If you thought having VD was bad news, try having a bit of Morgan Drexen (MD).
It seems all those who touched Morgan Drexen just keep on losing. The clients were unhappy, the government was unhappy, the CFPB is unhappy, Former CEO Walter Ledda has got to be unhappy, and now the current attorneys managing the remaining clients have had their assets frozen.
On May 17, 2016 the court granted an asset freeze against Vincent Howard, Lawrence Williamson, Howard Law, PC, the Williamson Law Firm, LLC, and Williamson & Howard, LLP
This is a case worth covering because despite the fight and pushback by those involved in the Morgan Drexen mess, it just does not seem to end well for anyone involved.
Morgan Drexen was either an attorney network to settle debt or a clerical service to assist attorneys. It depends on which end of the spectrum you believe.
The court order says:
“IT IS ORDERED that the Attorneys and their successors, assigns, officers, agents, servants, employees, independent contractors, and attorneys, and all persons directly or indirectly under the control of any of them, including any Financial Institution, and all other persons in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile, email, or otherwise, are hereby restrained and enjoined pending the resolution of this litigation, except as specifically provided for in Section V of this Order, from directly or indirectly:
A. Selling, liquidating, assigning, transferring, converting, loaning, hypothecating, disbursing, gifting, conveying, encumbering, pledging, concealing, dissipating, spending, withdrawing, or otherwise disposing of any Asset that is in the actual or constructive possession of any of the Attorneys or any corporation, partnership, trust or other entity directly or indirectly owned or controlled by any of the Attorneys; and
B. Incurring charges or cash advances on any credit card, stored value card, debit card or charge card issued in the name, singly or jointly, of any of the Attorneys or any other entity directly or indirectly owned, managed, or controlled by any of the Attorneys.”
However the attorneys are able to pay for “reasonable monthly living and business expenses after they comply with Section V herein and if the Court issues an additional order.”
Here is an interesting section of a court document from the same date.
“Here, CFPB contends “there is a significant likelihood of irreparable harm without an asset freeze.” (App. at 11.) The crux of CFPB’s argument is that between June 18, 2015 and October 9, 2015, the Attorneys received in excess of $5 million in fees from consumers. (Id.) Nevertheless, CFPB argues, the Attorneys today represent “that they cannot pay even $2 million of the more than $5 million they owe.” (Id.) According to CFPB, the Attorneys have, “by their own admission, in less than half a year . . . dissipated millions of dollars of fees paid by consumers, even though they were under Court order during this time to provide full restitution to borrowers.” (Id. (emphasis in original).) In a declaration in support of its Application, CFPB adds that when asked about the location of the five million dollars in fees, the Attorneys “could not provide an answer.”
Based on these facts, the Court finds that delaying consideration of CFPB’s request until after the July 8, 2016 hearing – that is, proceeding in accordance with the schedule that governs regularly noticed motions – would create a substantial risk that the assets in question would no longer be recoverable. Therefore, the Court finds that CFPB and the consumers it represents would be “irreparably prejudiced” if CFPB’s request for an asset freeze is not considered on an ex parte basis. See Baeza, 2011 WL 11648375, at *2. To be sure, the Court is troubled by CFPB’s decision to wait until now to seek an asset freeze, despite becoming aware of the Attorneys’ purported financial difficulties as early as March 9, 2016. (O’Malley Decl. ¶ 8.) Notwithstanding these concerns, however, the Court concludes that CFPB’s decision to pursue relief through an ex parte application – rather than a regularly noticed motion – should be permitted in light of the Court’s detailed prior findings concerning the Attorneys’ violations of this Court’s orders and the gravity of the harm at issue in this long-running case.” – Source
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