National Check Control out of business
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Posted by observer
(64.12.96.205) on May 15, 2003 at 18:58:39:
Judge freezes assets of ex-inmate's collection agency
By Jeffrey Gold, Associated Press, 5/15/2003 17:21
NEWARK, N.J. (AP) A federal judge on Thursday froze the assets of a collection agency that regulators consider one of the nation's most abusive. By improperly threatening consumers with arrest, criminal prosecution and civil action, Check Investors Inc. of Secaucus collected at least $10.2 million from about 42,100 people since 1995, the Federal Trade Commission charged. Many did not even owe any money, the agency said. ''The abusive, harassing, illegal conduct is going to stop,'' said Gregory A. Ashe, a senior lawyer in the FTC's Bureau of Consumer Protection. Also Thursday, New Jersey and West Virginia sued the company, which does business as National Check Control, accusing it of charging unlawful fees and check fraud. The company's president, Barry S. Sussman, served 3½ years in federal prison in the late 1980s for mail fraud, bank fraud and impersonating a federal official. He is now in his early 40s. While in prison, he wrote a how-to guide to credit card fraud, ''I Scam ... You Scam: Specific Methods for Defeating Bureaucratic Organizations.'' Neither Sussman nor lawyer Stephen R. LaCheen immediately returned messages seeking comment. Besides Sussman and Check Investors, the FTC complaint names his wife, Elisabeth M. Sussman, the company's vice president, and company lawyer Charles T. Hutchins, who is accused of signing dunning letters whose language violated the Fair Debt Collections Practices Act. In addition to freezing assets, Chief U.S. District Judge John W. Bissell issued a restraining order barring the defendants from violating the debt collections act and barring them from suing any consumer. Ashe noted that although consumers were also threatened with lawsuits, none were filed. Bissell scheduled a June 9 hearing on whether to grant a preliminary injunction against the defendants. Check Investors bought checks that had been returned to check guarantee companies for insufficient funds, typically paying pennies on the dollar, according to FTC court papers. Check guarantee companies contract with merchants, agreeing to any bad checks that the merchant had first run through their system to ensure it was a valid account. Check Investors demanded immediate payment from consumers, plus and additional fee of $125 to $130, although most states only allow about $30 in fees, Ashe said. The collection letters, however, only mentioned the ''amount due,'' without noting the value of the check or the fee, the FTC said. The company threatened arrest and prosecution in letters and phone calls to consumers and their family members, usually for six months, the FTC said. ''Numerous consumers report that defendants' collectors verbally assaulted them, lacing their demands for immediate payment with invective, insults, profanity, and threats,'' FTC court papers said. One person reported getting 17 calls within 10 minutes. The collection letters routinely lied that nonpayment would result in garnishment of property or wages, the agency said.
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