The following information is alleged or stated in court documents filed in Federal court on September 8, 2011.
Safeguard Support Services (“Safeguard”) is located in Florida and was a branch office of Legal Helpers Debt Resolution (“LHDR”) aka Macey, Aleman, Hyslip & Searns.
Under the terms of the agreement, “Safeguard provide administrative and marketing services to Legal Helpers Debt Resolution business in exchange for compensation paid to Safeguard.” That sounds like the typical sell the consumer and we’ll hire you to service the account and pay you, but hey, that’s not fee splitting, right?
In June 2009, Safeguard and LHDR entered into a branch office agreement. In exchange for new clients, Safeguard serviced under that agreement, LHDR allegedly owed Safeguard money. At some point LHDR decided to move those contracted functions from Safeguard to Nationwide Referral Services aka National Legal Referral Service (“Nationwide”).
The way it worked initially, LHDR would deposit funds on a monthly basis into accounts at a bank designated by LHDR, which were held in escrow. Here is the interesting part that makes the probability of fee splitting even greater.
Those funds are ultimately used by Legal Helpers to pay the obligations that were negotiated on behalf of its clients, as well as specified portion to Legal Helpers for its services. Likewise, these funds are the source from which both Safeguard and Nationwide were paid for their respective services.”
“Operating under the above contractual arrangements, Legal Helpers’ business was a success and all parties involved reaped the economic benefits from the business venture.”
Around December of 2009 John Lembo and Mark Mancino from Nationwide met with Safeguard to negotiate a “hold back” period where half (50%) of Safeguard’s earned fee would not be disbursed for 30 days. Safeguard agreed to this proposal.
From the complaint it appears Safeguard felt this was a one-time event but Nationwide continued to hold back 50% of the compensation due from December 2009 to March 2010.
Since March 2010 it is alleged LHDR, through Nationwide, has not paid Safeguard at all for the work they provided to LHDR. Ouch!
The complaint says, “Legal Helpers is both aware of and complicit in the failure to ensure that Safeguard has been compensated for services rendered.” The allegation is made that both Nationwide and LHDR “have orchestrated a conspiracy with each other to deprive Safeguard of large sums of monies owed…yet have allowed [Safeguard] to be mislead by such promises and misrepresentations, intentionally depriving [Safeguard] of its earned funds…”
The amount Safeguard claims is due them is seven million dollars, ($7,000,000) and continues to accrue at the rate of $100,000 per week.
You can read the original complaint, here. Unfortunately the one document I would have loved to have read, the net branch agreement, is not filed as part of the suit.
The suit was filed on behalf of Safeguard by:
Bradley Tobin, Esq.
2701 N. Rocky Point Drive
Tampa, FL 33607
The fascinating thing in this case is LHDR is being represented by Richard Epstein and/or Jonathan Brown of Greenspoon Marder.
The LHDR Response
The LHDR response is either A) Tough, or B) Stick it. It’s not clear which one is the primary. Needless to say LHDR argues they do not owe Safeguard the $7,000,000,000.
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