FTC Stops Phantom Debt Collection Scheme

Alleges defendants bilked millions of dollars from consumers for debts they did not owe

At the Federal Trade Commission’s request, a federal court has temporarily halted and frozen the assets of a debt collection scheme that allegedly bilked consumers out of millions of dollars, using deceptive and threatening tactics to collect phantom debts that they did not owe.

According to the FTC’s complaint, Global Asset Financial Services Group, LLC, doing business in North Carolina and New York, falsely claimed to be attorneys or affiliated with attorneys to pressure consumers into making payments on debts they did not owe, and threatened to take legal action against consumers if they did not pay.

The FTC’s complaint names 10 companies and six individuals as proposed defendants including: GAFS Group, LLC; Regional Asset Maintenance, LLC; 10D Holdings, Inc.; Trans America Consumer Solutions, LLC; Midwestern Alliance, LLC; LLI Business Innovations, LLC; TACS I, LLC; TACS II, LLC; TACS III, LLC; Cedar Rose Holdings & Development, Inc.; and their principals Ankh Ali, Aziza Ali, Kenneth Moody, David Carr, Jeremy Scinta, and Omar Hussain.

One of the companies behind the operation, Midwestern Alliance, is a debt broker that allegedly bought, sold, and placed fake debt portfolios that it obtained from former payday loan generator Joel Tucker even after consumers said they did not recognize the debt or had already paid it.

The complaint charged that the defendants’ deceptive and unfair tactics violated the FTC Act and the Fair Debt Collection Practices Act.

This action is part of the FTC’s continuing crackdown on all players involved in phantom debt schemes, including those who sell fake debt portfolios and those who harass consumers to collect the phony debt.

The Commission vote approving the Complaint was 5-0. The U.S. District Court for the Western District of North Carolina entered a temporary restraining order in the case on February 4, 2019.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.

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