A Southern California debt collection operation, Asset Capital and Management Group, will surrender more than $4 million for consumer redress to settle Federal Trade Commission charges that it extorted payments from consumers using false threats.
The defendants behind the scheme will turn over their personal assets and give up any claim to the business assets, under the FTC settlements. They also are banned from the debt collection industry.
“Consumers shouldn’t be subjected to threats and intimidation,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We’re pleased that victims of this scheme will be getting money back from the defendants.”
The FTC alleged the defendants used a sprawling network of intertwined companies and dozens of fictitious names to illegally extract payments from consumers for credit card debt that they had purchased from creditors. According to the FTC, the defendants employed an assortment of deceptive and abusive tactics in collecting on the credit card debt, violating both the FTC Act and the Fair Debt Collection Practices Act. The FTC charged that the defendants posed as process servers in calls to consumers and third parties, falsely threatened consumers with lawsuits, wage garnishment, seizure of their property, and arrest, and disclosed debts to consumers’ employers, colleagues, and family members. The FTC also alleged that the defendants violated the FDCPA by failing to tell consumers they were attempting to collect a debt, and failing to notify consumers of their right to dispute and obtain verification of their debt.
At the FTC’s request, a federal court in Los Angeles halted the operation in July 2013, froze the defendants’ assets, and appointed a receiver to take charge of the defendants’ business.
The settlements that resolve the case impose judgments totaling $90.5 million. The judgments against Thai Han, Jim Tran Phelps, Keith Hua, and James Novella will be suspended when they surrender their personal assets. The proceeds from those assets, in addition to frozen corporate funds held by the receiver, total more than $4 million, which will be used to provide refunds to consumers.
Besides the monetary judgments imposed on the defendants, and the bans on collecting debt, the settlement orders prohibit them from misrepresenting any relevant fact in connection with promoting or selling credit repair, debt relief, mortgage assistance relief, or lending services.
For consumer information regarding debt collection see: Debt Collection.
The Commission vote approving the proposed settlements was 4-0. The FTC filed the stipulated final orders in the U.S. District Court for the Central District of California and they were entered on May 19, 2014. The FTC would like to thank the U.S. Postal Inspection Service for its assistance in bringing this case.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.