Four years after federal regulators shut down a debt relief operation that promised to help customers pay down credit card debt, but in reality only relieved customers of their cash, a man who worked for the scheme has been ordered to spend two years in prison and to refund $1.2 million to his victims.
The Department of Justice, along with the U.S. Postal Service, announced Monday that John Vartanian, 57, recently pleaded guilty to conspiracy to commit mail and wire fraud for his part in operating the debt relief scam through firms Nelson Gamble & Associates and Jackson Hunter Morris & Knight.
According to the DOJ, beginning in Feb. 2010 Vartanian and his associates portrayed Nelson Gamble and Jackson Hunter as law firms or attorney-based companies that could negotiate favorable settlements with creditors.
The man and other sales associates allegedly contacted prospective consumers by phone, promising to help reduce their debts.
A previously settled lawsuit from the Federal Trade Commission further alleged that the defendants called phone numbers on the National Do Not Call Registry, called consumers who had told them not to call, failed to transmit caller identification to consumers’ caller ID service, delivered pre-recorded messages without prior written consent, repeatedly called consumers to annoy them, and delivered pre-recorded messages that failed to identify the seller, the call’s purpose, and the product or service.
Customers who enrolled in the services made monthly payments expecting the money to go toward settlements, the complaint states. However, the operators took at least 15% of the total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees, the DOJ claims.
At some point in 2011, the company changed its name to Jackson Hunter Morris & Knight. At this point, the DOJ claims that Vartanian and others claimed Nelson Gamble had gone bankrupt and that the new company, Jackson Hunter, was unrelated and had taken over the accounts.
The company blamed past issues on Nelson Gamble and refused to issue refunds of money paid to the now-defunct company.
Monday’s sentencing comes four years after the Federal Trade Commission brought a civil case against the companies and two others owned by Jeremy Nelson, claiming the operations made false and deceptive claims and caused consumers’ bank accounts to be debited without their express. That case was settled in 2013.
by Ashlee Kieler via Consumerist