The Consumer Financial Protection Bureau sued three executives at a Colorado debt collection company for allegedly selling debt to third party debt collectors who threatened consumers with arrest, jail, or lawsuit for payment.
The CFPB said in a lawsuit filed Monday that three executives – Craig Manseth, co-CEO and president of United Debt Holding, a debt buyer in Englewood, Colorado; Darren Turco, United’s co-CEO; and Jacob Adamo, the company’s chief operations officer, who engages in illegal debt collection practices in violation of the Fair Debt Collection Practices Act.
The executives also own and manage two other companies, United Holding Group and JTM Capital Management, which are also in the 33-page lawsuit. The bureau said executives had misrepresented the “connections and ongoing nature of their various business units.”
“This collection agency and its operators have created the conditions for rampant abuse,” said CFPB director Rohit Chopra in a press release. “Companies cannot profit or evade liability by simply creating a maze of changing entities and allowing third parties to take advantage of consumers.”
The CFPB claims that executives “knowingly or recklessly placed and sold debt to debt collection agencies who used threats and misrepresentations to coerce payments from consumers.” The executives “took no sensible measures to prevent or rule out further false statements, and the defendants mostly did their business with these debt collection agencies as usual,” said the agency.
Since 2015, executives have received more than 500 complaints from consumers that a debt collection company had threatened them if they failed to pay their debts. Collectors also reportedly told consumers that their credit reports would improve if they paid off their debts or would have a negative impact if they didn’t.
The executives did not respond to requests for comments.
The companies bought millions of dollars in distressed consumer debt for pennies per dollar. From September 2017 to April 2020, executives placed approximately $ 8 billion in debt with third-party collectors, the CFPB claimed. The companies sold around 380,000 consumer accounts, according to the lawsuit, and received hundreds of complaints over the years for alleged threats and other misrepresentations.
“Many of the complaints were forwarded to the defendants by the creditors who originally sold the debt portfolios,” the CFPB said in the lawsuit filed in the US District Court for the Western District of New York.
The CFPB is seeking indefinite monetary damage, including consumer compensation, surrender of improper profits, and a civil fine.