The Consumer Financial Protection Bureau yesterday announced an enforcement action against several defendants, including two companies and their owners and four attorneys for engaging in a student loan debt relief operation that illegally charged individuals nearly $12 million in upfront fees.
The defendants include: GST Factoring and its two owners, Rick Graff and Gregory Trimarche, Champion Marketing Solutions and its owner, Scott Freda, and four attorneys — Amanda Johanson, Jacob Slaughter, David Mize, and Daniel Ruggiero. The CFPB announced stipulated final judgments with Trimarche, Slaughter, Mize, and Ruggiero which will see them permanently banned from the debt relief industry. Those four individuals who reached settlements with the CFPB would also be required to repay $11.8 million, which represents how much was taken from the 2,600 victims during a five-year period. The full amount of the judgment will be suspended and the defendants will be ordered to pay a portion of that amount based on their inability to repay the full amount that was charged. Each of the defendants are also ordered to pay a $1 civil money penalty to the CFPB.
Under the Telemarketing Sales Rule, it is illegal to request fees before the debt is settled or negotiated. The defendants were accused of charging upfront fees in exchange for purportedly renegotiating the balances on the individuals’ student loans. The individuals were charged as much as 40% of what they owed on the promise they would be working with an attorney, when in fact the fees were paid to GST Factoring, which then distributed the funds to the scheme’s other participants. Individuals were also encouraged to stop making payments on their student loans, according to the complaint.
A copy of the complaint can be accessed by clicking here
