RSSThe Consumer Financial Protection Bureau and seven state attorneys general sued New York-based debt relief services company Strategic Financial Solutions and several of its shell companies for allegedly running an illegal debt-relief enterprise that netted more than $100 million in illegal fees.
The groups also sued the alleged chief architects of the enterprise, Strategic Financial Services CEO Ryan Sasson and Jason Blust, who together reportedly controlled both Strategic Financial Services and its web of shell companies and law firms.
The lawsuit, filed Jan. 10 in the U.S. District Court for the Western District of New York, alleges that Strategic Financial Solutions violated both the Telemarketing Sales Rule and New York and Wisconsin state laws both by charging illegal advance fees and falsely claiming that lawyers would provide debt relief when in fact Security Financial Services employees conduct debt-relief negotiations.
“The operators of this scheme established a network of shell companies and law firms to hide their illegal activities from law enforcement,” said CFPB Director Rohit Chopra. “The CFPB and state attorneys general are seeking to shut down this outfit’s illegal activity.”
According to the CFPB, Strategic Financial Solutions uses third parties for advertisements that target financially vulnerable consumers. The ads reportedly led consumers to believe that they could qualify for loans to help pay debts. Though the company informed most consumers that they did not qualify for the advertised loans, Strategic Financial Services reportedly encouraged them to enroll in its debt-relief services. The company allegedly promised that its network of lawyers and law firms would negotiate lower debt amounts, despite it providing only minimal debt-relief services.
“SFS requires customers to make immediate payments into an escrow account,” according to the CFPB. “While the illegal fees and false claims of legal assistance leave consumers worse off, Sasson and Blust pad their pockets through their web of shell companies that siphon the fees from the escrow accounts.”
Strategic Financial Solutions was shut down Jan. 19 after the government obtained a temporary restraining order and appointed a receiver to take control of the company. According to Buffalo News, the company is looking to reopen its operations.
The seven state AGs who joined the lawsuit included Colorado’s Philip Weiser; Delaware’s Kathy Jennings; Kwame Raoul in Illinois; Minnesota’s Keith Ellison; New York’s Letitia James; North Carolina’s Josh Stein; and Wisconsin’s Josh Kaul.
