A reader brought a recent lawsuit filed by Betty Bennett against Otto Berges, Berges Law Group, Consumer Protection Counsel, Debt Be Gone, Paralegal Staff Support, and United Legal Group.
What had me scratching my head was the complaint says, “In or around September 2013, a person alleging to work for Defendant Consumer Protection Counsel contacted Ms. Bennett, offering to help her fix her credit.”
But the alleged emailed contract, Exhibit A, seems to be all about disputing debts and using the debt validation approach to try to deal somehow with the debts owed by the consumer. It’s a tactic I’m generally not a huge fan by any provider since I’ve never seen much data to support the results of such an approach showing the majority of people who enroll in a validation program have all of their debt eliminated and/or reduced.
The complaint says the contract sent to the consumer contained “a copy of a contract, Exhibit A (where she listed all of her debts), an agreement with RAM (related to ACH withdrawals), power of attorney, an affidavit (which appears to be a document they would use to dispute debts), a sheet containing alleged compliance questions, an addendum regarding student loans, and a EchoSign document history.”
The complaint alleges the participants in this debt relief sale violated the Credit Repair Organizations Act and the Wisconsin Consumer Act since the defendants have allegedly not been issued “a certification of registration as required by law.” And the allegations continue that the contract did not contain a number of requirements required by the Wisconsin statutes. You can read the complaint, here if you want to know more about that.
According to the suit and documentation the debt relief/settlement services, if any, to be provided by the Defendants were incidental or free to the services being provided. The client agreement says, “Settlement of Claims. Attorney shall cause counterparties and other parties to enter into Settlement Release agreements. There is no charge to Client for the service of re-negotiating, settling, or altering in any other way the terms of any debt between the Client and any unsecured creditor or debt collector, including a reduction in the balance, interest rate, or fees owed. This service is provided free of charge and incidental to services (a)-(e) above.”
The fee for the service to be provided the consumer is said to be $7,338.15 to be paid in monthly installments.
So I guess this isn’t really a settlement service and I could not find anything promising to improve the credit, so what was this service to be? If you look at the agreement the service is defined as “specific legal services regarding unsecured obligations, claims, and defenses.”
Those services seem to be to dispute most everything and ask for verification from the creditors. The enclosed affidavit in the complaint says the consumer “did not agree to the interest rate being charged on my credit card account issued” and then it lists 12 accounts of the consumer. The affidavit also says, “I attempted to recreate the bank/lender/creditor’s mathematics, or in the alternative, check that the accounting was accurate, but it was to no avail. Accordingly, I have a good faith belief that there is a mathematical and/or accounting error on the periodic billing statements.” That was apparently one mathematically savvy consumer to try to work that out. I would have loved to have seen the report the Defendants had provided to the consumer to show the math errors they found. I’m not sure I’ve such a report from a debt relief company. Have you?
So the case does not seem to be about improving credit and not about settling debts. And the compliance document says this is also not “a credit counseling or management program.” So what exactly were the debt relief Defendants selling and what did the consumer think they were buying?
Now you can see why I’m completely confused.
The complaint then goes on to allege an interconnected relationship between the Defendants.
Hopefully all the parties in this complaint can iron out their differences and come to some amicable and mutually agreeable solution.
From the payments listed in the complaint, the dispute seems to be over just $1,192 in fees paid by the consumer. I would be surprised if the Defendants had refused to refund the consumer over just $1,192 to put this matter behind them before it reached the level of the complaint.
But wait, just who was the single focal point that was selling the services to the consumer? It’s hard to tell based on who was getting paid.
When it came to the payments the complaint says:
“Per the terms of the contract, Ms. Bennett was to pay an initial payment of $199 “that shall be deemed earned upon receipt.”
The client agreement was sent from a Demetrius Harryton with an email address at UnitedLegal.org. Did they get the initial payment?
“On November 21, 2013, Defendant Paralegal Staff Support charged Ms. Bennett checking account $179.26.
On December 12, 2013, Defendant Paralegal Staff Support charged Ms. Bennett’s checking account $179.26
On December 21, 2013, Defendant Paralegal Staff Support charged Ms. Bennett’s checking account $155.10.
On February 21, 2014, Defendant Berges Law Group charged Ms. Bennett’s checking account $170.10.
On March 21, 2014, Defendant Berges Law Group charged Ms. Bennett’s checking account $155.10.
On April 21, 2014, Defendant Berges Law Group charged Ms. Bennett’s checking account $155.10.”
I’ve probably now left you scratching your head as well. You can see why this is a puzzling situation.
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Why is this so perplexing? This group is actually bigger than the group run by Ed Cherry and Larry Diodato. And while Larry and Ed are getting grilled by the AG, these guys are operating under the radar. But there is one mistake in the graphic provided as Exhibit B. There should be two names in the center of that graphic, not one. In fact maybe there should be a separate bubble above all of this with the name of Jeremy Marcus. Jeremy is the master puppeteer running this whole show. All of these organizations are run under his watchful eye – yes even the law firm. Jeremy has been busy buying up debt settlement portfolios. Then he has his sales staff convince the new “clients” that they are no longer settling their debts – they are now disputing those debts. Now all of the money saved up in these special purpose accounts to settle are being converted to “attorney’s fees”. Some are getting charged tens of thousands of dollars. What do they get for that much money? The “law firm” sends out a few dispute letters to each of the client’s creditors disputing under the FCBA, FDCPA, and FCRA. Basically they are using the Diodato-Cherry dispute model. Then the rest of the time is spent by the firm’s staff playing defense against the client, telling them to be patient and that it is a long process. Yet, the only thing that has happened is that a few letters went out. Wow. And now? They are busy creating more firms. Active Debt Solutions has a new dba of the Guardian Legal Center, run by this same group. It’s all about misdirection. Keep moving your assets around, open up new companies, close older ones. Just look at all the debt companies related to Jeremy Marcus, and you’ll see this guy is the true godfather of debt settlement down here. By the way, remember when Gov Cuomo sent those subpoenas to the student loan debt relief firms like Consumer Protection Counsel? As soon as they got that subpoena they withdrew from NY. If your operation is legit, why would you withdraw? Hmmmm. Go get ‘em Nate.