In late December, the Federal Trade Commission and Florida Attorney General filed an amended complaint in an action pending in the United States District Court for the Middle District of Florida that charged nine defendants with violations of the Federal Trade Commission Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), the FTC's Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"). The case is Federal Trade Commission v. E.M. Sys. & Servs., LLC, No. 8:15cv1417 (M.D.-Fla., filed June 15, 2015).
The complaint alleged the defendants operated a nationwide debt relief telemarketing scam that promised consumers reduced credit card interest rates and refunds in exchange for an upfront fee of $695 to $1,495, charged to the consumers' credit cards. The scammers, which included a web of entities controlled by a husband and wife who previously participated in a similar scam and a telemarketing agency and its owner, did not deliver on their promises for reduced rates and refunds and instead caused consumers to fall deeper into debt. In June, the district court entered a preliminary injunction, freezing the assets of the scammers and appointing a special receiver.
The amended complaint names seven new defendants, including a credit processing company, its three executives, and three co-owners of the telemarketer, and contains charges of credit card laundering in violation of the FTC Act and the Telemarketing Sales Rule. The amended complaint contains additional allegations of violations of the FTC Act, Telemarketing Act, and Telemarketing Sales Rule. The debt relief and credit card laundering schemes have allegedly operated since at least January 2013.
According to the amended complaint, the debt relief scammers utilized the new defendants to process credit card payments for the debt relief scam. The credit processing scammers used at least 26 shell merchants to illegally launder and process the consumers' credit card payments to the debt relief scammers. These defendants retained a large portion of the revenue generated by the debt relief scam. Jessica Rich, director of the FTC's Consumer Financial Protection Bureau, commented that the FTC's investigation "stopped the credit card processing operation that hid [the] illegal transactions" of the telemarketers who swindled consumers.
The eight-count amended complaint seeks preliminary and permanent injunctive relief and other equitable relief, including rescission or reformation of contracts, restitution, refunds, and disgorgement, and costs. Responsive pleadings to the amended complaint have not been filed yet.
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