In late December, the Federal Trade Commission and Florida Attorney General filed an amended complaint in an action pending in the United States District Court for the Middle District of Florida that charged nine defendants with violations of the Federal Trade Commission Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), the FTC’s Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”).  The case is Federal Trade Commission v. E.M. Sys. & Servs., LLC, No. 8:15cv1417 (M.D.Fla., filed June 15, 2015).   

The complaint alleged the defendants operated a nationwide debt relief telemarketing scam that promised consumers reduced credit card interest rates and refunds in exchange for an upfront fee of $695 to $1,495, charged to the consumers’ credit cards.  The scammers, which included a web of entities controlled by a husband and wife who previously participated in a similar scam and a telemarketing agency and its owner, did not deliver on their promises for reduced rates and refunds and instead caused consumers to fall deeper into debt.  In June, the district court entered a preliminary injunction, freezing the assets of the scammers and appointing a special receiver. 

The amended complaint names seven new defendants, including a credit processing company, its three executives, and three co-owners of the telemarketer, and contains charges of credit card laundering in violation of the FTC Act and the Telemarketing Sales Rule.  The amended complaint contains additional allegations of violations of the FTC Act, Telemarketing Act, and Telemarketing Sales Rule.  The debt relief and credit card laundering schemes have allegedly operated since at least January 2013.     

According to the amended complaint, the debt relief scammers utilized the new defendants to process credit card payments for the debt relief scam.  The credit processing scammers used at least 26 shell merchants to illegally launder and process the consumers’ credit card payments to the debt relief scammers.  These defendants retained a large portion of the revenue generated by the debt relief scam.  Jessica Rich, director of the FTC’s Consumer Financial Protection Bureau, commented that the FTC’s investigation “stopped the credit card processing operation that hid [the] illegal transactions” of the telemarketers who swindled consumers. 

The eight-count amended complaint seeks preliminary and permanent injunctive relief and other equitable relief, including rescission or reformation of contracts, restitution, refunds, and disgorgement, and costs.  Responsive pleadings to the amended complaint have not been filed yet.    

Photo of Keith J. Barnett Keith J. Barnett

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts…

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts, state courts, and before arbitration and administrative law panels in the financial services industry.

Photo of Laura Anne Kuykendall Laura Anne Kuykendall

Laura Anne (LA) counsels individuals and companies responding to allegations of regulatory and criminal wrongdoing and advises them in connection with navigating these high-stakes matters throughout the investigatory, enforcement, and litigation process.

Photo of Michael E. Lacy Michael E. Lacy

Michael heads the firm’s Consumer Financial Services practice, and handles class actions and high-stakes consumer litigation on a nationwide basis. He represents banks, mortgage servicers, debt buyers and collectors, and lenders against claims under consumer protection statutes, including the FCRA, TCPA, RESPA, RICO,

Michael heads the firm’s Consumer Financial Services practice, and handles class actions and high-stakes consumer litigation on a nationwide basis. He represents banks, mortgage servicers, debt buyers and collectors, and lenders against claims under consumer protection statutes, including the FCRA, TCPA, RESPA, RICO, and state UDAP laws. He has significant experience litigating and trying corporate governance disputes, including shareholder derivative claims, corporate dissolution cases, and corporate divorce matters. Michael also represents public utility companies in litigation and regulatory matters, including condemnation and land use cases.