Suit alleges that Associated Financial Services and Patrick Kolling used abusive and harassing practices, deceptive collection letters, and brought unlawful collection lawsuits

Minnesota Attorney General Mike Hatch filed suit today against Associated Financial Services
harassing and deceiving consumers in their attempts to collect debts owed to businesses,
particularly medical and dental offices.

The State’s lawsuit alleges that AFS and Kolling repeatedly engaged in unlawful pre-suit
collections tactics, such as abusive telephone calls, discussion of debts with non-debtors, and false and deceptive collection letters. The suit also alleges that AFS and Kolling brought thousands of unlawful collection lawsuits against Minnesota consumers based on sham "assignments" of the
unpaid accounts to AFS from the creditor.

"AFS and its owner have run roughshod over consumer rights and the law in their attempts to
collect debts," Deputy Attorney General Lori Swanson said. "They’ve used harassment, threats,
deception, and unlawful collections lawsuits to bully consumers into paying."
AFS and Kolling--using his own name, or his aliases, Dave Walker or Pat Collins--attempt to
collect debts allegedly of whatever amount is recovered as a fee for their services. AFS and Kolling offer pre-suit collection services, such as telephone calls and form letters, as well as "complete legal services," such as suing consumers and then garnishing their wages or bank accounts.

Specifically, the State’s lawsuit alleges that AFS and Kolling used the following unlawful pre-suit
collection tactics:

AFS and Kolling illegally abused and harassed Minnesotans by telephone and in person,
using profanity, obscenity, insults, hang-ups and other offensive or belittling conduct to prod
consumers into paying debts. Illustrative examples are on pages 7-8 of the Complaint.

AFS and Kolling illegally discuss the debts of consumers with third parties, such as parents
or siblings, without seeking or securing the direct prior consent of the consumer who allegedly owes the debt. Illustrative examples are on pages 8-9 of the Complaint.

AFS and Kolling use an initial "dunning" or collection letter that demands "immediate"
payment in the first, capitalized paragraph, which overshadows the second, lower-case
paragraph that gives consumers 30 days to dispute that they owe the debt.

AFS and Kolling then sent a second form letter to consumers who don’t pay, misrepresenting that AFS has "referred" the account to an attorney for "legal action" and that the consumer "should be receiving a Summons and Complaint shortly." In fact, when AFS and Kolling send out the letter, AFS and Kolling have no authority from the creditor, and may not even intend, to initiate suit.

AFS and Kolling brought unlawful collections lawsuits. Specifically, if their pre-suit
collection tactics prove unsuccessful, AFS and Kolling take a sham "assignment" of the
unpaid account from the creditor. AFS and Kolling furnish extensive legal services to
creditors in this way, including drafting and preparing multiple pleadings, determining the
amount to claim in the suits, and evaluating consumer responses to the suits. By preparing
and prosecuting these legal actions for the benefit of the creditor--the party whose interests
are actually at stake in the suit--AFS and Kolling unlawfully furnish legal services to
creditors under the pretext of conducting their own lawsuits.

AFS and Kolling garnished wages or bank accounts based on these unlawful lawsuits,
falsely naming AFS as the "creditor" in the suits. AFS and Kolling bring such actions without
notice to the debtor, or with a notice that obscures the debtor’s rights, especially the right to
claim exemption from garnishment if the consumer is a recipient of public assistance.

Filed in Stearns County District Court, the State’s action alleges violations of Minnesota’s
collection agency statute and its prohibition against the unauthorized practice of law. The suit seeks
to permanently enjoin AFS and Kolling from violating state law, civil penalties, and restitution for
consumers.

AFS is a Minnesota corporation with its principal place of business at 606 25th Avenue South,
Suite 211, P.O. Box 7215, St. Cloud, MN 56302, and a mailing address at P.O. Box 7215, St.
Cloud, MN 56302.

Any consumer who has been affected by the practices of AFS or Patrick Kolling, or his aliases,
Dave Walker and Pat Collins, should call the Minnesota Attorney General’s Office at (651)
296-3353 or toll-free at (800) 657-3787.

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