Feb 19, 2018 | Consumer Protection, Employment & Technology Archive
FTC Mailing 72,386 Checks Totaling $2.9 Million to People Who Lost Money in Alleged Payday Loan Scheme
On February 15, 2018, the Federal Trade Commission announced that it is mailing 72,836 checks totaling more than $2.9 million to people who lost money to an alleged scheme that trapped them into payday loans they never authorized or whose terms were deceptive.
According to the FTC, CWB Services, LLC and related defendants used consumer information from online lead generators and data brokers to create fake payday loan agreements. After depositing money into people’s accounts without their permission, they withdrew recurring “finance” charges every two weeks without applying any of the payments to the supposed loan. In some instances, consumers applied for payday loans, but the defendants charged them more than they said they would. Under settlements with the FTC, the defendants are banned from the consumer lending business.
According to the FTC, the average refund amount is $40.61, and check recipients should deposit or cash checks within 60 days. Importantly, the FTC never requires people to pay money or provide account information to cash a refund check. If recipients have questions about the case, they should contact the FTC’s refund administrator, Epiq Systems, Inc., 888-521-5208.
Related News: FTC Announces Action Stopping Payday Loan Fraud Scheme
In July 2015, the FTC announced that the operators of a payday lending scheme that allegedly bilked millions of dollars from consumers by trapping them into loans they never authorized will be banned from the consumer lending business under settlements with the FTC.
The FTC identified the defendants as Coppinger and his companies, CWB Services LLC, Orion Services LLC, Sandpoint Capital LLC, Sandpoint LLC, Basseterre Capital LLC, Basseterre Capital LLC, Namakan Capital LLC, and Namakan Capital LLC, and Rowland and his companies, Anasazi ervices LLC, Anasazi Group LLC, Vandelier Group LLC, St. Armands Group LLC,; Longboat Group LLC, doing business as Cutter Group, and Oread Group LLC, d/b/a Mass Street Group.
The FTC settlement orders impose consumer redress judgments of approximately $32 million and $22 million against, respectively, Coppinger and his companies and Rowland and his companies. The judgments against Coppinger and Rowland will be suspended upon surrender of certain assets, and in each case, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.
The settlements stem from charges the FTC filed alleging that Timothy A. Coppinger, Frampton T. Rowland III, and their companies targeted online payday loan applicants and, using information from lead generators and data brokers, deposited money into those applicants’ bank accounts without their permission. The defendants then withdrew reoccurring “finance” charges without any of the payments going to pay down the principal owed. The court subsequently halted the operation and froze the defendants’ assets pending litigation.
Under the proposed settlement orders, the defendants are banned from any aspect of the consumer lending business, including collecting payments, communicating about loans, and selling debt, as well as permanently prohibited from making material misrepresentations about any good or service and from debiting or billing consumers or making electronic fund transfers without their consent.
The orders extinguish any consumer debt the defendants are owed; bar the defendants from reporting such debts to any credit reporting agency; and prevent the defendants from selling, or otherwise benefiting, from customers’ personal information.
According to the FTC’s complaint, the defendants told consumers they had agreed to, and were obligated to pay for, the unauthorized “loans.” To support their claims, the defendants provided consumers with fake loan applications or other loan documents purportedly showing that consumers had authorized the loans. If consumers closed their bank accounts to stop the unauthorized debits, the defendants often sold the “loans” to debt buyers who then harassed consumers for payment.
The defendants also allegedly misrepresented the loans’ costs, even to consumers who wanted the loans. The loan documents misstated the loan’s finance charge, annual percentage rate, payment schedule, and total number of payments, while burying the loans’ true costs in fine print.
Source: FTC.gov
Feb 19, 2018 | Securities Class Action Archive
Securities Investigation on Behalf of Purchasers of Shares of the LJM Preservation and Growth Fund Class I From February 28, 2015 Through February 7, 2018
Kehoe Law Firm, P.C. is conducting a securities investigation on behalf of purchasers of shares of the LJM Preservation and Growth Fund Class I (LJMIX) from February 28, 2015 through February 7, 2018, both dates inclusive.
The LJMIX mutual fund, which is marketed and sold as aiming “to preserve capital, particularly in down markets (including major market drawdowns), through using put option spreads as a form of mitigation risk” suffered a massive loss, steeply declining from a closing price of $9.82 on February 2, 2018 to a closing price of $1.94 on February 7, 2018, a loss of approximately 80%.
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Following the massive loss, the LJM Preservation and Growth Fund announced in an SEC filing that “[e]ffective February 7, 2018, the LJM Preservation and Growth Fund . . . is closed to all new investments, with the exception of dividend reinvestments, and the Fund’s transfer agent will not accept orders for purchases of additional shares of the Fund, either from current Fund shareholders or from new investors.”
For additional information, see the Reuters article, “U.S. fund that lost most of its value shuts doors to new investment.”
Class Action Filed on Behalf of LJMIX Investors
On February 9, 2018, a class action lawsuit was filed on behalf of LJMIX investors alleging that the defendants violated provisions of the Securities Act by issuing false and misleading statements to investors. Allegedly, the LJM defendants made false and/or misleading statements or failed to disclose that LJMIX was not focused on capital preservation and left investors exposed to an unacceptably high risk of catastrophic losses. Further, it is alleged that the LJM defendants violated the law by failing to disclose that LJMIX had not taken appropriate steps to preserve capital in down markets. The class action lawsuit is attempting to recover damages for LJMIX investors under the federal securities laws.
LJM Preservation and Growth Fund
LJM is described as a class of mutual fund pitched as bringing hedge fund-like strategies to a broader swath of investors. It used options to bet on markets remaining calm and told investors that the strategy offered an alternative to traditional stock and bond investing.
According to media reports, “The [portfolio manager] described to us several processes he had in place at the open-end fund that would limit losses,” said Gretchen Rupp, an analyst at Morningstar. “We discussed the risk management process with the PM and their risk officer at length. Clearly, the process failed.”
The fund had proved popular in recent months, attracting more than $100 million in new cash in December alone, according to Morningstar data.
LJMIX Investors
If you purchased, or otherwise acquired, shares of the LJM Preservation and Growth Fund Class I (LJMIX) from February 28, 2015 through February 7, 2018, both dates inclusive, and have questions or concerns, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
Feb 15, 2018 | Shareholder & Investor Protection
SEC’s Office of Investor Education and Advocacy Issues Investor Alert Warning of the Risks of Using Credit Cards to Buy Investments or Fund an Investment Account
On February 14, 2018, the SEC issued an investor alert to inform investors about the risks associated with investing by credit card. The SEC’s alert advised that investors should understand that most licensed and registered investment firms do not allow their customers to use credit cards to buy investments or to fund an investment account, and investors should work only with a licensed or registered investment professional or firm and not attempt to use a credit card to fund investments.
The SEC’s Investor Alert provided the following information regarding the risks associated with using a credit card for an investment:
Fraud. Unregistered and unlicensed sellers often pressure investors to use credit cards for investments that are actually fraudulent scams. Most registered investment firms do not allow their customers to use credit cards to purchase investments – so be skeptical if you are asked to use a credit card to invest. Investors should research the background of any investment professional or firm before handing over your money, and use the free search tool on Investor.gov to make sure the firm and professional is licensed.
High Interest Rates. High interest rates may significantly reduce the return you receive on any investment or may even cause you to lose more money than you invested. For example, if your credit card charges a 15% interest rate and your investment provides a 10% return, you will owe more money than you made on your investment if you do not pay off your credit card balance before any interest accrues. The SEC advises investors to consider paying off credit card debt before making an investment decision.
Credit Risk. If you cannot make your credit card’s minimum payments, you may incur additional credit card fees and risk damage to your credit score.
Transaction Fees. Credit card companies generally charge a processing fee (often ranging from 1.5% to 3%) for each credit card transaction. If you use a credit card to buy an investment, you generally have to pay this processing fee with each investment purchase which would have a major impact on the investment’s return.
Issues with Withdrawals. Credit card investment scammers often use delay tactics when you attempt to withdraw your money from the fraudulent investment. These scammers will often hold up your withdrawal request from an investment account until it is too late for you to dispute the charge(s) with your credit card company. The Fair Credit Billing Act (FCBA) provides consumer protections if you are charged for goods and services you didn’t accept or that weren’t delivered as agreed, but you must send a letter disputing the charges that reaches the creditor within 60 days after the first bill with the error was mailed to you.
Credit Card Abuse. Be watchful for unauthorized charges on your credit card statements. Even if you signed a form purportedly waiving your right to dispute any credit card charges, report all unauthorized charges to your credit card company immediately.
Third-Party Payment Processors. If you make an investment using your credit card through a third-party wallet service or payment processor, you may have limited recovery options because these entities may be unregulated or operating unlawfully.
Margin Accounts. A margin account is an investment account offered by some investment firms which allows you to borrow cash from the investment firm to buy securities, using the account as collateral. While both involve borrowing money to buy investments, using a margin account is not the same as using a credit card to buy securities. For additional information on how margin accounts work and their related rules and regulations, please review the SEC’s Investor Bulletin: Understanding Margin Accounts.
Source: Investor.gov
Feb 14, 2018 | Consumer Protection, Employment & Technology Archive
Federal Trade Commission announced that it is mailing 5,745 checks totaling more than $480,000 to people who lost money to a debt relief scheme that misled its customers and charged illegal upfront fees.
According to the FTC’s announcement, United Debt Counselors exaggerated how much money people would save using its services. The company’s direct mail ads looked like official documents from a bank or attorney and claimed that typical customers would have their credit card debt cut in half and become debt-free within 36 months. Under a settlement with the FTC, the defendants were banned from making misrepresentations about debt relief and other financial products or services and making unsubstantiated claims about any products or services.
The average refund amount is $84.27, and the FTC advises recipients to deposit or cash checks within 60 days. Consumers should be aware that the FTC never requires people to pay money or provide account information to cash a refund check. If refund check recipients have questions about the case, the FTC advises that they should telephonically contact the FTC’s refund administrator, Rust Consulting, Inc., 855-263-3449.
Related News: In March 2017, the FTC reported (“FTC Reaches Settlement with Nationwide Debt Relief Provider”) that United Debt Counselors LLC, a debt relief company, and its principals, allegedly, misled consumers, charged illegal advance fees, and will be banned from those practices under a settlement with the Federal Trade Commission.
The FTC’s complaint against United Debt Counselors LLC alleged that the company exaggerated how much money people would save using its services. The company’s direct mail ads, which reached up to 100,000 consumers per week, looked like official documents from a bank or attorney, and claimed that typical customers would have their credit card debt cut in half and become debt-free within 36 months.
Allegedly, the defendants repeated similar claims on their website and by phone when consumers called in response to the mail; claimed a high success rate and asserted that consumers rarely dropped out of their program; and claimed they provided consumers with a special savings account that only consumers could control. According to the FTC, however, the defendants removed monthly fees from the accounts.
Allegedly, consumers who wanted to buy the debt relief services were told they had to meet with an experienced sales representative, but instead the defendants sent notaries public, who had minimal product knowledge, to show a sales video and witness contract signings. Typically, the defendants charged advance fees before they negotiated any savings on credit card debts. It should be noted that these types of advance fees violate the FTC’s Telemarketing Sales Rule, unless consumers first meet face-to-face with a knowledgeable sales representative who can fully describe the program and answer questions.
According to the FTC, fewer than half of those who bought the services completed the program, and even fewer were debt-free at the end of 36 months.
The defendants, United Debt Counselors LLC, also known as United Debt Services LLC and also doing business as Department of Negotiations; David Melrose; Kirk Lanahan, and Corinne Maples, under a stipulated order, are banned from making misrepresentations about debt relief and other financial products or services, as well as making unsubstantiated claims about any products or services. The defendants only can charge advance fees if they comply with the Telemarketing Sales Rule; sales persons making face-to-face sales presentations must have authority to discuss material terms; they must do so in specific detail; and they must be able to answer consumer questions. The order also imposes a $9 million judgment that represents the amount of alleged harm to consumers. The judgment will be partially suspended upon payment of $510,000, and the full judgment will become due immediately, if the defendants are found to have misrepresented their financial condition.
Source: FTC.gov
Feb 13, 2018 | Securities Class Action Archive
Class Action Filed on Behalf of All Persons or Entities Who Purchased, or Otherwise Acquired, NQ Mobile Inc. Securities Between March 30, 2017 and February 6, 2018, Both Dates Inclusive
Kehoe Law Firm, P.C. continues its investigation on behalf of investors and shareholders who purchased NQ securities and announces that a class action has been filed in United States District Court, Eastern District of Texas, on behalf of all persons or entities who purchased, or otherwise acquired, NQ Mobile Inc. (NYSE:NQ) securities between March 30, 2017 and February 6, 2018, both dates inclusive (the “Class Period”) to try to recover compensable damages caused by the NQ Mobile Defendants’ alleged violations of federal securities laws.
NQ Mobile – “Price Target $0”; Doubts About NQ’s “Purported Values”
On February 6, 2018, a report (“NQ Mobile: Undisclosed Transfer Of Subsidiaries To Chairman Introduces Significant Risks – Price Target $0”) was published by Rota Fortunae on SeekingAlpha stating, among other things, that
Chinese corporate records lead us to believe that insiders control Tongfang Investment Fund, the firm that recently acquired NQ’s mobile gaming and video businesses.
One day after the deal with Tongfang was announced and eight months before it closed, NQ transferred its interest in FL Mobile and Showself to its Chairman, Vincent Wenyong Shi.
Our research leads us to doubt every aspect of the transaction, including the cash payments and the $270 million note receivable, which together represents over 100% of NQ’s market cap.
We find alarming similarities between NQ and Ambow Education, and we think NQ is likely to default when its convertible debt comes due in October 2018.
The US phone number listed on press releases has been disconnected; the US HQ is for lease.
[Emphasis added]
The Rota Fortunae report on SeekingAlpha also stated that
[d]espite being called a zero, NQ’s market cap has hovered around $400 million, ostensibly supported by hundreds of millions in cash and the value of its mobile gaming business. But we have serious doubts about their purported values, and we recently uncovered an undisclosed transaction with NQ’s chairman that leads us to believe the end is finally near.
[Emphasis added]
On this news, shares of NQ Mobile (NYSE:NQ) fell $1.30, or over 43%, to close at $1.68 on February 6, 2018.
NQ Mobile Shareholders and Investors
If you purchased, or otherwise acquired, NQ Mobile Inc. securities between March 30, 2017 and February 6, 2018, both dates inclusive, and have questions or concerns about the investigation or your potential legal rights, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
