FTC halts debt collection operation accused of outrageous tactics - East Valley Tribune: Nation / World

FTC halts debt collection operation accused of outrageous tactics

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Posted: Sunday, October 9, 2011 2:15 pm

The Federal Trade Commission has halted operations and frozen assets of a Southern California debt collection firm accused of threatening to kill pets, dig up deceased relatives, and a long list of other harassment complaints from across the country.

The business operated under a variety of names including Joseph, Steven and Associates and Specialized Debt Recovery.

According to the FTC, the business is accused of telling a woman who was unable to pay the balance due on her daughter's funeral that they "were going to dig her up and hang her from a tree if she did not pay the debt," and would take her dog and "eat him."

An Iowa woman said she told the company they had the wrong person after repeated phone calls and was told if she didn't send a check "they would fart in my face."

In another instance, the FTC alleges the defendants contacted a mother with two special needs children and told her she should "sell her retarded children."

In Van Nuys, the company operated as Commercial Investigations Inc.; Rumson, Bolling and Associates; Forensic Case Management Services Inc.; and Commercial Receivables Acquisition Inc.

The owner was David M. Hynes Jr., who ran it with his wife, Lorena Quiroz-Hynes; in-house attorney Randy Chang; and four other people, James Hynes, Kevin Medley, Heather True and Frank E. Lindstrom Jr.

The FTC called Lindstrom's tactics particularly "devious." They reported finding an email he sent that read: "Jesus paid his bills. Why don't you? We have had this account for 4 months now. Not even $1. That is not what Jesus wants. That is why the Muslims are winning."

Many of the employees working for the business were California Department of Corrections parolees. The defendants' lawyer, Christopher Pitet, said they did a good thing by hiring them.

"My understanding is that they did it at the request of the state of California to help them find jobs so that they wouldn't find their way back to the penal system," he said.

Pitet said his clients deny the government's allegations. The case is proceeding through the U.S. District Court in Los Angeles.

Pitet noted if employees did threaten things like digging up deceased relatives and eating pets it would have been unacceptable.

"If those specific things happened, they're outrageous," he said. "But if they did happen it was not the company's policy."

Former employee Edward Gonzales disagrees. He said employees were expected to do anything to secure funds, including using abusive and foul language.

"The leads on the floor left it up to you with suggestions on how to be forceful," he said. "They loved confrontation because the longer you kept the debtor on the phone, the more likely they will offer some sort of monetary settlement to get you off the phone."

The FTC halted the business' operations on Sept. 30 and froze more than $800,000 held at bank accounts tied to the operation, after charging that its practices violated the Federal Trade Commission Act and Fair Debt Collection Practices Act.

A permanent receiver has been appointed to run the operation while the FTC moves forward with a federal case. After the FTC took over, the receiver wrote in his report that prohibited practices are ingrained in the defendants' daily operations. Getting the business to comply with necessary changes "would require a sea change in the culture and all operational aspects of the business."

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