Feds Shut Down Multimillion-Dollar Debt Relief Scam

A phony debt relief operation that bilked tens of millions of dollars from individuals — including the disabled and elderly — based on the promise it could lower their debt burden is out of business after a federal court temporarily halted the scheme. 

A lawsuit [PDF] filed jointly by the Federal Trade Commission and the State of Florida accused 11 companies operated by Jeremy Lee Marcus, Craig Davis Smith and Yisbet Segrea of defrauding cash-strapped individuals looking for help managing their debts.

These companies — doing business under names such as 321Loans, Credit Specialists of America, Financial Freedom National, Helping America Group, and Instahelp America — represented an interrelated network that purported to provide consumers with a number of debt relief options, such as making payments for customers, lowering interest rates, providing new bogus loans to cover debts, or wiping away bills.

According to the complaint, the businesses promised to pay, settle, or obtain dismissal of debts and improve customers’ credit in exchange for hundreds or thousands of dollars each month.

The companies would typically contact potential clients through either mailers or unsolicited telephone calls.

In one program, once contact was made, the FTC claims a rep for the supposed debt relief company would tell potential clients it was a not-for-profit company that made new low-interest rate loans in the exact amount of their total unsecured debt, plus interest.

These new loans ranged from $10,000 to $60,000 or more, and could be paid back in attractive monthly payments.

As a non-profit, the company claimed that it could also help clients dismiss or settle debts. Believing this, the FTC says, many customers agreed to have their bank accounts immediately debited for their first loan repayment or a processing fee.

In another scheme, the companies would call debtors already enrolled din debt relief programs claiming that their accounts had been transferred.

The company falsely promised that they would continue to perform the same relief services, instructing the client to transfer all money from their escrow accounts to the defendants.

The FTC and State of Florida claim that with both of these debt relief campaigns consumers had provided the companies access to their bank accounts, which were then debited between $200 and $1,000 each month.

However, after a period of time, the victims found their debts unpaid, their accounts in default, and their credit scores severely damaged.

In all, Marcus, Smith, Segrea and their companies have been charged with violating the FTC Act, the FTC’s Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act. The court’s order prohibits the companies from continuing business and freezes their assets in order to obtain funds for possible reimbursement to customers.