Soon we’ll need to start a new category, “When Affiliate Relationships Go Bad.” They seem to be coming a bit faster these days.
A reader send me in information about a suit that was filed at the end of October but was just removed to Federal Court.
The case is Strategic Debt Solutions v. Saltzman Law Group, Martin Saltzman, Consumer Legal Services America, Ira Frazer.
The suit alleges that at the beginning of 2010, Saltzman Law Group and Martin Saltzman engaged Strategic Debt Solutions “to manage and provide administrative services to Saltzman Law Group consumer debt settlement clients located throughout the United States.
As part of the agreement, Strategic Debt Solutions was required to send potential debt settlement clients to Saltzman Law Group. In return the Law Group agreed to pay and paid Strategic Debt Solutions for the administrative, accounting, and processing services they delivered.
Saltzman Law Group entered into an agreement with Consumer Legal Services of America (CLSA) and CLSA “provided Law Group with attorneys licensed to practice law throughout the United States.”
Consumers that hired the Saltzman Law Group paid the firm a monthly fee. “A portion of Clientele’s monthly fee was allocated to Law Group for the consumer debt settlement services and a portion of said fee was allocated to settling Clientele’s consumer debt.
Clientele would have this monthly fee deposited into a holding account with a separate company called Global Client Solutions. Upon Clientele’s monthly deposits being made, Law Group and Martin Saltzman then allocated a percentage of the amounts contained in the holding account to Law Group, CLSA, and SDS…”
The complaint says, “All parties to this Complaint had access to the Global Client Solutions holding account.”
Pursuant to the terms of the Oral Agreement, SDS was also required to deposit a monthly “reserve” into a bank account with Global Client Solutions. The purpose of this “reserve” was to protect Law Group in the event that an Attorney General’s office complained of SDS’s processor services and Law Group was required to obtain legal counsel to defend an action.
The suit alleges that things were moving along but, “Upon information and belief, towards the end of 2010, Ira Frazer, acting on behalf of himself and CLSA, contacted Law Group. Mr. Frazer told Law Group that if it did not cease using SDS for the provision of supplying administrative services, CLSA and Ira Frazer would stop providing attorneys across the United States to Law Group.
Ira Frazer and CLSA engaged in the foregoing conduct solely because CLSA and Ira Frazer wanted Law Group to use and engage a different administrative company to process the Clientele work. The new and different administrative service company was a direct affiliate of and/or owned by CLSA and/or Ira Frazer and such an arrangement would increase CLSA’s and /or Ira Frazer’s revenues and profit.”
Around the beginning of July, 2011, Strategic Debt Solutions alleges they were terminated without cause or notice and removed from access to the Global Client Solutions account.
The suit alleges that around the same time, “martin Saltzman and Law Group, without cause or notice, improperly removed the Ninety Thousand Dollars ($90,000) from the Reserve Bank Account and provided said funds to Ira Frazer and CLSA.”
We’ll just have to wait and see how this one shakes out.
You can read the full complaint here.
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