FTC Refunding $4M to Consumers Victimized by Collection Scam

The Federal Trade Commission yesterday announced it is returning more than $4 million to 10,000 individuals who were scammed by a debt collector more than five years ago. The refunds were to replace money lost by individuals who were taken advantage of by a series of companies that allegedly threatened and intimidated individuals into making payments on phantom payday loans that were not owed, or not owed to the defendants, and who allegedly sold portfolios of fake loans to debt collectors — the first time the FTC ever made such an allegation.

The FTC, in partnership with the Illinois Attorney General, took action back in March 2016 against Stark Law, Stark Recovery, and Capital Harris Miller & Associates as part of Operation Collection Protection. The FTC obtained a court order banning the defendants from collecting or selling phantom payday loans. The defendants were Stark Law LLC, also doing business as Stark Recovery; Stark Legal LLC; Ashton Asset Management Inc.; CHM Capital Group LLC, also doing business as Capital Harris Miller & Associates; HKM Funding Ltd.; Pacific Capital Holdings Inc., formerly known as Charles Hunter Miller & Associates Inc. and also doing business as Pacific Capital; Hirsh Mohindra, also doing business as Ashton Lending LLC; Gaurav Mohindra; and Preetesh Patel.

Individuals who were victimized by the scammers are due to receive $375 each, according to the FTC. The FTC claimed the scammers “collected and processed millions of dollars in payments for alleged debts” as part of the scheme.

When they were shut down in 2016, the defendants had been operating the scam for more than five years, according to the FTC. The companies targeted borrowers who had obtained or applied for either payday loans or other forms of short-term loans, and pressured them into making payments that either were not owed, or were not owed to the company making the call. Borrowers were allegedly threatened with arrest or lawsuits and were allegedly told they would be charged with “defrauding a financial institution” or “passing a bad check,” according to the FTC. The companies also misrepresented themselves as a law firm with the authority to sue and obtain financial judgments.

Some of the defendants reached a settlement with the FTC back in 2017 where the three owners of the companies agreed to forfeit $9 million in assets to help repay a $47 million judgment. The three defendants surrendered houses, cash, and even a 1-kilogram gold bar as part of the settlement. 

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