Federal Trade Commission v. Forensic Case Management Services, Inc., et al., LACV11-7484-RGK, U.S. District Court, Central District of California

Defendants operated a telephone-driven collection business from Van Nuys, California with approximately 50 telemarketer/collectors soliciting small businesses with unpaid receivables and then pursuing debtors on behalf of those small businesses.  The FTC action alleged multiple unfair business practices, fraud, and violations of the Fair Debt Collection Practices Act.  In addition to telephone collection, these defendants also operated a “forwarding” business whereby they collected an up-front fee from their small businesses’ creditor clients and forwarded collection cases to attorneys around the country, often based on fraudulent representations that specific assets of the debtor had been identified and were ready for seizure. 

As court-appointed Receiver, we took over the operation which had a client base of nearly 25,000 small business customers.  After determining that fraud was so ingrained in the operation that it could not be operated lawfully, we suspended operations and communicated with the client base, pending a resolution of the underlying case.  Consent Judgments were entered in January, 2013.