ALEXANDRIA, Va. (Legal Newsline) – Lawyers engaged in racketeering with companies that were supposed to offer debt-relief services in order to drum up lawsuits under a federal telemarketing law.
That was the finding last week of a Virginia federal jury in a lawsuit brought by Navient, the nation’s largest student loan servicer and a company that tired of Telephone Consumer Protection Act lawsuits created through a scheme that involved The Law Offices of Jeffrey Lohman, of California.
Defendants recruited individuals with student loan debt and misled them into stopping making payments, Navient alleged in its 2019 lawsuit. When Navient made calls to those borrowers to inquire why they missed payments, the Lohman firm helped them file suit under the TCPA.
Champion Marketing Solutions sent mailers that advertised its debt counseling but instead fed borrowers’ info to the lawyer defendants. CMS would have borrowers sign an attorney retainer, set up an auto-debit program to pay lawyers “unearned monthly fees” and instructed clients to stop paying their student debt.
A second amended complaint in December 2019 named many more defendants than the original did, and some settled throughout the litigation.
Those that remained were punished by a jury in Alexandria, which hit the Lohman firm with a $1,146,500 verdict, while Lohman himself was told to pay $100,000 in damages.
Other parts of the more than $2.2 million verdict include:$50,000 as to Rick Graff; $860,000 as to GST Factoring; and $50,000 as to Gregory Trimarche.
Graff and Trimarche are principals of GST Factoring, which was alleged to have had a central in recruiting borrowers through affiliate companies and connecting them with attorneys.
Navient alleged in its complaint that a borrower known as E.A. received an unsolicited flyer in the mail for student loan relief. The flyer identified the total amount of E.A.’s debt and told her she was now eligible to receive benefits from laws that may reduce or discharge the debt.
E.A. called the number on the flyer. The company, Go2Finance, referred her to CMS. That company referred her to lawyer David Mize, with whom she signed a retainer agreement.
Mize said he would charge $39,312.88 for his services, which was 40% of E.A.’s debt.
“(A)t her Feb. 26, 2018, deposition, at which Defendant Lohman was present, E.A. could not identify a single that the Mize Defendants had done for her, except refer her to the Lohman defendants,” the complaint says.
CMS and Mize told E.A. to stop making payments on her student loans, which she did. Calls from Navient to ask why followed.
When those calls started, Mize referred her to Lohman, who advised her of the possibility of filing a TCPA lawsuit. Claims under the TCPA can penalize callers up to $1,500 per call – a penalty that forces many companies to quickly settle rather than spend six figures on attorneys to fight claims through trial.
E.A. had been coached on what to say when contacted by Navient in order to revoke permission for the company to call her.
A Georgia law firm filed a federal lawsuit on E.A.’s behalf, though she testified she had never talked to anyone at that firm and did not know the suit had been filed.
Prior to an arbitration hearing, Navient agreed to a settlement of $75,000 in cash and the discharge of $26,000 in debt.
Navient made similar allegations in a lawsuit against Krohn & Moss in 2017. The defendants involved in that case reached settlements after their motion to dismiss failed.
The TCPA has provided enterprising plaintiffs and lawyers with the ability to threaten companies with class actions, with one defendant calling it “legalized extortion.”
One of the more egregious schemes involved a Pennsylvania woman buying dozens of cell phones and assigning Florida area codes to them. She figured debt collectors would call the former holders of the numbers and she’d be able to file suit when they did.
Defendants have to be thorough when alleging misconduct on the parts of plaintiffs and lawyers. One company recently successfully argued it should be paid the $286,000 it incurred in fees in fighting litigation from a serial plaintiff.