New Life Financial Solutions, 1st United Consultants, and Expense Management America Exposed by Get Out of Debt Guy and Nailed by FTC

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As far back as early 2011, the GetOutOfDebt.org site has been publishing information about and warning consumers about suspicious and concerning practices by a number of interrelated companies promising financial help and foreclosure relief.

These schemes were not uncovered by the site alone. Readers and insiders also sent in critical information that led to the unraveling of the operations. From tipster (send in your tips here)s we learned the company was operating out of Montreal, employees were in heavy sales positions, and we even received photographs of the operation.

Today we are proud to announce that the Federal Trade Commission took action and has filed a suit against E.M.A. Nationwide, EMA Nationwide, EMA, Expense Management America, New Life Financial Solutions, New Life Financial, New Life Financial Services, 1UC, 1st United Consultants, First United Consultants, 7242701 Canada, 7242697 Canada, 7246293 Canada, 7246421 Canada, James Benhaim, Jimmy Benhaim, Daniel Michaels, Dan Michaels, Dan Michles, Phillip Hee Min Kwon, Phillip H. Kwon, Phillip Kwon, Joseph Shamolian, Nissim N. Ohayon, and Nissim Ohayon.

Now I will admit that I did gloat a bit in the title to this article and I am feeling happy over this action by the FTC, but sometimes you just have to celebrate the little victories that you can. And this one I’m going to celebrate.

The scheme was a stinker from the beginning, I wrote about my findings and support for why I thought it was a scam and the action by the FTC supports the initial concerns I had.

The FTC today announced they found the companies were presenting themselves as the solution to all the consumer’s financial problems, the defendants have cold-called thousands of U.S. consumers from their call center in Montreal since at least mid-2010, including those whose numbers were registered on the Do Not Call Registry, according to the FTC complaint.

Whether the consumer was struggling with a mortgage, credit card debt, student loans, car payments, or a poor credit score, the defendants charged an up-front fee of $2,200 to $10,000 that they claimed was being used to pay off debts, according to the complaint. The defendants allegedly claimed that their relationships with lenders and their ability to negotiate on behalf of large groups of consumers made it possible to substantially reduce their payments. But according to the FTC, the defendants failed to produce any of the promised results.

The defendants – Expense Management America, six affiliated companies, and five individuals, who operated in Canada and the United States – also used a series of websites that lured consumers to call them, according to the complaint. After pitching consumers by phone, the defendants allegedly would send brochures and financial documents to consumers via e-mail, and obtain their authorization to withdraw funds from their checking accounts. One brochure, the Expense Management Guide, explicitly told consumers they must follow the “Golden Rule,” which was to cease communicating with their creditors and let the defendants do the talking:

“Sometimes [creditors will] go to extremes in an attempt to force you into an agreement by saying things such as ‘We’ve never heard of E.M.A.’ Or ‘We don’t deal with them.’ … Sometimes [creditors] even break the law. Don’t be fooled by them. Let E.M.A. do the talking!” The FTC charged that the defendants violated the Telemarketing Sales Rule, the FTC Act, and the MARS Rule by: falsely claiming they could secure more affordable payments and reduce the principal on consumers’ loans; making deceptive claims about the price and material aspects of debt relief and other goods and services; charging advance fees for debt relief; calling consumers whose phone numbers are listed on the Do Not Call Registry; telling consumers not to communicate with their lenders; and failing to make the disclosures required by the MARS Rule.

The Scam

In April, 2011 I published Suspicious New Life Financial Solutions Contract Has Me Very Concerned – SCAM. That article reviewed a contract from New Life Financial and made some of the connections between the parties. At that time, New Life Financial was taking money from consumers with the assistance of NoteWorld, now known as Meracord. It’s hard to imagine the due diligence NoteWorld had done to vet this or these companies before joining them in their efforts to deceive consumers.

In June of 2011 an employee spoke out about their experience at the Canadian call center and was promptly threatened with being sued by the people in charge. They worked hard to shelter their operations and cloack their activities as much as possible.

The FTC Complaint

Defendant E.M.A. Nationwide, Inc. (“EMA”), is a Florida and California corporation. Its registered address is 1444 Biscayne Blvd., Suite 213, Miami, FL 33132. It also has used the addresses 800 Parkview Drive, #222, Hallandale Beach, FL 33009 and 28310 Roadside Drive, Suite 155, Agoura Hills, CA 91301. EMA also does business as E.M.A. and Expense Management America, and it transacts or has transacted business in this district and throughout the United States.

Defendant New Life Financial Solutions, Inc. (“New Life”), is a Florida and California corporation. Its registered address is 1444 Biscayne Blvd., Suite 213, Miami, FL 33132. It also has used the addresses 800 Parkview Drive, #222, Hallandale Beach, FL 33009 and 28310 Roadside Drive, Suite 155, Agoura Hills, CA 91301. New Life also does business as New Life Financial and New Life Financial Services, and it transacts or has transacted business in this district and throughout the United States,

1UC Inc. (“1st United”), is a Wyoming corporation. Its business address is 800 Parkview Drive, #222, Hallandale Beach, FL 33009. 1st United has done business as 1st United Consultants and First United Consultants, and it transacts or has transacted business in this district and throughout the United States.

Defendant 7242701 Canada Inc. is a Montreal, Canada corporation. Its registered address is 75 Rue Queen, Suite 6600, Montreal, Quebec, H3C 2N6. Its cori’espondence office address is 500, Place D’Armes, Bureau 2920, Montreal, Quebec H2Y 2W2.

Defendant 7242697 Canada Inc. is a Montreal, Canada corporation. Its registered address is 75 Rue Queen, Suite 6600, Montreal, Quebec, H3C 2N6. Its correspondence office address is 500, Place D’Armes, Bureau 2920, Montreal, Quebec H2Y 2W2.

Defendant 7246293 Canada Inc. is a Montreal, Canada corporation. Its registered address and its correspondence office address are both 75 Rue Queen, Suite 6600, Montreal, Quebec, H3C 2N6.

Defendant 7246421 Canada Inc. is a Montreal, Canada corporation. Its registered address and its correspondence office address are both 75 Rue Queen, Suite 6600, Montreal, Quebec, H3C 2N6. It has also done business as “EMA.” (Together with Defendants 7242701 Canada Inc., 7242697 Canada Inc., and 7246293 Canada Inc., the “Montreal Corporations.”)

Defendant James Benhaim, also known as Jimmy Benhaim (“Benhaim”), is an officer of EMA, New Life, 1st United, 7242697 Canada Inc., 7246293 Canada Inc., and 7246421 Canada Inc. At all times material to this Complaint, acting alone or in concert with others, he formulated, directed, controlled, had the authority to control, or participated in the acts and practices set forth in this Complaint. Defendant Benhaim, in connection with the matters alleged herein, transacts or has transacted business in this district and throughout the United States.

Defendant Daniel Michaels, also known as Dan Michles (“Michaels”), is an officer of EMA, New Life, 1st United, and 7242701 Canada Inc. At all times material to this Complaint, acting alone or in concert with others, he formulated, directed, controlled, had the authority to control, or participated in the acts and practices set forth in this Complaint. Defendant Michaels, in connection with the matters alleged herein, transacts or has transacted business in this district and throughout the United States.

Defendant Phillip Hee Min Kwon, also known as Phillip H. Kwon (“Kwon”), is or was an officer of EMA and New Life. At times material to this Complaint, acting alone or in concert with others, he formulated, directed, controlled, had the authority to control, or participated in the acts and practices of EMA and New Life, including the acts and practices set forth in this Complaint. Defendant Kwon, in connection with the matters alleged herein, transacts or has transacted business in this district and throughout the United States.

Defendant Joseph Shamolian (“Shamolian”) is or was an owner and officer of EMA and New Life. At times material to this Complaint, acting alone or in concert with others, he formulated, directed, controlled, had the authority to control, or participated in the acts and practices of EMA and New Life, including the acts and practices set forth in this Complaint. Defendant Shamolian, in connection with the matters alleged herein, transacts or has transacted business in this district and throughout the United States.

Defendant Nissim N. Ohayon (“Ohayon”), is or was an officer of EMA, New Life, and 1st United. At times material to this Complaint, acting alone or in concert with others, he formulated, directed, controlled, had the authority to control, or participated in the acts and practices of EMA, New Life, and 1st United, including the acts and practices set forth in this Complaint. Defendant Ohayon, in connection with the matters alleged herein, transacts or has transacted business in this district and throughout the United States.

Defendants EMA, New Life, ls( United and the Montreal Corporations (collectively, “Corporate Defendants”) have operated as a common enterprise while engaging in the deceptive acts or practices and other violations of law alleged below. Defendants have conducted the business practices described below through an interrelated network of companies that have common ownership, officers, managers, business functions, employees, and office locations, and that commingled funds. Because these Corporate Defendants have operated as a common enterprise, each of them is jointly and severally liable for the acts and practices alleged below. Defendants Benhaim, Michaels, Kwon, Shamolian, and Ohayon have formulated, directed, controlled, had the authority to control, or participated in the acts and practices of the Corporate Defendants that constitute the common enterprise.

SUMMARY OF COMPLAINT

Since at least June 2010, through at least three different iterations – EMA, New Life, and now, 1st United – Defendants have marketed and sold debt-related services, including debt settlement, loan modification, and mortgage assistance relief services, to consumers nationwide, primarily through the cold-calling telemarketing activities of Defendants’ Montreal based outbound call center.

Defendants even call consumers whose phone numbers have been registered with the Do Not Call Registry. Defendants attract distressed consumers via phone calls, deceptively promising substantial relief from unaffordable debt, including mortgages, and possible foreclosures. Defendants offer a substantial reduction in consumers’ monthly payments (and outstanding principal amounts), but rather than helping consumers address their debt-related challenges, Defendants dupe distressed consumers into paying thousands of dollars based on false promises and misrepresentations.

Defendants mislead consumers into thinking that their services come at little or no cost, and that consumers’ payments will be held in escrow pending resolution of debt settlement agreements with their creditors. In reality, much, if not all, of these payments are taken by Defendants up-front, as their undisclosed fee. In the end, Defendants provide little, if any, meaningful assistance to resolve consumers’ debt, and consumers are left worse off after signing up – and paying – for Defendants’ services.

DEFENDANTS’ BUSINESS ACTIVITIES

Since at least mid-2010, Defendants have marketed their debt-related services to consumers and homeowners who are in financial distress, behind on their secured and unsecured loans, and, in some cases, in danger of losing their homes to foreclosure. Since at least mid-2010, Defendants have initiated outbound telephone calls to numbers on the National Do Not Call Registry.

During Defendants’ calls with consumers, they offer to solve all of the consumers’ financial problems by reducing applicable interest rates, reducing outstanding principal amounts, reducing monthly payments, and generally improving consumers’ financial positions.

Defendants tell consumers that through their experience and connection with various lenders, and their ability to negotiate on behalf of many consumers at the same time, Defendants will be able to do what the consumers are unable to do – obtain real results and secure debt settlements, loan modifications, and mortgage loan relief that would otherwise be unavailable to consumers.

Defendants tailor their pitch to consumers depending on the individual consumer’s financial situation. If the consumer is having trouble with a mortgage, Defendants claim they can help. If the consumer is behind on credit card or student loan debts, Defendants say they have an answer. Even if the consumer is behind on car loans or suffers from a poor credit score, Defendants present themselves as the solution to all of the consumer’s financial problems.

Defendants collect basic financial information from consumers, including the amounts of outstanding debt, the type of debt, and, in some cases, the creditor to whom the debt is owed. Defendants also collect some personal information about the consumer, including name and address, and, in some cases, part or all of the consumer’s Social Security number. In some cases, Defendants utilize free credit reporting services and access the consumer’s credit report without their knowledge or consent.

After briefly placing the consumer on hold, Defendants return to the line and congratulate the consumer. “Congratulations! You’ve been approved for our program!” No matter how much debt is owed (as long as it isn’t too little), and no matter which creditor is involved, Defendants offer consumers a new, lower monthly payment, which Defendants claim will be held in a special purpose account and, when the balance is high enough, will be used to pay off outstanding debts at a fraction of what is owed.

In numerous instances, Defendants assure consumers that their “approval” virtually guarantees that creditors will modify the consumers’ outstanding debts. In numerous instances, Defendants claim to have an incredible track record of success, and Defendants claim that they are paid either a very small fee for processing each payment, or no fee from consumers, but rather Defendants claim to be paid by the consumers’ creditors.

Defendants also instruct consumers to stop paying their creditors directly, and Defendants give specific instruction that consumers should not speak to their creditors if they call. Defendants are careful to limit use of U.S. Postal Service delivery for the contract or any other materials or payments.

Although the pitch remains the same, Defendants have used at least three different company names in their deceptive and illegal scheme – EMA, New Life, and now, 1st United. While the names, websites, and contractual language varies somewhat between companies, the deception, and the failure to produce any of the promised results, is consistent. Defendant EMA

Beginning in or around June 2010 through around December 2010, EMA marketed its services primarily through the cold-calling techniques described above – like the other Corporate Defendants. EMA’s website and documents provided to consumers after they sign up reinforced the Defendants’ claims and promises of financial relief.

EMA’s website marketed its “forensic mitigation program” services, the purpose of which is to “help [consumers] with [their] financial situation and settle [their] debts for a substantially lower amount than [they] currently owe.”

EMA’s website contained statements that induced consumers to purchase Defendants’ services, including the following:

“Generally, we reduce your debt by 50-70% of the current total.”
“EMA negotiates with your creditors to substantially reduce your debt and help put a stop to collector calls and harassment.”
“We arrange a settlement with one low monthly payment for you with no upfront fee.”
“Through the established relationships that we have with the creditors and financial institutions, we are able to successfully negotiate the debts of our clients at a substantial discount.”
“Any and all fees associated with the program are built in to your comfortable monthly payment and fully absorbed by the interest savings.”

When consumers signed up with EMA, they received an email containing a contract between the consumer and EMA, as well as an agreement between the consumer and EMA’s payment processor, Note World Servicing Center (later known as Meracord) granting Meracord permission to electronically withdraw payments from the consumer’s checking account at specified dates and amounts. The consumer was instructed to electronically “sign” the contract and begin the process.

After signing up with EMA, the consumer was sent an “Expense Management Guide” by email. The Guide contains approximately 40 pages of basic financial advice, budgeting exercises, and templates for letters to send to creditors. It also repeatedly reminds the consumer of “The GOLDEN RULE THAT YOU MUST FOLLOW,” which is, “LET E.M.A. DO THE TALKING FOR YOU.” (Emphasis in original.) The Guide also warns:

“Sometimes [creditors will] go to extremes in an attempt to force you into an agreement by saying things such as, ‘We’ve never heard of E.M.A.’ or ‘We don’t deal with them.’. .. Sometimes [creditors] even break the law. Don’t be fooled by them. Let E.M.A. do the talking!”
“Rely on our experience and expertise: we have your best interests at heart.” (Emphasis in original.)

Defendant New Life

Defendants continued to deceptively market their services in their second iteration – New Life – from approximately December 2010 until approximately March 2012.

Like EMA, New Life used telemarketers to cold-call consumers and promise all kinds of financial relief- reduced outstanding principal, reduced interest rates, and reduced monthly payments.

Like EMA, New Life’s website and contracts reinforced New Life’s deceptive claims. New Life’s website included the following:

“[New Life’s] goal is to provide a safe and secure place for consumers to seek financial relief.”
“Our financial consultants . . . will assist you in creating a tailor-made plan to reduce the burden on you and your family.”
“New Life does exactly what its name suggests and provides solutions to give you a new life and set you on the path to success ” (Emphasis in original.)

New Life’s website also offered 28 “testimonials” that “are but a few examples of the successes that can occur….” The “testimonials” were copies of letters from creditors purporting to show incredible reductions in outstanding principal amounts of debts, and they boast savings of up to 86%, dating back as far as 2005.

Like EMA, New Life dealt with consumers almost exclusively through telephone and email, and when consumers signed up with New Life they received a contract and “Debt Appraisal Guide.” Consumers electronically signed the contract with New Life (and the included contract with Meracord for payment processing), and began making payments directly to New Life.

New Life instructed consumers not to pay their creditors directly, and the “Debt Appraisal Guide” states, “DO NOT SPEAK TO YOUR CREDITORS UNTIL YOU HAVE MAPPED OUT A CLEAR SOLUTION TO THE PROBLEM!” (Emphasis in original.)

New Life told consumers that they needed to make payments for a specific number of months – usually between four and ten – and that these funds would be used to settle with the consumers’ creditors. In fact, however, in virtually all cases when the consumers made all of the scheduled payments, New Life informed the consumers that they had successfully paid New Life’s fee in full, and New Life referred consumers to third parties who attempted to charge a second fee for the debt settlement, loan modification, and/or mortgage relief services.

Many consumers who complained to New Life received no relief and rarely received a return call.

By this time, consumers were several months behind on their payments to creditors, and they had lost all of the money paid to New Life, with nothing to show for it.

Defendant 1st United

Started in approximately December 2011, Defendants’ latest – and current – iteration is 1st United. Like its predecessors, 1st United uses the deceptive telemarketing tactics described above.

1st United’ s website states:

“Whether you are struggling with: Mortgage Payments; Credit Cards; Monthly Budget; Medical Bills; Student Loans; Personal Loans; Tax Debt
Our job is to provide you savings, which in turn give you more disposable income, which means more options for eliminating your debt and reducing your monthly output dramatically!”
“If saving money is for you, our financial consultants will work tirelessly to ensure that you are put on the road to financial stability.”

The website also provides testimonials:

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“Yay for 1st united!!! You helped me do what others have been trying to for years. I admit, I wasn’t sure how you would help but after ail is said and done and my monthly payments are down by $1000 a month, I have to say Kudos!”
“When you guys called me my first question was ‘Are there any fees?’ Steven told me that there are fees and that even with fees I will still be saving 35% on my bills, he told me that aside from the fees I needed to be concerned with the savings and he was right, despite the fees I was saving 800$ a month. He explained that 1st United lowers my payments on the first month and they go even lower on the 5th or 6lh month.”

In numerous instances, as with EMA and New Life, 1st United collects consumers’ payments without providing the promised results.

CONSUMER RESULTS

In numerous instances, consumers who pay fees to Defendants do not obtain loan modifications or have their debt or moitgage payments or principal amounts substantially reduced.

In numerous instances, when consumers contact Defendants for status updates, Defendants fail to answer or return consumers’ telephone calls or emails. When consumers are able to reach Defendants, Defendants’ salespersons generally assure consumers that their files are being handled.

In numerous instances, consumers learn from their creditors that the creditors have never been contacted by Defendants.

In numerous instances, consumers enrolled in Defendants’ programs have suffered significant economic injury, including: monetary losses ranging from $2,200 or lower to $10,000 or higher and receiving little or no service in return; going into foreclosure; and even losing their homes. – Source

The Federal Trade Commission has asked the Court to freeze the assets of the parties and appoint a receiver. As the FTC said in their court request:

Plaintiff, the Federal Trade Commission (“FTC” or “Commission”) asks this Court to bring an immediate stop to a deceptive telemarketing scheme that sells bogus debt-relief and mortgage assistance relief services to consumers struggling to make ends meet. Defendants E.M.A. Nationwide, Inc. (“EMA”), New Life Financial Solutions, Inc. (“New Life”), 1UC Inc., doing business as 1st United Consultants (“lsf United”), 7242701 Canada Inc., 7242697 Canada Inc., 7246293 Canada Inc., 7246421 Canada Inc., (collectively, “Corporate Defendants”), their two principals, James Benhaim (“Benhaim”) and Dan Michaels (also known as Dan Michles) (“Michaels”), and three other individuals that are or were owners or officers of at least one of the Corporate Defendants (collectively, “Defendants”) have fleeced thousands of U.S. consumers out of millions of dollars.

Over the past 28 months, Defendants have operated a telemarketing operation, based in Montreal, Canada, that has deceptively marketed debt relief and mortgage assistance relief services to thousands of U.S. residents – many of whom have registered their phone numbers with the Do Not Call Registry. Defendants claim that through their relationships with creditors and the power of negotiating on behalf of hundreds of debtors with each creditor, they are able to secure more favorable terms including reduction of monthly payments, interest rates, and outstanding principal – by up to 70%. Unfortunately for consumers, Defendants do little more than market those services; most, if not all, of their clients do not receive the help Defendants sold them, despite paying thousands of dollars in up-front fees. Since June 2010, Defendants have taken in more than $4 million from U.S. residents through these deceptive practices.

Defendants’ misrepresentations violate Section 5(a) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45(a), the FTC’s Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, and the Mortgage Assistance Relief Services Rule, 16 C.F.R. Part 322 (“MARS Rule”).

The FTC therefore brings this suit under Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, the TSR, and the MARS Rule to stop Defendants’ illegal practices and provide a remedy to injured consumers. The FTC seeks an ex parte temporary restraining order: (1) enjoining Defendants’ deceptive practices; (2) appointing a receiver; (3) freezing Defendants’ assets; (4) prohibiting Defendants from sharing consumer information with any other persons; and (5) expediting discovery. Supporting the motion are documents obtained from Defendants’ payment processor that show the extent of Defendants’ fraud, and 24 declarations from injured consumers, two FTC investigators, and third-party custodians of documents and records further evidencing Defendants’ operations. These evidentiary materials demonstrate and corroborate the nature of Defendants’ widespread deceptive scheme. – Source

Sincerely,

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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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.