I don’t think the former corporate directors of Debt Relief USA will soon forget July 15, 2011. On that day a State of Washington court awarded a class action award of $1.5 million against the directors of a now defunct and bankrupt debt settlement company.
James Wojcik, Kelly Reilly, and Alvin Bell will have to personally pony up this big damage award. The Court also tacked on litigation costs and punitive damages as well. – Source
In an alleged attempt to shake the liability of the Debt Relief USA business the then owners bankrupted the company to attempt to control damages. In June of 2009 Debt Relief USA filed a Chapter 11 bankruptcy which was soon converted to a Chapter 7. The bankruptcy proceeding is ongoing.
A Special Meeting of the Board of Directors of Debt Relief USA, Inc. (the “Corporation”), was held at 16200 Addison Road, Suite 105, Addison, Texas 75001, on June 1, 2009.
The following directors were present: Kelly E. Reilly, James F. Wojcik, and Alvin B. Bell.
Kelly E. Reilly, President of the Corporation, called the meeting to order and stated that the meeting had been called in accordance with the Bylaws of the Corporation. James F. Wojcik acted as Secretary of the meeting.
The Chairman then announced that meeting was called to consider the following: the liquidation and shut down of the Corporation’s operations and the filing of a bankruptcy petition to wind up the Corporation’s affairs. After discussion and motion duly made, seconded and carried, it was:
RESOLVED, that the Corporation file a petition under Chapter 11 of the Bankruptcy Code, that the officers of the Corporation are directed and empowered to take all reasonable and necessary actions to retain counsel, pay retainers, sign bankruptcy petitions and related schedules and documents, prepare a plan of liquidation, and otherwise wind up the affairs of the Corporation.
There being no further business to come before the Board of Directors, on motion duly made, seconded and carried, the meeting was adjourned.
At the time of the bankruptcy the court documents show the company owned interest in XO Communications and co-owned a Mercedes S550 with Alvin Bell. Ironically they also owed $25,000 to American Express and $15,000 to Bank of America on credit cards. – Source
The case was originally filed in August 2009 by The Scott law Group in the State of Washington on behalf of 345 consumers.
This is not the only such case The Scott Law Group is pursuing and a number of other debt settlement companies are now facing the same fate. Owners of advanced fee debt settlement companies that offered debt settlement services in the State of Washington should expect to see this develop further if they charged fees in excess of the Washington debt adjusting act.
B. Mack Mayo, attorney at The Scott Law Group, P.S., said, “Debt settlement companies often operate on a business model specifically tailored to exact as much money as possible from already financially vulnerable individuals. This judgment sends a strong message to individual corporate officers whose companies violate Washington consumer protection laws, including the protections afforded by our debt adjusting act.”
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