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Post date: June 21 2012

A.G. Schneiderman Shuts Down Deceptive Practices Of Two Western NY Debt Collectors

Attorney General Puts Dishonest Businesses Engaging In Deceptive Practices On Notice

Schneiderman: Our Office Will Continue To Crack Down On Unscrupulous Debt Collectors Preying On Western New Yorkers


BUFFALO– Following an investigation, Attorney General Eric T. Schneiderman announced today agreements with two Western New York debt collectors, permanently barring one from the debt collection business and requiring the other one to pay $175,000 in penalties. Both debt collection companies engaged in deceptive practices to trick consumers into thinking they were in trouble with the law when they were not.

"More and more debt collectors are giving their businesses names that mimic law firms as a way to deceive individuals into thinking they are in legal trouble. Predatory scams that prey on Western New Yorkers will not be tolerated," said Attorney General Schneiderman. "These settlements put dishonest businesses that engage into deceptive practices on notice. Our office will prosecute unscrupulous debt collectors to the fullest extent of the law."

The first investigation ended with a settlement with John Chebat, who operates several debt collection businesses in the Buffalo area, including Western New York Capital, Inc.; International Asset Group, LLC; Unified Asset Solutions, LLC; Outsourced Legal Prep, LLC; Argos Alliance Group, LLC; and Check Systems Recovery, LLC.

The Attorney General's office entered into an agreement with Chebat requiring him to pay $175,000 in penalties and change his debt collection practices. The investigation concluded that Chebat collectors:

  • Illegally contacted the employers of consumers.
  • Illegally sent verification of employment forms to employers demanding information to which they were not entitled to. For example, they demanded social security numbers of consumers.
  • Illegally sending letters to consumers on the letterhead of a local attorney.
  • Falsely representing to consumers that, if they did not settle a debt, their case would be referred to a "nationwide network of attorneys" or in-house counsel.
  • Engaged in Caller ID spoofing, the practice of causing a fictitious local number to be displayed consumer's Caller ID display, including local court phone numbers.
  • Falsely represented to consumers that they were process servers and were about to serve consumers with legal process.
  • Falsely represented to consumers that if they did not settle the debt, Chebat would pursue them "according to [the consumer's] Bad Check Laws"
  • Falsely implied to consumers that they had taken civil judgments when they had not.

"Our Buffalo Regional office received hundreds of complaints from consumers about this company," said Attorney General Schneiderman. “We have also seen a trend where debt collectors engage in shameful practices like spoofing to trick people into thinking that they are in trouble with the law when they are not. Debt collectors, like all other businesses in New York, must play by the rules or we will hold them accountable.”

In addition to paying $175,000, Chebat must (i) install a system that permits him to monitor the calls of his collectors without their knowledge, (ii) monitor his collectors on a regular basis to ensure that they are complying the law, (iii) bar his employees from engaging in spoofing and representing that they are process servers, and (iv) appoint a compliance officer responsible for ensuring that Chebat's collectors comply with the law.

The second investigation involved a debt collection business called "The Lombardo Davis Goldman Firm, LLC" owned by Frank Davis. The name of the company was misleading because it mimicked a law firm's name. Davis' website compounded that deception by including the photo of a gavel and law books and making reference to litigation experts. In an agreement made last year with the Attorney General's office, Davis was ordered to stop using a name that mimicked an unrelated law firm's name and install a monitoring system of his employees to discourage them from engaging in improper and illegal conduct. Davis was further required to pay $20,000 in penalties.

In early 2012, the Attorney General's office investigated Davis again and learned that he violated the original settlement. Davis again was using a name that mimicked a law firm name. He failed to disclose to the Attorney General that he changed the name and location of his business. Davis failed to monitor his employees to assure that they were complying with the law.

The Attorney General's agreement with Davis shut down his debt collection agency and permanently bars him from participating in any consumer debt collection business in the state of New York. Davis was also required to pay an additional $5,000 penalty.

This case was handled by Assistant Attorney General James Morrissey under the supervision of Assistant Attorney General In-Charge Michael Russo and Executive Deputy Attorney General for Regional Offices, Martin J. Mack.