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April 23
WASHINGTON — Regulators are challenging two debt settlement companies in court, claiming they charged consumers millions of dollars in unnecessary fees.
In a complaint filed Tuesday in New York's federal district court, the Consumer Financial Protection Bureau alleges that Mission Settlement Agency in New York and Premier Consultant Group LLC in New Jersey charged upfront fees to more than a thousand consumers in multiple states without settling their debt.
The agency's complaint also alleges that Michael Levitis, Mission's principal, who runs a law office and night club, misled consumers by impersonating a government agent and giving false statements about fees.
The U.S. Attorney's Office for the Southern District of New York separately filed a complaint against Mission Settlement and its executives along similar grounds, alleging conspiracy to commit mail and wire fraud.
"These wolves in sheep's clothing take money from consumers who are already struggling to pay their bills, falsely promising them help while really making their problems worse," said CFPB Director Richard Cordray, in prepared remarks for a press conference in New York. "Consumers deserve better, and we are proud of this joint effort to crack down on unscrupulous behavior."
The CFPB has said the companies should shut down, pay civil money penalties and give restitution for affected consumers. The alleged improper fees totaled more than $1.3 million, the CFPB said.
Separately, the complaint by the Attorney's Office says Mission collected nearly $4.4 million from 2,200 customers since mid-2009 and pocketed more than $6.6 million. Some of that collection paid for Levitis' night club and his mother's debt — likely the only person not needing restitution.
"Indeed, as a result of the defendants' scheme, most of Mission's customers failed to achieve the reduction in debt that defendants had promised them, and some of them suffered further declines in their credit ratings, were sued by their creditors, and/or fell into bankruptcy," the complaint said.
Meanwhile, Levitis "used the money that Mission took from its customers to pay for, among other things, the operating expenses of a restaurant nightclub he controlled, lease payments for two different luxury Mercedes cars, and credit card bills for his mother."
The Attorney's Office is seeking forfeiture of the defendants' assets, including $2.2 million of proceeds through Mission and individual accounts including for the nightclub.
The CFPB first started investigating the companies in July and then referred the case to the U.S. Attorney for the Southern District of New York upon finding criminal evidence. The agency said it also "received substantial assistance" from the New York Office of the U.S. Postal Inspection Service.
"From my experience in state and local government, I have found that strong partnerships can be hard to build, but very often are the best way to get things done," Cordray said. "We will be looking for more such occasions to coordinate and collaborate."
