Universal Debt Payment Solutions, LLC, Universal Debt Solutions, LLC, WNY Account Solutions, LLC et al.
On March 26, 2015, the Bureau filed a lawsuit against a group of seven debt collection agencies and six individual debt collectors, four payment processors and individual sales organizations, and a telephone marketing service provider alleging unlawful conduct related to a phantom debt collection operation. Phantom debt is debt that consumers do not actually owe or debt that is not payable to those attempting to collect it. The Bureau alleges that the individuals, acting through a network of corporate entities, used threats and harassment to collect phantom debt from consumers. The Bureau alleges the defendants violated the FDCPA and the CFPA’s prohibition on unfair and deceptive acts and practices and substantial assistance to unfair or deceptive conduct. On April 7, 2015, the Bureau obtained a preliminary injunction against the debt collectors that froze their assets and enjoined their unlawful conduct. On August 25, 2017, as a discovery sanction against the Bureau, the court dismissed the Bureau’s claims against the payment processors and the telephone marketing service provider: Frontline Processing Corp., Global Payments, Inc., Pathfinder Payment Solutions, Inc., Francis David Corp. d/b/a/ Electronic Merchant Systems, and Global Connect, LLC.
Five of the seven corporate debt collectors defaulted and the Bureau voluntarily dismissed one individual defendant, Varinderjit Bagga. On March 21, 2019, the court granted the Bureau’s motion for summary judgment on all its claims against four individual debt collectors, Marcus Brown, Mohan Bagga, Sarita Brown, and Tasha Pratcher, and against the non-defaulted corporate debt collector WNY Account Solutions, LLC. The court further granted the Bureau’s motion as to one of its claims against the other individual debt collector defendant, Sumant Khan, but denied summary judgment on the remaining claims. The court also denied the Bureau’s motion for summary judgment against the other non-defaulted corporate debt collector S Payment Processing Solutions, LLC. Lastly, the court denied the latter two defendants’ motions for summary judgment against the Bureau.
On August 21, 2019, the court entered a stipulated final judgment and order against Sumant Khan and S Payment Processing Solutions, LLC. Among other things, the stipulated judgment and order requires the settling defendants to transfer all the funds in their various bank accounts to the Bureau in partial satisfaction of a judgment of equitable monetary relief and damages in the amount of $633,710, which is partially suspended based on inability to pay. The stipulated judgment and order permanently bans the settling defendants from engaging in debt collection activities and prohibits them from making certain misrepresentations.
On November 15, 2019, the court entered a stipulated final judgment and order against Mohan Bagga. Among other things, the stipulated judgment and order imposes a suspended judgment against Bagga of equitable monetary relief and damages in the amount of $5,261,484, orders him to pay a $1 civil money penalty, permanently bans him from engaging in debt collection activities, and prohibits him from making certain misrepresentations. The suspension of the judgment and the $1 civil money penalty are based on his inability to pay.
On February 19, 2020, the court appointed a receiver to, among other things, identify and conserve frozen assets of certain defendants for future potential consumer redress.
On December 15, 2020, the court entered a stipulated final judgment and order against Tasha Pratcher. Among other things, the stipulated judgment and order imposes a $300,000 judgment against Pratcher for monetary relief and damages, which amount is suspended upon her payment of $2,500 and turnover of assets, orders her to pay a $1 civil money penalty, permanently bans her from engaging in debt collection activities, and prohibits her from making certain misrepresentations.
On October 20, 2021, the court entered a permanent injunction and final judgment against Marcus Brown, Sarita Brown, and WNY Account Solutions, LLC and a default judgment against the five corporate debt collectors—Check & Credit Recovery, LLC, Credit Power, LLC, Universal Debt & Payment Solutions, LLC, Universal Debt Solutions, LLC, and WNY Solutions Group, LLC—which had previously defaulted. These orders impose judgments for monetary relief against Marcus Brown, Sarita Brown, WNY Account Solutions, LLC, and the defaulted defendants, joint and severally, in the amount of $5,183,947.71 and require them to pay civil money penalties totaling $2,016,000. The orders also permanently ban them from engaging in debt collection activities, prohibit them from making certain misrepresentations, and prohibit them from using consumer information they obtained during the course of the debt collection scheme.
On December 17, 2021, the Bureau filed a notice of appeal of the court’s August 25, 2017 order dismissing its claims against the payment processors and the telephone marketing services provider.
Related documents
Dismissal order - Frontline, Global Pay, Pathfinder, Francis David Corp, and Global Connect
Stipulated final judgment and order - Khan and S Payment and Processing Solutions, LLC
Stipulated final judgment and order - Bagga
Stipulated final judgment and order - Pratcher
Final judgment and order – Brown and WNY Account Solutions, LLC
Press release
CFPB Sues Participants in Robo-Call Phantom Debt Collection Operation