conduct, Defendants have violated several laws to take advantage of Plaintiff, an 87 year-old widow living on social security in East Texas who allegedly owed $8200 on a Chase Bank debt. Defendants Debt Choice and Iniguez Firm solicited her in order to help her reduce the debt. In exchange for paying them over $1750 in fees, the sole “services” provided were two one-paragraph form letters to Plaintiff’s creditors that were computer generated with electronic signatures.
  • Debt Choice’s referral to the Iniguez Firm was a referral to a lawyer. The contract between Plaintiff and Debt Choice provides that Plaintiff’s first payment to Iniguez Firm will be paid to Debt Choice as a referral fee. “I understand that making a payment, (sic) equal to the first program payment is paid to Debt Choice and is not paid to my creditors.” The “program payment” was set out in the alleged contract between Plaintiff and Iniguez Firm. Under Texas law, Debt Choice was prohibited by law from accepting money or anything of value to solicit employment for the Iniguez Firm. TEX. PENAL CODE § 38.12.
  • Even if a valid contract existed between Plaintiff and Debt Choice, Debt Choice failed to provide any consideration to Plaintiff. The sole “service” Debt Choice provided was a referral to the Iniguez Firm. However, Iniguez Firm is not licensed in the State of Texas to provide debt management services. Thus, to the extent a valid contract existed between Plaintiff and Debt Choice, Debt Choice breached that contract by referring Plaintiff to a firm that could not legally engage in debt management services in Texas.
  • The Iniguez Firm’s form contract calls for Iniguez Firm to provide the following legal services:
    • Negotiating in an attempt to settle Client’s debts.
    • Administering, managing, and reporting on Client’s funds held by Bank of America and a subscription to Law Firm’s monthly newsletter, for which Iniguez Firm charges a whopping $65 a month!

    As if the $65 per month charge was not outrageous enough on its face, as shown in Iniguez Firms’ own file, it only sent two “monthly newsletters” in the 17 months of the parties’ relationship. Those were generic one page documents of information easily obtained from many other sources on the web.

  • Mr. Iniguez later testified under oath that the firm’s employees did not perform all the services provided under the Legal Representation Agreement between the Iniguez Firm and Plaintiff. In fact, he claims in that deposition that the large majority of the alleged services performed for Plaintiff were performed by Defendant Lexxiom’s employees.
  • Iniguez Firm’s “letterhead” gives a P.O. Box in Rancho Cucamonga, California, as the firm’s address. Yet, Respondent does not have an office in Rancho Cucamonga, California. Nor does Respondent rent a post office box there. According to Defendant Iniguez, Lexxiom owns that P.O. Box.
  • Upon information and belief, Defendant Iniguez paid or gave or offered to pay or give Debt Choice money or anything of value to solicit employment of Plaintiff in violation of TEX. PENAL CODE § 38.12 (a)(4).
  • Iniguez Firm’s form contract clearly and unequivocally provides what anyone would expect when hiring a law firm – that the law firm will provide the legal services: “Responsibilities of Law Firm: Law Firm shall perform the legal services called for under this agreement … .” (emphasis added). That representation was false.
  • Iniguez Firm employs a bait and switch scam wherein an undisclosed and non-attorney corporation, Defendant Lexxiom, allegedly performs the services called for in the legal services contract.
  • Each of the Defendants conspired with one or more of the other Defendants to engage in the unlawful conduct described herein. Specifically, each Defendant conspired with one or more of the other Defendants to obtain money from consumers, including Plaintiff, for debt management services without the provider of such services being licensed as required by Texas law.
  • Each Defendant was aware that one or more of the other Defendants sought to obtain money from consumers, including Plaintiff, for debt management services without the provider of such services being licensed as required by Texas law.
  • Each Defendant formed the specific intent to assist one or more of the other Defendants to obtain money from consumers, including Plaintiff, for debt management services without the provider of such services being licensed as required by Texas law.

You can read the full complaint here.

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

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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.
  • Fred

    Actually, the elderly are one of the most prayed up groups by unscrupulous debt collectors. I’m not defending this group, the lawyer or whoever admitted that they didn’t perform, but, to try and make a blanket statement about what people are going to do “(knowing that most of them were not suitable and would fall out of the program with most of their fees being paid. ) is just wrong. Having worked 10 years in the finance industry, some of that managing legal compliance for collections, I can tell you, most companies don’t care if you’re 100 years old, if they can scare you, intimidate you, or threaten you into paying some portion of the money you supposedly owe, they will. In most cases, a letter from an attorney representing you is enough to put your debt on the “black” list – to be sold off to another collector or written off as a loss; particularly if the collector can’t back up the debt with proof. Short of that, they’re going to collect. If I was this lawyer, I would have advised her to do exactly what “sean” stated above. And I would have done it pro bono. ;)

  • Angelo

    Exactly, so why would a company milk her for fees knowing this? An 87 year old widow living on social security is the worst possible candidate for debt settlement and the exact reason so many people got screwed by up front fee based companies who would enroll everyone and their grandmother (Literally) just to earn fees knowing that most of them were not suitable and would fall out of the program with most of their fees being paid.

  • Sean

    Sure, she can technically just walk away from debt. I’d tell her to give the middle finger to all her creditors. She’s 87 years old, she’s not going to have another job for creditors to garnish her wages. PLUS, wages can’t even be garnished in the state of Texas.

  • FNB

    Under Texas law, Debt Choice was prohibited by law from accepting money or anything of value to solicit employment for the Iniguez Firm. TEX. PENAL CODE § 38.12.
    The sole “service” Debt Choice provided was a referral to the Iniguez Firm. However, Iniguez Firm is not licensed in the State of Texas to provide debt management services.
    I would assume debt settlement and debt management are the same. It’s the fee splitting for refferal that bites.

  • SeanDSLegalPlan

    For the record- The comment above is NOT me…

  • Angelo

    An 87 year old widow living on social security is not a bad candidate for debt settlement? Really??? WOW!!!!!!!! Im dumbfounded !! Please get out of this industry as fast as possible as you have no clue what suitable really is!

  • Sean

    An 87 year old widow living on social security is not a bad candidate for debt settlement. After all, she’s judgment proof (assuming very little assets). I’m not defending the Debt Settlement company in any way, as a matter of fact, they are a prime example of way the new FTC ruling took place. But I noticed a phrase in the article that says:

    “Thus, to the extent a valid contract existed between Plaintiff and Debt Choice, Debt Choice breached that contract by referring Plaintiff to a firm that could not legally engage in debt management services in Texas.”

    Wasn’t the plaintiff enrolling into a debt settlement company? Two totally different things..DMP & Debt Settlement.

  • Sean

    An 87 year old widow living on social security is not a bad candidate for debt settlement. After all, she’s judgment proof (assuming very little assets). I’m not defending the Debt Settlement company in any way, as a matter of fact, they are a prime example of way the new FTC ruling took place. But I noticed a phrase in the article that says:

    “Thus, to the extent a valid contract existed between Plaintiff and Debt Choice, Debt Choice breached that contract by referring Plaintiff to a firm that could not legally engage in debt management services in Texas.”

    Wasn’t the plaintiff enrolling into a debt settlement company? Two totally different things..DMP & Debt Settlement.

    • Angelo

      An 87 year old widow living on social security is not a bad candidate for debt settlement? Really??? WOW!!!!!!!! Im dumbfounded !! Please get out of this industry as fast as possible as you have no clue what suitable really is!

      • Sean

        Sure, she can technically just walk away from debt. I’d tell her to give the middle finger to all her creditors. She’s 87 years old, she’s not going to have another job for creditors to garnish her wages. PLUS, wages can’t even be garnished in the state of Texas.

      • Angelo

        Exactly, so why would a company milk her for fees knowing this? An 87 year old widow living on social security is the worst possible candidate for debt settlement and the exact reason so many people got screwed by up front fee based companies who would enroll everyone and their grandmother (Literally) just to earn fees knowing that most of them were not suitable and would fall out of the program with most of their fees being paid.

      • Fred

        Actually, the elderly are one of the most prayed up groups by unscrupulous debt collectors. I’m not defending this group, the lawyer or whoever admitted that they didn’t perform, but, to try and make a blanket statement about what people are going to do “(knowing that most of them were not suitable and would fall out of the program with most of their fees being paid. ) is just wrong. Having worked 10 years in the finance industry, some of that managing legal compliance for collections, I can tell you, most companies don’t care if you’re 100 years old, if they can scare you, intimidate you, or threaten you into paying some portion of the money you supposedly owe, they will. In most cases, a letter from an attorney representing you is enough to put your debt on the “black” list – to be sold off to another collector or written off as a loss; particularly if the collector can’t back up the debt with proof. Short of that, they’re going to collect. If I was this lawyer, I would have advised her to do exactly what “sean” stated above. And I would have done it pro bono. ;)

    • Anonymous

      For the record- The comment above is NOT me…

    • FNB

      Under Texas law, Debt Choice was prohibited by law from accepting money or anything of value to solicit employment for the Iniguez Firm. TEX. PENAL CODE § 38.12.
      The sole “service” Debt Choice provided was a referral to the Iniguez Firm. However, Iniguez Firm is not licensed in the State of Texas to provide debt management services.
      I would assume debt settlement and debt management are the same. It’s the fee splitting for refferal that bites.

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