Readout of Justice Department Officials' Trip to Ghana and Togo to Advance West Africa Consumer Fraud Initiative
The U.S. District Court for the Eastern District of Texas entered a stipulated order for permanent injunction and civil penalty judgment against David J. Devany, former vice president of Commercial Recovery Systems Inc. (CRS), of Plano, Texas, to prevent future deceptive and abusive debt collection practices, the Department of Justice announced today.
“Deceptive debt collection practices are an all too common problem,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We at the Department of Justice will continue to work with the Federal Trade Commission and others to ensure that these practices stop and that those who engage in them are held accountable.”
CRS is a third-party debt collector that primarily collects auto loan and credit card debts on behalf of creditors. On Jan. 21, 2015, the United States filed a complaint against CRS, its president, Timothy Ford, and its former vice president, Devany. The complaint alleges that, in numerous instances, collectors at CRS called consumers and falsely claimed to be attorneys or judicial employees. According to the complaint, collectors also falsely stated that lawsuits had already been filed against consumers and offered to resolve the fictitious lawsuits “out of court.” They left voicemail messages falsely representing that a failure to return the collector’s call would result in a waiver of rights. The government alleges that, in some instances, collectors told consumers that their wages, taxes and 401(K) plans would be garnished if they did not pay. In reality, CRS had neither the intent nor the authority to file lawsuits against the consumers or attempt to have their wages garnished.
Prompted by numerous consumer complaints of deceptive and abusive debt collection practices, the U.S. Federal Trade Commission (FTC) launched an investigation. The complaint was filed in the U.S. District Court for the Eastern District of Texas at the request of the FTC and alleges violation of the Federal Trade Commission Act and the Fair Debt Collection Practices Act. The government sought civil monetary penalties and a permanent injunction to prevent the defendants from further engaging in such violations.
In previous rulings, U.S. District Judge Amos L. Mazzant III for the Eastern District of Texas found that CRS had engaged in numerous, widespread violations of the law and entered a permanent injunction against the company and its president, Ford. U.S. District Judge Mazzant further found Ford liable for civil penalties, to be determined by the court in a later proceeding.
On Sept. 9, the United States and Devany filed a proposed stipulated order for permanent injunction and civil penalty judgment, by which they agreed to resolve the litigation as between those two parties. The stipulated order, entered by the district court, permanently bans Devany from engaging in debt collection and other related activities. It assesses a partially suspended judgment in the amount of $496,000, which approximates Devany’s earnings from 2011 to 2014, during which Devany served as vice-president and numerous violations took place. The stipulated order also assesses an immediate civil penalty payment of $10,000, which is based upon Devany’s current ability to pay. The partial suspension of judgment is to remain in effect as long as Devany abides by the all requirements of the stipulated order.
The government is represented by Trial Attorney Heide L. Herrmann of the Civil Division’s Consumer Protection Branch, with the assistance of Attorneys Anne D. LeJeune and Reid A. Tepfer of the FTC’s Southwest Region.
A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.