Miami Federal Judge Enters Preliminary Injunction in Action by FTC and State of Florida Against Nationwide Debt Relief Operation For Fraudulent and Deceptive Acts

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MIAMI FEDERAL JUDGE ENTERS PRELIMINARY INJUNCTION IN ACTION BY FTC AND STATE OF FLORIDA AGAINST NATIONWIDE DEBT RELIEF OPERATION FOR FRAUDULENT AND DECEPTIVE ACTS
GJB Shareholder Jonathan E. Perlman Appointed Receiver, Takes Possession of Pompano Beach Headquarters

MIAMI, FL (May 25, 2017) – Last week, in an action brought by Florida’s Office of the Attorney General and the Federal Trade Commission,  U.S. District Court Judge Cecilia M. Altonaga of the Southern District of Florida entered a preliminary injunction halting a massive nationwide debt relief operation headquartered in Pompano Beach and run by S. Florida resident Jeremy Lee Marcus. The operation was using more than a dozen different names, including Defendants 321 Loans, Inc., Helping America Group, Instahelp America, Inc., and Financial Freedom National, Inc.

The preliminary injunction order also appointed Jonathan E. Perlman, a shareholder at Miami-based Genovese Joblove & Battista, P.A. (GJB), as "Permanent Receiver" over the entities listed above and all related operating entities. The Court’s order directs Perlman to manage and investigate Defendants’ affairs and to attempt to recoup funds for defrauded consumers. The case is Federal Trade Commission and State of Florida v. Jeremy Lee Marcus, Craig Davis Smith, Yisbet Segrea, Financial Freedom National, Inc. et al., Case No. 17-60907-CIV-ALTONAGA (S.D. Fla).

According to the complaint filed by the FTC and Attorney General Pam Bondi, since 2013, Jeremy Marcus and other individual defendants, through a maze of interrelated companies, engaged in a massive debt relief scheme that defrauded 15,000 financially distressed consumers, many of whom are elderly or disabled, of over $50 million dollars. Though customers resided throughout the U.S., all companies operated out of Defendants’ 50,000 square foot boiler room facility in Pompano Beach or a second smaller call center in Panama.

According to the complaint, Defendants’ false and deceptive sales practices included bogus loan campaigns that -- through direct unsolicited telephone call, Internet, websites, and direct mail -- would allow consumers to combine all balances on their current debt to creditors into a single loan from Defendants at a very low interest rate, such that the consumers would only have to make a single small monthly payment in an amount ranging from $200-$1,000 to resolve all of their debts to creditors, which Defendants would pull directly from consumers’ bank accounts via ACH.

During initial phone calls, Defendants also told consumers that they were non-profit entities and that, as a result, 100% of the payments and fees they received from consumers went back into their charitable purpose of helping distressed consumers. Defendants said to consumers that this allowed them to offer the lowest interest rate on their "loan," and that the consumer was in especially good hands.

In truth, however, there was no "loan," and Defendants did not use the "loan payments" to pay down debts to creditors. Rather, the payments were just disguised monthly fees, which even if truthfully disclosed, Defendants would have been prohibited from receiving by statute. Consumers still owed their creditors on their original debt plus interest. Defendants’ statements that they were a charitable nonprofit enterprise to induce consumers to part with their money were an outright falsehood.

Finally, Plaintiffs assert that Defendants expanded their scheme to include "takeover campaigns." In these instances, Defendants would pay to acquire other (presumably legitimate) debt relief companies whose customers were paying monthly amounts into escrow accounts, which would ultimately be used to pay their creditors. Upon purchase of these consumers’ accounts, Defendants’ telephone salespeople would call and tell consumers that they were taking over the relationship, and that in order to resolve their creditor debt, they must transfer all of the monies they had saved in their escrow account to Defendants, and pay Defendants a monthly fee to boot. The rest of the business model was the same, including the same false "non-profit" representations, and that the monies paid were, in fact, disguised fees going to Defendants, not to creditors.

The FTC and State of Florida allege that Defendants essentially converted consumers’ money to their own use and generally provided nothing in return, leaving consumers with unpaid debt, accounts in default, plummeting credit, and some facing bankruptcy and financial ruin.

In the Receiver’s Interim Report, presented to the court on May 16, Receiver Perlman notes he and his team have discovered 55 additional potentially related businesses and business trusts that utilized the same Pompano Beach address, appear to share common management or employees, and that Defendant Jeremy Marcus appears to be the direct or indirect owner or beneficiary of each.

"We are only at the tip of the iceberg in terms of conducting our investigation and determining the workings of – and relationship between – the numerous entities involved," said Perlman. "There is a lot of work to be done. My team and I look forward to helping the court delve deeper into the intricacies of this matter for the benefit of the consumers."

Perlman is represented by attorneys Gregory M. Garno, Allison R. Day, Theresa Van Vliet, and Heather L. Harmon, also of Genovese Joblove & Battista. Perlman has served as a court-appointed receiver in numerous actions brought by federal agencies, including the Securities and Exchange Commission and FTC. Most recently, he was appointed temporary receiver in a Miami-based invention-promotion scam allegedly being perpetrated by World Patent Marketing and its CEO, Scott Cooper. He is also currently the court-appointed receiver overseeing the liquidation of assets from the Creative Capital Ponzi scheme orchestrated by South Florida resident George Theodule, who is presently incarcerated. Perlman is also the receiver over Hispanic Global Way and its affiliates, entities that advertised and sold weight loss products using deceptive and unfair means.

The defendants deny all wrongdoing. No future court dates has been scheduled at this time. Anyone having knowledge concerning the allegations in this case and financial affairs of the Receivership entities is encouraged to contact the Receiver’s team by sending an email to info@321loansrecevership.com or calling the Receiver’s Receivership Hotline at 1-888-982-4188. Additional information can be found on the Receiver’s website at www.321loansreceivership.com or on the FTC’s website.

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About Genovese Joblove & Battista, P.A.

Genovese Joblove & Battista, P.A. (GJB) was established in 1999 by founding partners John H. Genovese, Michael D. Joblove, and Paul J. Battista. Today, GJB has grown steadily to become a major regional firm with offices in Miami, Fort Lauderdale, and Fort Myers as well as an affiliate office in Caracas, serving clients throughout the U.S. GJB attorneys are recognized for their experience representing clients in large and complex litigation in a number of areas, including bankruptcy, insolvency, receiverships, franchises, and general commercial matters, as well as white collar, real estate, employment law, class actions, and securities litigation. The firm and its affiliate, GJB Consulting, also counsel clients in local, state and federal government matters. For more information, visit www.gjb-law.com.