FTC Settlement Obtains Permanent Ban Against Abusive Debt Collection Operation

The remaining defendants in the Federal Trade Commission’s case against Rumson, Bolling & Associates have agreed to a settlement that permanently bans them from the debt collection business.

Part of the FTC’s continuing efforts to curb illegal debt collection practices, the settlement resolves FTC allegations that three debt collection companies, their owner, David M. Hynes II, and the companies’ principals subjected consumers to abusive debt collection practices and deceived their small business clients. Under the settlement, defendants will pay $700,000. In a separate settlement, the FTC also obtained over $400,000 in judgments against three other companies that Hynes controlled, which were alleged to have received funds from the defendants’ activities.

The defendants were based in Van Nuys, California, but collected debts nationwide. The FTC’s complaint alleged that the defendants used multiple illegal debt collection practices. Among other things, the agency alleged that the defendants berated consumers with obscene and profane language, threatened them with physical harm, improperly disclosed consumers’ debts to their employers, co-workers, neighbors, and other third parties, and falsely threatened consumers with lawsuits, arrest, seizure of their property, or wage garnishment. Several consumers reported that defendants even threatened to dig up the bodies of consumers’ deceased relatives for alleged non-payment of funeral bills.

The FTC also alleged that the defendants deceived their small business clients. Using the slogan “no recovery, no fee,” the defendants promised that they would collect their clients’ past-due accounts on a contingency basis. The FTC alleged that, in many cases, the defendants collected money for a client, then kept all of the money or more than they were entitled to keep. In some cases, the defendants asked clients for additional fees, purportedly for legal expenses in filing a lawsuit that would “guarantee” the successful collection of a debt. However, in many cases, the defendants failed to file the promised lawsuits and the clients never received any money in satisfaction of the debt.

These practices allegedly violated both the Fair Debt Collection Practices Act, which bars deceptive, abusive, and unfair debt collection practices, and the FTC Act, which more generally bars deceptive and unfair commercial practices.

Under the settlement, defendants David M. Hynes II, Lorena Quiroz-Hynes, Forensic Case Management Services, Inc. (doing business as Rumson, Bolling & Associates, FCMS, Inc., Commercial Recovery Solutions, Inc., and Commercial Investigations, Inc.), Specialized Recovery, Inc. (doing business as Joseph, Steven & Associates and Specialized Debt Recovery), and Commercial Receivables Acquisition, Inc. (doing business as Commercial Recovery Authority, Inc. and The Forwarding Company) agreed to a $33.8 million judgment, which will be suspended due to inability to pay after they turn over $700,000. In addition, under the same settlement, defendants James S. Hynes and Heather True agreed to judgments of $43,822 and $233,973, respectively, which will be suspended due to their inability to pay. If it is determined that the financial information the defendants gave the FTC was untruthful, the full amount of the judgments will become due.

In a separate settlement, three companies that David Hynes controlled – Vesper Collins, LLC; Ramillies, LLC; and Innsbruck, LLC – agreed to turn over $403,487 to the FTC. The FTC named these companies as relief defendants, alleging that they did not participate in the defendants’ wrongdoing but still profited from it. In addition, the FTC has filed for a default judgment against another company owned and operated by Hynes, Kester Archwood, LLC.

For consumer information about dealing with debt collectors, see Debt Collection FAQs: A Guide for Consumers.

The Commission, including Commissioner J. Thomas Rosch, voted 5-0 in favor of authorizing the staff to file the consent agreements with the court.

NOTE: The consent agreements are for settlement purposes only and do not constitute an admission by the defendants that the law has been violated. Consent agreements have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

(FTC File No. X110017)