In an article out today by Ameet Sachdev of the Chicago Tribune, for which I was interviewed, we learn an interesting fact.
Jason Searns, the firm’s general counsel, said publicity surrounding the lawsuit and settlement has made it hard for Legal Helpers to attract new customers outside Illinois, and the decision was made to cease operations after servicing its existing clients. The company operates in about 38 states.
“Once you have something like this, it’s very difficult to get your message out,” Searns said. – Source
That’s news to me but isn’t that just incredible to think we witnessed the rise and fall of Legal Helpers Debt Resolution from start to finish.
From recruiting the underlying companies to service clients, parting off account management, not really splitting but splitting legal fees, sexual harassment suits and drug stories. In the middle we had lots of unhappy consumers who felt they were being charged big fees, not getting what they paid for and not getting refunds. In the end the partnerships with the marketers fell apart and everyone sued everyone else it seemed.
“This was a business built on defrauding people, not providing real legal help,” said Natalie Bauer, a spokeswoman in Madigan’s office. “When you expose that conduct for what it is, it’s not surprising that a business can’t survive.”
The comment from Bauer might be a bit harsh but the underlying premise is true, a debt relief program not built on fairness, value, and promised results will always fail. And as an insider looking out and outsider looking in its easy to spot those schemes that delude themselves into thinking they have found the magic formula to make a shit load (more than a lot) of money from debtors.
But in the end, with very few exceptions, they all seem to come apart at the seams.
Two of Legal Helpers’ partners are not out of the woods yet. Thomas Macey and Jeffrey Aleman face disciplinary action related to their debt settlement business. Their attorney, George Collins, denied any wrongdoing.
A quick look at just federal court cases shows that Legal Helpers Debt Resolution currently has six active cases with three in appeal. Who knows how many open state suits they also have going on.
In one ongoing case in Washington, Greenspoon Marder and others even withdrew as counsel. – Source
This appears to have happend on the eve of a class action settlement in this case. – Source
Just this week, the parties in the State of Washington class action suit finally came to an agreement. In that single case, Legal Helpers Debt Resolution has agreed to pay $2,000,000 to settle the claims of Washington state clients.
The front-end marketing/lead generation company, Marshall Banks, said they only had 23 clients in Washington as part of this transaction. But LHDR allegedly had a total of 1,278 State of Washington clients.
In negotiation talks as part of the settlement, Marshall Banks stated they were “struggling financially and would not be able to pay a large judgment.” – Source
While the marketing company Marshall Banks stated they had only collected $60,000 in fees from Washington clients, through discovery and additional documentation the Plaintiff’s lawyers learned that others had collected a lot more, “Plaintiff has learned that Washington consumers paid Defendants a total of $4.765 million in debt adjusting fees. Although $250,000 has already been refunded to consumers, Defendants have retained the remaining $4.515 million. Of this amount LHDR retained approximately $578,000.” (The Defendants in this case included Legal Services Support Group, JEM Group, Marshall Banks, Joanne Garneau, Arthur Garneau, Jason Searns, Thomas macey, Jeffrey Aleman, Jeffrey Hyslip.)
In addition to the $2,000,000 to be paid by Legal Helpers Debt Resolution, Marshall and Banks, LLC has agreed to pay $60,000. In the original suit Marshall and Banks was described as:
Defendant Marshall Banks, LLC: Defendant Marshall Banks, LLC (hereinafter “Marshall Banks”) is a California company having its principal offices in Irvine, California. Marshall Banks does business under the name Kazlow and Tucker Debt Relief, LLC. “Kazlow and Tucker Debt Relief, LLC” is a fictitious entity that is not registered to do business in any state. Marshall Banks does business throughout the United States, including the State of Washington. Marshall Banks is not and has never been registered to do business in the state of Washington. Marshall Banks is principally engaged as a “front-end” debt relief company that markets its debt relief program to consumers, including Washington residents. Marshall Banks is also engaged in the business of “lead generation” for other debt relief companies, including but not limited to JEM and LHDR.
The settlement agreement fro Marshall and Banks was signed by Elizabeth Conway, Harold Gallob, and Jesse Mullen.
It is estimated consumers as part of this State of Washington class action settlement will receive approximately 30 percent of the fees they paid.
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