The Consumer Financial Protection Bureau and the Attorney General of New York have filed suit in the U.S. District Court for the Western District of New York against two individuals — Douglas MacKinnon and Mark Gray — and three companies — Northern Resolution Group, Enhanced Acquisitions, and Delray Capital — alleging the defendants engaged in an illegal debt collection scheme.
The defendants, using their companies, are accused of purchasing tens of millions of dollars in consumer debt, adding $200 to the balance that was owed, and then attempted to collect on the debts or placed the accounts with other agencies. When collecting the debt for themselves, the defendants allegedly impersonated law enforcement officials and threatened consumers with arrest.
The defendants have been purchasing debt since 2009, according to the complaint filed today. MacKinnon allegedly set up a network of 60 collection agencies that were used to collect on the debts.
The defendants are charged with 10 counts of violating state and federal laws. A copy of the complaint can be downloaded here.
“Our lawsuit asserts that millions of consumers were harassed, threatened, and deceived as part of a massive scheme to collect inflated debts,” said CFPB Director Richard Cordray in a statement. “Today we are taking action against the ringleaders of this operation so they can no longer prey upon vulnerable consumers. We are pleased to be working in partnership with New York Attorney General Schneiderman to hold these companies accountable.”
“Living with debt is difficult enough as it is, without the added stress of being harassed and threatened by debt collectors,” Attorney General Schneiderman said in a statement. “These collection shops inflated debts of their victims. This suit sends the message that debt collectors that employ abusive tactics will be held accountable.”