Privat Lawyers Got Serious Money Penalties

Privat Lawyers Got Serious Money Penalties
From Their Fraud Debt Collection

Connecticut General Status (“C.G.S”) §36a-800 prohibits the state court and judge from collecting debt. The same restriction applies to private lawyers except a private lawyer obtained a debt collection license from the Department of Bank.

2. Fair Debt Collection Practices Act (FDCPA), codified as 15USC§1692-1692p, has details:

(1) 15 USC §1692a(6) prohibits any state court and judge from engaging in debt collection activities.

(2) 15 USC §1692e(5) prohibits debt collectors from making threats of actions that are not legally permissible.

Then the debtor collectors used the language of potential litigation, or engaged in litigation to collect the debt, which violated 15 USC §1692e(5).

(3) 15USC §1692d(1), prohibits the debt collectors from using any criminal means to harm the physical person, reputation, or property of any person.

3. Debt-prisoner was abolished by federal law in 1833. But it exists today.

4. 15 USC§1692a(3) defines ’ the “term ‘consumer’ means any natural person obligated or allegedly obligated to pay any debt”; 15USC§1692a(5) defines “term ‘debt’ means any obligation”, and 15USC§1692a(6) defines debt collector who “collected any debts”.

5. Debt collection does not fall under the category of legal activities, thereby excluding attorneys from the application of lawyer-client privilege, as discussed in Heintz v. Jenkins (1995), 514 US 291, 297. – Supreme Court 1995

“regulates debt collection, not the practice of law. Congress repealed the attorney exemption to the act, not because of attorney[s’] conduct in the courtroom, but because of their conduct in the backroom. Only collection activities, not legal activities, are covered by the act. . . The act applies to attorneys when they are collecting debts, not when they are performing tasks of a legal nature. . ” 132 Cong. Rec. 30842 (1986).

6. Abused debt collection is the unfair and cheating business practice, violated 15USC§45(a)(1) which deserved monetary penalty, as discussed in Case: Jerman v Carlisle et al., 130 S.Ct. 1605,1609 (2010), US Supreme Court:

“violations of the FDCPA are deemed to be unfair or deceptive acts or practices under the Federal Trade Commission Act (FTC Act), 15 USC § 41 et seq., and are enforced by the Federal Trade Commission (FTC). See § 1692l. As a result, a debt collector who acts with “actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is [prohibited under the FDCPA]” is subject to civil penalties of up to $16,000 per day. §§ 45(m)(1)(A), (C); 74 Fed.Reg. 858 (2009) (amending 16 CFR § 1.98(d)).”

Here the monetary penalty per day for a single violation of 15USC §45(m)(1)(A) was adjusted annually to account for inflation. The Federal Trade Commission (“FTC”) and Consumer Financial Protection Bureau (“CFPB”) CFPB specified money punishment $16,000 per day initiated from year 2009. For inflation adjustment, the penalty is $40,000 after August 1, 2016; $40,654 for 2017, $ 41,484 for 2018, $42,530 for 2019; $43,280 for 2020; and $43,792 for 2021, $46,517 for 2022, and $50,120 for 2023 per day.

7. Connecticut Unfair Trade Practices Act (CUTPA). C.G.S. §42-110a-110q, and §42-110b(b)(a), C.G.S § 42-110b(b)(a) mandates Connecticut court to consider principles established in cases decided by the Federal Trade Commission (“FTC”) and Consumer Financial Protection Bureau (“CFPB”) while evaluating this matter under a private act.

8 Penalties for violation of FDCPA against the law firms and lawyers by CFPB:

(1) In case of 09-cv-02467-LDW-AKT, U.S. v Oxford Collection Agency and Salvatore Spinelli, ESQ, the U.S. obtained a “Consent Decree” on 06/10/2009, from the District Court for the Eastern District of New York. The decree penalized Salvatore Spinelli, ESQ, a member of the New York bar, for violating FDCPA, specifically 15 USC §1692d, and other violations. The court found the defendants guilty of running a debt collection lawsuit mill and ordered a penalty of $1,060,000 against Salvatore Spinelli, ESQ. The penalty amount was determined according to 15 USC §45(m)(l)(A). The Consent Decree accused the defendants of misleading consumers by implying that nonpayment of a debt would result in arrest or legal action. These communications were deemed to violate 15 USC §1692d(2), because criminal punishment for unpaid debt was ‘obscene or profane language” in debt collection.

(2) CFPB obtained a “Stipulated Final Judgment and Order” dated 01/06/2016 under 1:14-cv-02211-AT, U.S. Court, Northern District of Georgia, Atlanta Division. The judgment ordered defendants Frederick J. Hanna & Associates, P.C. and its three principal partners to pay injunctive relief, damages or other monetary relief, restitution, disgorgement, and civil penalties of $3,100,000 for Defendants: used complaints that falsely represented or implied meaningful attorney involvement” and “recklessly used affidavits” in violation of FDCPA and others.

(3) CFPB’s Administrative Proceeding against Pressler & Pressler, LLP, and its partners (File No. 2016-CFPB-0009, dated 04/25/2016) resulted in not only a penalty of $1 million but also a prohibition on certain debt collection acts. The defendants were found to have engaged in unfair debt collection practices, including initiating litigation without a reasonable basis, using deceptive affidavits, and engaging in improper pre-judgment discovery practices etc.

(4) On 01/18/2023, CFPB obtained the stipulated final judgment and order under Case No.2:19cv2928, U.S Court for Eastern District of New York. The defendant was the law firm Forster & Garbus, LLP, which on behalf of Citibank and Discover and others, illegally filed junk lawsuits against borrowers in debt collections. The order halted the law firm from engaging the debt collection, Duo to that defendant exposed no money, the judge ordered to pay the penalty of $100,000 to CFPB. Upon further motion of CFPB, the law firm will pay $3,000,000.

Andrew Chien (jcs23@yahoo.com)