Debt collectors LVNV Funding, LLC and Resurgent Capital Services, L.P. have been ordered to cease collecting debts in Maryland. The cease & desist order issued by Maryland's Commissioner of Financial Regulation, Mark Kaufman, also applies to the debt collectors' related entities, including Sherman Financial Group, LLC. The order was signed on October 25, 2011, and was effective immediately. Click here for a link to the press release.
The Maryland State Collection Agency Licensing Board began an investigation in July 2011. The investigation revealed that all of the companies above (and some others) are ultimately owned, controlled and operated by Sherman Financial Group. A number of individuals (Benjamin W. Navarro, Leslie G. Gutierrez, Scott E. Silver, Kevin P. Branigan, and Robert A. Roderick) serve as the directors, managers and officers of subsidiary business entities in varying capacities.
According to the documents that were filed, Resurgent Capital Services, L.P. acts as the master servicer for charged off consumer debt owned by LVNV Funding. Which means that Resurgent attempts to collect debts owned by LVNV.
LVNV and Resurgent Cannot Prove Ownership of the Debts
One of the problems is the Agency found that LVNV cannot prove ownership of the debts it claims to have bought for pennies on the dollar. Yet, the company filed thousands of lawsuits in Maryland and obtained judgment, by filing false affidavits with the Courts.
LVNV and Resurgent Were Collecting Without a License
The filings say that LVNV filed approximately 25,811 lawsuits in Maryland district courts seeking judgments against consumers. Of those LVNV filed 17,160 lawsuits before it was ever licensed to collect debts in Maryland!
LVNV and Resurgent Did Not Have Valid Title to the Debts
Another problem is that in most cases LVNV is that the company did not have valid title to the debts it says it purchased. LVNV only purchased a computer database from a previous creditor or other debt buyer, and the only document it filed with its lawsuit complaints was a one-page printout from a database that had been allegedly created y the original creditor. LVNV did not acquire the original contracts applicable to each consumer, and they did not acquire credit card statements or any other documents about the actual use of the credit cards by the consumers. Simply put, the documents were insufficient to obtain a judgment against the consumers. The filing goes even further to say that the documents allegedly transferring the debts (the Bill of Sale and Assignment) were faulty.
LVNV and Resurgent Deceived the Court
The cease and desist order continued its harsh criticism saying LVNV and Resurgent knowing violated state law by, "knowingly submitting false or misleading affidavits that were intended to deceive the courts and consumer defendants. In another section the Agency wrote, "the various form affidavits submitted by [LVNV and Resurgent] contained artfully crafted language intended to deceive the courts and consumer defendants."
Creditors hiring LVNV Funding and Resurgent should be careful collecting debts in states such as California, where the California Fair Debt Collection Practices Act incorporates much of the federal Fair Debt Collection Practices Act. These laws protect consumers from unlawful collection practices like those above. In California LVNV Funding and Resurgent sometimes hire the Brachfeld Law Group, P.C. to try to collect their debts.
Our law office protects consumers being harassed by debt collectors. We are investigating claims against LVNV Funding, LLC and Resurgent Capital Services, L.P. for allegedly violating the Fair Debt Collection Practices Act. If you are being contacted by either of these companoies, or any other creditors or debt collectors, give us a call at 408-296-0400.