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Collection Agency Files RICO Lawsuit Against Lexington Law Group

A collection agency has taken the incredibly bold step of accusing a number of defendants, namely the Lexington Law Group, of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act because of what the plaintiff describes is a “predatory and fraudulent ‘credit repair’ scheme.”

A copy of the complaint in the case of Ad Astra Recovery Services v. John Clifford Heath, Esq.; John C. Heath, Attorney at Law, PLLC d/b/a Lexington Law Firm; Progrexion Holdings, Inc. d/b/a “Progrexion;” Progrexion Teleservices, Inc. d/b/a “Progrexion;” Kevin Jones, Esq.; Adam C. Fullman, Esq.; Lexington Consumer Advocacy, Inc.; and XYZ Corps. 1-20; John Does 1-20 can be accessed by clicking here.

This is the second time that a collection agency has attempted to use RICO to go against a noted plaintiff’s firm. The other attempt has not progressed very far, but it is another sign that the industry is standing up and fighting back.

The complaint was filed on May 21 in U.S. District Court for the District of Kansas. Ad Astra, the plaintiff, is being represented by Scott Wortman, Hilary Korman,  and Nicholas Harbist of Blank Rome and Lee Thompson of Thompson Law Firm in Wichita, Kansas. Thompson is a former U.S. Attorney for District of Kansas.

Ad Astra says in the complaint that it has received 75,000 dispute letters from the defendants during the past four years. The complaint lays out a “scheme” that accuses the defendants of preying on consumers and defrauding the credit and collections community.

In one case, the plaintiff received two dispute letters from an individual, one a month after and the other two months after the individual had passed away. The complaint included a copy of the individual’s death certificate, and the two letters that were sent.

In another case, an individual sent 11 dispute letters to the plaintiff. The individual then submitted a complaint about the plaintiff to the Bureau of Consumer Financial Protection. In the complaint, the individual noted she had retained Lexington Law group. In checking the dispute letters, the plaintiff noticed that there were different signatures used by the individual.

The plaintiff also noted many other common traits of letters that were allegedly sent by individuals, but appeared to be coming from the defendants.

Many of them contained affixed postage stamps that had an image of a sun shape, leaf, or a circle shape filled with stars. The format and spacing of each letter was similar, and the way that the envelopes were printed and addressed was identical. The font used in each letter was identical, or purposefully varied. Curious verbiage was used—primarily too formal or which used uncommon, British phrases (for example, “problems may be extant,” “I must request,” “I must ask,” “I must demand,” “the unverified account,” the “unvalidated account,” “the questionable account,” “the suspicious account,” “the so-called account,” “the ostensible account,” “the asserted account,” “the alleged account,” “I want more than,” “this request is for more than,” “this is not a request for,” “vacate such bureau items,” “kindly vacate that bureau material,” “kindly recall such tradelines,” “rescind that bureau material,” “I remain appreciative,” “I appreciate your attending to this circumstance,” “malevolent,” “deleterious,” “in alignment with,” “materials dispatched from your company,” “any data dispatched,” and “I am grateful for your examining this circumstance.” Most of the letters concluded with some variation of quickly, such as “soon,” “immediately,” “promptly,” “as soon as possible,” “now,” “rapidly,” and “straightaway.” Even the signatures on the letters resembled each other. Also, many of them had a similar type-o in Ad Astra’s name, spelling it as “Ad Astra Recovery Servic” or “Ad Astra Recovery Serv.”

The CEO of Ad Astra went as far as to schedule a meeting with John Heath from Lexington Law Group. In that meeting, according to the complaint, Heath admitted that the defendant’s clients were not signing the dispute letters. The defendant’s computer system had “several signature options, which randomly varied as the letters were generated, which explained the similar signatures that Ad Astra had already observed.”

There was no further communication between the two parties.

In order to send letters on behalf of its clients, the defendants have those individuals sign power of attorney forms, giving the defendants the permission to draft and sign letters in their names. However, as noted by the complaint, some states, like Utah, require letters sent by an attorney indicated that they are from the attorney. This all ties in with the crux of the plaintiff’s allegations, which is that the defendants intentionally circumvented the Fair Credit Reporting Act, specifically by making it appear that the dispute was directly from a consumer. As stated in the complaint, “a credit furnisher… is required to comply with certain onerous investigative requirements when it receives a dispute direct from a consumer. It is not, however, required to investigate a disputed item of information it receives from a credit repair organization (like Defendants).”

Defendants intentionally disregard Utah and other laws and generate and transmit mass credit dispute letters to creditors and collection agencies, like Plaintiff, by forging the consumer’s signatures, without any indication that they are actually prepared and transmitted by Defendants.

Dealing with the dispute letters cost Ad Astra in excess of $75,000, according to the complaint.

The complaint accuses the defendants of engaging in mail and wire fraud among a number of other allegations.

 

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