UNITED STATES DISTRICT COURT THE FEDERAL TRADE COMMISSION and Plaintiffs, v. RAYMOND J. CALUORI, an individual, doing business as NEW ENGLAND FINANCIAL, Defendant. CIVIL NO. COMPLAINT FOR INJUNCTION AND OTHER EQUITABLE RELIEF Plaintiffs, the Federal Trade Commission and the Commonwealth of Massachusetts for itself and as parens patriae on behalf of the residents of the Commonwealth of Massachusetts, for their complaint allege as follows: 1. Plaintiff Federal Trade Commission (“the Commission”) brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b), to obtain preliminary and permanent injunctive relief, restitution, rescission, disgorgement and other equitable relief for Defendant’s deceptive acts or practices in connection with the sale and offering for sale of credit repair services in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the Credit Repair Organizations Act , 15 U.S.C. § 1679 et seq. 2. Plaintiff Commonwealth of Massachusetts brings this action under Section 410(c) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(c), to obtain preliminary and permanent injunctive relief, restitution, rescission, disgorgement and other equitable relief for Defendant’s deceptive acts or practices in connection with the sale and offering for sale of credit repair services in violation of the Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq., and, as part of the same case or controversy, also brings this action pursuant to the Massachusetts Consumer Protection Act, M.G.L. c.93A, §§ 2(a) and 4, to secure a permanent injunction and other equitable relief, including restitution and attorneys’ fees, against Defendant’s violations of that Act. JURISDICTION AND VENUE 3. This Court has jurisdiction of this matter pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345 and 1367; and 15 U.S.C. §§ 53(b), 57b, 1679h(b), and 1679h(c)(1). 4. Venue in this district is proper under 28 U.S.C. § 1391 and 15 U.S.C. § 53(b). THE PARTIES 5. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41 et seq. The Commission is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission also enforces the Credit Repair Organizations Act. 15 U.S.C. §§ 1679h(a). The Commission is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and the Credit Repair Organizations Act in order to secure such equitable relief, including consumer redress, as may be appropriate in each case. 15 U.S.C. §§ 53(b), 57b, and 1679h(b). 6. The Commonwealth of Massachusetts, by its Attorney General, Scott Harshbarger, is authorized to bring civil actions to enforce the Massachusetts Consumer Protection Act pursuant to M.G.L. c.93A, § 4. The Commonwealth of Massachusetts is authorized to bring an action to enjoin violations of the Credit Repair Organizations Act and to secure such relief as may be appropriate in each case, including damages on behalf of the residents of the Commonwealth of Massachusetts. 15 U.S.C. §1679h(c)(1). 7. Defendant Raymond J. Caluori is an individual doing business as New England Financial. Defendant Caluori resides at 5 Briggs Street, Quincy, Massachusetts, and maintains his office and principal place of business as New England Financial at 140 Wood Road, Braintree, Massachusetts. Defendant Caluori, doing business as New England Financial, transacts or has transacted business in this District. At all times material to this complaint, acting alone or in concert with others, Defendant Caluori has formulated, directed, controlled or participated in the acts and practices of New England Financial, including the acts and practices set forth in this complaint. COMMERCE 8. At all times relevant to this complaint, Defendant has maintained a substantial course of trade in the offering for sale and selling of credit repair services, in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act. 15 U.S.C. § 44. DEFENDANT’S BUSINESS PRACTICES 9. Since at least 1995, Defendant has advertised, promoted, offered for sale, and sold credit repair services to consumers throughout the Commonwealth of Massachusetts and, upon information and belief, elsewhere in the United States. 10. Defendant has offered services to remove derogatory information from, or improve, consumers' credit histories, credit records, and credit ratings. Consumers have contacted Defendant and have been told by Defendant that Defendant can remove bankruptcies, charge-offs, late payments, liens, judgments, foreclosures, repossessions, collections, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete. Defendant has made similar claims in print advertisements. Before providing any of the promised services, Defendant requests and obtains at least partial payment for these services. 11. Typical and illustrative of Defendant’s claims about his credit repair services are the following:
12. Consumers have agreed to purchase Defendant’s services based on the representations set forth above, among others. Defendant has usually charged $1,000 or more for these services. VIOLATIONS OF THE CREDIT REPAIR ORGANIZATIONS ACT 13. The Credit Repair Organizations Act, signed by the President on September 30, 1996, took effect on April 1, 1997, and has since that date remained in full force and effect. 14. Defendant is a "credit repair organization" as that term is defined in the Credit Repair Organizations Act. 15 U.S.C. § 1679a(3). 15. The purposes of the Credit Repair Organizations Act, according to Congress, are:
16. Section 404(b) of the Credit Repair Organizations Act prohibits credit repair organizations from charging or receiving any money or other valuable consideration for services that the credit repair organization has agreed to perform before such service is fully performed. 15 U.S.C. § 1679b(b). 17. Section 404(a)(3) of the Credit Repair Organizations Act prohibits all persons from making or using any untrue or misleading representation of the services of the credit repair organization. 15 U.S.C. § 1679b(a)(3). 18. Pursuant to Section 410(b)(1) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b)(1), any violation of any requirement or prohibition of the Credit Repair Organizations Act constitutes an unfair and deceptive act or practice in commerce in violation of Section 5(a) of the FTC Act. 15 U.S.C.§ 45(a). COUNT ONE (By Plaintiffs Federal Trade Commission and Commonwealth of Massachusetts) 19. In connection with the performance of services for consumers by a credit repair organization, as that term is defined in Section 403(3) of the Credit Repair Organizations Act, 15 U.S.C. § 1679a(3), Defendant has charged or received money or other valuable consideration for the performance of services that the credit repair organization has agreed to perform before such service was fully performed. Defendant has thereby violated Section 404(b) of the Credit Repair Organizations Act. 15 U.S.C. § 1679b(b). COUNT TWO (By Plaintiffs Federal Trade Commission and Commonwealth of Massachusetts) 20. In connection with the performance of services for consumers by a credit repair organization, as that term is defined in Section 403(3) of the Credit Repair Organizations Act, 15 U.S.C. § 1679a(3), Defendant has made untrue or misleading statements to induce consumers to purchase his services, including, but not limited to, the representation that Defendant can improve substantially most consumers’ credit reports or profiles by permanently removing bankruptcies, charge-offs, late payments, liens, judgments, foreclosures, repossessions, collections, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete. 21. In truth and fact, Defendant cannot improve substantially most consumers’ credit reports or profiles by permanently removing bankruptcies, charge-offs, late payments, liens, judgments, foreclosures, repossessions, collections, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete. 22. Defendant has thereby violated Section 404(a)(3) of the Credit Repair Organizations Act. 15 U.S.C. § 1679b(a)(3). VIOLATIONS OF SECTION 5 OF THE FTC ACT 23. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits unfair or deceptive acts or practices in or affecting commerce. 24. Misrepresentations of material fact constitute deceptive acts or practices prohibited by Section 5(a) of the FTC Act. COUNT THREE (By Plaintiff Federal Trade Commission) 25. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair services, Defendant has made untrue or misleading statements to induce consumers to purchase his services, including, but not limited to, the representation that Defendant can improve substantially most consumers’ credit reports or profiles by permanently removing bankruptcies, charge-offs, late payments, liens, judgments, foreclosures, repossessions, collections, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete. 26. In truth and fact, Defendant cannot improve substantially most consumers’ credit reports or profiles by permanently removing bankruptcies, charge-offs, late payments, liens, judgments, foreclosures, repossessions, collections, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete. 27. Defendant has thereby violated Section 5(a) of the FTC Act. 15 U.S.C. § 45(a). VIOLATIONS OF THE MASSACHUSETTS (By Plaintiff Commonwealth of Massachusetts) 28. M.G.L. c.93A, § 2(a) prohibits unfair or deceptive acts or practices in the conduct of trade or commerce pursuant to state and federal law. 29. Pursuant to 940 Code Mass. Reg. § 3.16(4), a violation of any federal consumer protection statute within the purview of M.G.L. c.93A, § 2 is deemed a violation of M.G.L. c.93A, § 2. By engaging in the acts and omissions described in paragraphs 9 through 27, and thereby violating the Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq., and the FTC Act, 15 U.S.C. § 41 et seq., in accordance with 940 Code Mass. Reg. § 3.16(4), Defendant is in violation of M.G.L. c. 93A, § 2(a). 30. Pursuant to the Massachusetts Credit Repair Organizations Act, M.G.L. c.93, § 68E, "any violation of sections sixty-eight B to sixty-eight D, inclusive, shall constitute a violation of chapter ninety-three A." 31. Defendant has violated M.G.L. c.93, § 68B, by engaging in various unfair and deceptive practices, including but not limited to:
32. By virtue of the foregoing, Defendant has violated M.G.L. c.93A, § 2(a). 33. In the course of selling credit repair services to consumers, Defendant has violated M.G.L. c.93A and 940 Code Mass. Reg. §§ 3.05(1) and 3.16(2) by unfairly and deceptively representing that:
34. In the course of selling credit repair services to consumers, Defendant has violated M.G.L. c.93A, § 2 and 940 Code Mass. Reg. §§ 3.05(a) and 3.16(2) by failing to disclose that consumer reporting agencies typically do not remove accurate and non-obsolete credit information from consumers’ credit reports once such information has been verified. 35. Defendant knew or should have known that his above-described acts and practices are in violation of M.G.L. c.93A, § 2(a) and regulations promulgated thereunder. CONSUMER INJURY 36. Consumers have suffered or are likely to suffer monetary loss as a result of Defendant’s unlawful acts or practices. Absent injunctive relief by this Court, Defendant is likely to continue to injure consumers and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 37. Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and Sections 410(b) and 410(c) of the Credit Repair Organizations Act, 15 U.S.C. §§ 1679h(b) and 1679h(c), empower this Court to issue a permanent injunction against Defendant’s violations of the Credit Repair Organizations Act and the FTC Act and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary injunction, rescission, restitution, disgorgement of profits resulting from Defendant’s unlawful acts or practices, and other remedial measures. 38. Section 4 of the Massachusetts Consumer Protection Act, M.G.L. c.93A, § 4, empowers this Court to grant injunctive and such other relief as the Court may deem appropriate to halt and redress violations of the Massachusetts Consumer Protection Act. This Court, in the exercise of its equitable jurisdiction, may award other ancillary relief to remedy injury caused by Defendant’s law violations. PRAYER FOR RELIEF WHEREFORE, Plaintiffs request that this Court, as authorized by Section 410(c)(1) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(c)(1); Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b; M.G.L. c.93A, § 4; and pursuant to its own equitable powers:
Respectfully Submitted, DEBRA A. VALENTINE ANDREW D. CAVERLY PAMELA J. WOOD, Mass. Bar Reg. No. 533590 SCOTT HARSHBARGER ANTHONY RODRIGUEZ |