Madigan
CHICAGO (Legal Newsline) - Illinois Attorney General Lisa Madigan and the Department of Financial and Professional Regulation announced a settlement on Monday with a Chicago-based law firm that allegedly unlawfully charged consumers upfront fees.
Legal Helpers Debt Resolution LLC, a nationally operating company, allegedly charged fees to consumers to provide debt settlement services with promises to make them free of debt.
Under the terms of the settlement, Legal Helpers will pay $2.1 million in restitution to residents in Illinois who paid for services of debt settlement but failed to receive debt reduction that was meaningful and will no longer accept any new customers in Illinois.
"This company was fronting as a law firm claiming to help consumers reduce their debt, but in reality, their scheme had nothing to do with the practice of law," Madigan said.
"The company's primary purpose was to squeeze thousands of dollars in illegal upfront fees from struggling families for supposed debt relief that never materialized. I encourage anyone who might have contracted with this firm to call my office's Consumer Fraud Hotline for more information about how we can help, whether through this settlement or by connecting consumers with legitimate credit counseling agencies."
Madigan filed a lawsuit against Legal Helpers in March 2011, alleging that it unlawfully charged upfront fees to consumers in Cook, Will, Kendall, Champaign and Bureau counties. The company allegedly tried to circumvent laws banning companies from charging upfront fees by using attorneys, who are in some cases exempt from the ban, to be a front for the company. The lawsuit alleged that the services of the company rarely reduced the debt of consumers and, in most cases, consumers were left in a more problematic financial state.
The IDFPR joined the lawsuit as a co-plaintiff in September after Legal Helpers failed to respond to a cease and desist order. The order was the result of the company not obtaining the licensing required under the Debt Settlement Consumer Protection Act.
On June 5, the Attorney Registration and Disciplinary Commission filed a disciplinary action against two managing members of Legal Helpers, Thomas Macy and Jeffrey Aleman, for allegedly engaging in misconduct in connection with their debt settlement company. The ARDC is an entity that regulates licensed Illinois attorneys.