It's been a rough couple of weeks for debt-relief services firm Morgan Drexen. You may recall our previous post about the CFPB's action against Morgan Drexen in the Central District of California and the alleged antics that ensued. By way of quick recap, the case involves alleged violations of the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act.
While it looked like the action was trial-bound, the court disposed of the case on April 21, 2015 by granting the CFPB's motion for the sanction of default judgment. The CFPB claimed that Morgan Drexen had falsified evidence by, among other things, creating fake bankruptcy petitions after the CFPB already had served its discovery requests. The court agreed, noting that the falsification of evidence was "blatant" and faulting the defendant for deceiving even its own trial counsel.
On April 30, the court granted the CFPB's motion for an order temporarily freezing Morgan Drexen's assets. Morgan Drexen filed for Chapter 7 bankruptcy the same day. Plus, on May 1, the D.C. Circuit declined to hear Morgan Drexen's challenge to the CFPB's constitutionality, saying that Morgan Drexen could raise those issues in the Central District of California litigation.
We'll keep watching the Morgan Drexen litigation and keep you posted on any new developments.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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