United States: State AGs In The News - April 3rd, 2014

Last Updated: April 9 2014
Article by Bernard Nash and JB Kelly

Consumer Protection

Massachusetts Attorney General Sues Travel Companies for Alleged Deceptive Marketing

  • Massachusetts AG Martha Coakley has sued Berkshire Concepts, LLC, and several affiliates for alleged violation of the state's consumer protection laws in their marketing of travel services.
  • The AG's suit against the companies alleges that they engaged in deceptive marketing by using "high pressure sales tactics" to offer travel discounts, overcharging customers for access to a database that did not provide the stated discounts, and engaging in other activities. The suit seeks over $278,000 in restitution and civil penalties.
  • The Suffolk Superior Court has entered a preliminary injunction prohibiting the defendants from violating consumer protection laws, including barring them from advertising travel as free if it requires customers to pay fees and taxes, advertising access to nonexistent discounts, and holding customers who have not yet received access to the companies' websites to a three-day cancellation period.


Iowa Attorney General Announces Record $1.5 Million in Civil Penalty Against Grain Processor Over Emissions-Related Claims

  • An Iowa state court entered a consent decree in a lawsuit Iowa AG Tom Miller filed against Grain Processing Corporation. The lawsuit alleged that the company violated air quality and water pollution control requirements at its corn processing facility.
  • In addition to the $1.5 million civil penalty, the consent decree requires Grain Processing to convert certain boilers from coal-fired to natural gas-fired, and take other steps to maintain environmental compliance at the facility.
  • According to AG Miller's announcement, the penalty is the largest ever paid to Iowa for environmental violations. AG Miller described the court's order as "a comprehensive and historic resolution of an environmental enforcement action."

Financial Industry

New York Attorney General Announces $25 Million Settlement of Claims Related to Bank's Acquisition

  • New York AG Eric T. Schneiderman announced that his office has settled claims against Bank of America and its former chief executive Kenneth D. Lewis related to the bank's 2009 acquisition of Merrill Lynch.
  • The AG's suit had alleged that the defendants violated the state's Martin Act and Executive Law by failing to disclose certain Merrill Lynch losses to shareholders and by engaging in other activities related to the merger.
  • Under the settlement, the bank will pay $15 million to reimburse the AG's office for the fees and costs of its investigation. The former officer will pay another $10 million. The bank also agreed to undertake corporate governance reforms, and the officer is prohibited from serving as an officer of a public company for three years. Neither defendant admitted wrongdoing under the settlement.
  • AG Schneiderman noted that claims against another former corporate officer remain ongoing.

False Claims Act

Kansas Attorney General Obtains a Default Judgment in Suit Alleging False Billing

  • Kansas AG Derek Schmidt announced that his office has obtained a default judgment for $132,000 in civil penalties against UST Development, Inc. The company does business as US-Telecom, Inc., according to the AG's office.
  • AG Schmidt's suit alleged that the company sent invoices to Kansas state agencies and local governments for a "telecom maintenance agreement" even though the company had no previous dealings with the recipients. The suit asserted that the company's conduct violated the Kansas False Claims Act.
  • In a release describing the judgment, the AG said that "[f]alsely billing government agencies in an attempt to defraud Kansas taxpayers is a serious violation of the law" and "[w]e take seriously our responsibility to guard the public treasury."


New York Attorney General Sues Shipper for Alleged Illegal Cigarette Shipments

  • New York AG Eric T. Schneiderman has sued Federal Express Corporation (FedEx), alleging that the company unlawfully shipped over 400,000 cartons of cigarettes to New York consumers between 2006 and 2012.
  • The suit asserts that the company violated the federal Contraband Cigarette Trafficking Act, the Prevent All Cigarette Trafficking Act, New York tax and public health laws, and a 2006 agreement between FedEx and the AG's office relating to cigarette shipments.
  • The suit broadens an existing complaint filed by the City of New York in December 2013.

Mortgages and Foreclosures

Washington Attorney General Takes Action Against Foreclosure Trustee

  • Washington AG Bob Ferguson has entered into a consent decree with Quality Loan Service Corp. (QLS). The AG described QLS as among the largest foreclosure trustees in Washington.
  • The decree resolves allegations that QLS engaged in unfair and deceptive business practices by failing to notify borrowers in the foreclosure process that the company had moved and by operating from an office that was not properly accessible to borrowers.
  • Under the consent decree, QLS will pay $250,000 to certain homeowners, place a six-week moratorium on foreclosures, restart foreclosure proceedings for 24 homeowners, and pay $25,000 to cover the costs and fees of the AG's proceedings, among other steps. The company did not admit wrongdoing.
  • AG Ferguson's office will contact homeowners eligible for payments under the decree.

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