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Howard Law Seems to Lose Again to Court in Morgan Drexen Case

By on July 5, 2016

To catch up on those case that has now been going on since 2013, click here.

Recently, four parties to the ongoing action that started with Morgan Drexen had asked the court to release money and approve expenses after the Court imposed a restraining order. The four entities are Vincent Howard, Howard Law P.C., the Williamson Law Firm, and Williamson & Howard, LLP.

At issue was what constituted reasonable budgets or at the least, budgets the court would approve. It certainly seems Williamson has had an easier time with this process than Howard.

The Court stated, “Because Howard’s proposed budget is contingent on the Court allowing Howard Law to continue paying Howard’s salary, the Court next considers Howard Law’s proposed budget. Howard Law seeks approval of monthly expenses totaling $208,685. (Howard Decl., Ex. 2, “Howard Law Budget,” Doc. 461-1.) Included in this amount are a number of high value line items, including: (1) $52,061 per month for payroll and related expenses, (2) $32,000 per month for “professional fees,” (3) $24,353 per month in rent, (4) $21,422 per month in “marketing” expenses, (5) $19,168 per month for employee benefits, (6) $15,000 per month in bank fees, (7) $13,065 per month in telephone fees, and (8) an additional $10,000 per month associated with a “call center.” (Id.) In its Opposition, CFPB takes issue with nearly all of these expenses. (See generally Opp. at 1-6.) At a more general level, however, CFPB contends that while the Non-Parties have now submitted “some invoices,” they have nevertheless failed to “explain why many of their proposed expenses are necessary and reasonable.” (Id. at 1.)

After a careful review of the parties’ briefing, the Court GRANTS IN PART and DENIES IN PART Howard Law’s proposed budget. Because the Court finds that Howard Law has failed to adequately substantiate, or otherwise demonstrate the need for, its purported expenses relating to marketing, the call center, and the company car, the Court DENIES these expenses.

Additionally, the Court does not accept at face value Howard Law’s purported monthly expense of $32,000 for “professional fees.” Once broken down, this request amounts to (1) $25,000 per month to the Vanderpool Law Firm, (2) $4,000 per month to David Walker for “accounting and tax services,” and (3) $3,000 per month to the Kesher Law Group. (Howard Law Budget at 1.) The Court finds that the fees relating to Walker are inadequately supported because there is nothing to substantiate what Walker actually does for the firm. Moreover, the Court will not permit Howard Law to continue to make payments to Kesher Law Group, a firm associated with Jeffrey Katz, an attorney previously found to have deliberately misled this Court in the course of this very litigation. (See generally Order on Terminating Sanctions at 19-21, Doc. 284.) Therefore, the Court DENIES the Walker and Kesher Law Group budget items. Finally, the Court finds that Howard Law has failed to adequately support the requested $25,000 monthly payment to the Vanderpool Law Firm. However, because the Court is aware of the Vanderpool Law Firm’s work in this matter, it will reduce – rather than deny – this request. 2 The Court bases this reduction on the evidence submitted by Howard Law. Specifically, Exhibit 18 to the Howard Declaration – the only evidence submitted in support of the $25,000 per month request relating to the Vanderpool Law Firm – is an invoice from the Firm for the month of April. (Howard Decl., Ex. 18, Doc. 461-1.) The invoice reflects time entries from April 18, 2016 through April 29, 2016, or approximately two weeks. (Id. at 2.) The fees resulting from this period equal $5,200. (Id. at 3.) Using this half-month fee as a guide, the Court finds that $10,000 per month – or approximately double the amount of the April invoice – is reasonable. Accordingly, the Court reduces this request from $25,000 to $10,000.

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The Court now turns to Howard’s proposed personal budget. (Howard Decl., Ex. 1, “Howard Personal Budget,” Doc. 464.) Howard’s request includes expenses totaling $6,270 per month. (Howard Decl. ¶ 4.) He represents his salary, after taxes, as equaling $6,356.64 per month. (Id.) After a review of Howard’s proposed expenses (Howard Personal Budget at 14), with one limitation, the Court finds these requests reasonable. Additionally, although the Court does not preclude Howard from making monthly tuition payments for his fiancée’s children, the Court ORDERS Howard to submit proof that such payments are made directly to the education service provider. A proof of payment should be filed with the Court no later than seven (7) days following the next payment. Accordingly, the Court APPROVES Howard’s proposed budget subject to these exceptions.

In sum, the Court (1) DENIES Williamson Law Firm’s request to pay its purportedly outstanding bank fee, and (2) APPROVES Williamson & Howard’s payment of the same. Additionally, the Court APPROVES IN PART AND DENIES IN PART Howard Law’s proposed budget. The budget is APPROVED, less the requests for marketing ($21,422), the call center ($10,000), costs associated with the car lease ($1,864), and the professional fees for Walker ($4,000) and Kesher Law Group ($3,000). The Court also reduces the permissible monthly expense for the Vanderpool Law Firm from $25,000 to $10,000. Finally, the Court APPROVES Howard’s personal budget subject to the two aforementioned exceptions.”

It seems this case continuously fills up with people who lose. First and foremost, the consumers lost out here. But in this action the Venderpool Law Firm got income cut along withDavid Walker, the Kesher Law Group and Jeffrey Katz.

But the disallowed expenses that seem to through a wrench in the works are those around ongoing marketing, maintaining the offshore call center, and Howard’s ride to work. Maybe the payroll will be reduced to make more room for these items.

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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.

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