Nine months after filing an amended complaint, the FTC and Florida Attorney General have filed papers seeking entry of agreed permanent injunctions and monetary judgments against numerous defendants involved in an alleged nationwide debt relief telemarketing scam. The proposed settlements resolve allegations that the defendants violated the FTC Act, the Telemarketing Act, the Telemarketing Sales Rule, and Florida state law prohibiting deceptive and unfair trade practices.
Defendant E&M Systems & Services LLC, accused of running the scheme, agreed to entry of judgment in favor of the FTC and Florida in the amount of $12,365,731. In exchange for suspension of the money judgment, E&M Systems and Services and its executives will turn over an undisclosed amount of assets. Defendant CardReady LLC, a payment processing company, and its executives, Brandon Becker and James Berland, also agreed to entry of judgment in favor of the FTC and Florida in the amount of $12,365,731, with all but $1.8 million suspended. CardReady executive Andrew Padnick settled separately and agreed to judgment in the amount of $440,000, with all but $6,000 suspended. In papers seeking default judgment against telemarketer Kenneth Sallies in the amount of $2.5 million filed the same day as the proposed settlement orders, the FTC and Florida explained that settlements have been reached with the other telemarketer defendants, though no formal papers have been filed. So far, the FTC and Florida stand to collect over $5 million if the court enters the proposed orders.
The settling defendants also agreed to permanent injunctions that bar them from certain practices, including selling or marketing debt relief services.
The complaint alleged the defendants operated a nationwide debt relief telemarketing scam that promised consumers reduced credit card interest rates and refunds in exchange for an up-front fee ranging from $695 to $1,495, charged to the consumers' credit cards. The alleged scammers, which included a web of entities controlled by a husband and wife who previously participated in a similar enterprise, and a telemarketing agency and its owner, did not deliver on their promises for reduced rates and refunds and instead caused consumers to fall deeper into debt. In June 2015, the district court entered a preliminary injunction, freezing the assets of the scammers and appointing a special receiver.
The amended complaint filed in December 2015 named seven new defendants, including a credit processing company, its three executives, and three co-owners of the telemarketer, and alleged credit card laundering, in violation of the FTC Act and the Telemarketing Sales Rule. The amended complaint contained additional allegations of violations of the FTC Act, Telemarketing Act, and Telemarketing Sales Rule. The debt relief and credit card laundering schemes have allegedly operated since at least January 2013.
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