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Van Nuys debt collectors to pay $1.1 million to settle federal case

January 17, 2013|By Jim Puzzanghera
  • A Van Nuys debt collection operation agreed to pay $1.1 million to the federal government.
A Van Nuys debt collection operation agreed to pay $1.1 million to the federal… (Alex Wong/Getty Images )

WASHINGTON -- A Van Nuys debt collection operation and the people who ran it agreed to pay $1.1 million to settle federal allegations they improperly bullied consumers to get them to repay overdue bills and deceived clients about fees.

The settlement ends a case that began in 2011 against Forensic Case Management Services Inc. and permanently bars the owner, David M. Hynes II, and other officers in the company from the debt collection business, the Federal Trade Commission said Thursday.

The settlement is part of an agency crackdown on abusive debt collection practices as the down economy has pushed more consumers into debt.

Employees of the company, which did business as Rumson, Bolling & Associates among other names, violated federal law by berating and threatening people in pursuit of old debts and improperly disclosing information about those debts to employers, co-workers and others, the FTC said.

"Several consumers reported that defendants even threatened to dig up the bodies of consumers’ deceased relatives for alleged nonpayment of funeral bills," the agency said.

The company also allegedly deceived its clients, reneging on a "no recovery, no fee" pledge in its collection of old debts. In many cases, the company kept more of the money it collected than it was entitled to, and in some instances added additional fees, the FTC said.

In 2011, a federal judge halted the company's operations.

Under the settlement announced Thursday, Forensic Case Management Services, Specialized Recovery Inc., and Commercial Receivables Acquisition Inc., along with Hynes and another company official, Lorena Quiroz-Hynes, agreed to a $33.8-million judgment. They will be required to pay $700,000 because they cannot afford to pay the rest, the FTC said.

Two others connected to the companies, James S. Hynes and Heather True, agreed to smaller judgments that were suspended because of their inability to pay.

None of them agreed to any wrongdoing, said their attorney, Christopher L. Pitet of Newport Beach.

"From Day One, we have denied doing anything wrong," Pitet said. "We had extensive training and policies in place to prevent abusive debt collection practices and to the extent any employees engaged in those practices ... it was against company policy."

In a separate settlement, three companies controlled by David Hynes -- Vesper Collins; Ramillies; and Innsbruck – agreed to pay $403,487. The companies weren't involved in the alleged debt collection violations, but profited from them, the FTC said.

ALSO:

Regulators warn of 'phantom' debt collectors'

Aggressive debt collection tactics are drawing federal scrutiny

Consumer bureau to unveil rules overseeing debt-collection firms


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