They were charged with seeking money from consumers who did not owe
The Federal Trade Commission (FTC) and the Attorney General of the State of New York have reached a settlement with a debt collector and his companies banning them from the debt collection business.
Kelly S. Brace and four companies under his ownership had been charged with seeking money from consumers for debts those consumers did not actually owe, said the FTC. The charges were filed as part of Operation Collection Protection, described by the FTC as "an ongoing federal-state-local crackdown on collectors that use deceptive and abusive collection practices."
The defendants had been charged specifically with collecting fake payday loans from consumers using deceptive and abusive tactics, such as false threats of lawsuits and arrest. The court halted their operations and froze their assets at the request of the plaintiffs.
In addition to being banned from debt collection, Brace is also prohibited from "misrepresenting material facts or making unsubstantiated claims about any good or service, and profiting from consumers' personal information or failing to dispose of it properly." The final order imposes a judgment on the defendants of more than $18.4 million, which will be suspended in part due to inability to pay when the defendants surrender assets valued at $151,893.
The plaintiffs also agreed in the settlement to a stipulated order against the Brace's ex-wife, Joelle J. Leclaire, who was a relief defendant and profited from Brace's actions. Although the order imposes a judgment of $418,000, this will be partially suspended when she pays $44,700.
The full judgement will become due immediately for each defendant if they are discovered to have misrepresented the condition of their finances.