Preview
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POLINO and PINTO, P.C.
A Professional Corporation
Attorneys at Law
720 East Main Street, Suite 1C
Moorestown, NJ 08057
(856) 727-1777
By: Joseph M. Pinto, Esquire/012951977
Attorneys for Plaintiff
CHRISTINE HOVLIARAS SUPERIOR COURT OF NEW JERSEY
BURLINGTON COUNTY
Plaintiff LAW DIVISION
Vv. DOCKET NO. BUR-L-588-19
Civil Action
GLOBAL CLIENT SOLUTIONS, L.L.C.;
WORLD LAW GROUP; U.S. BANK,
NA
Defendants FIRST AMENDED COMPLAINT
Plaintiff, CHRISTINE HOVLIARAS, residing at 17 Shadetree Lane, Mt. Arlington,
New Jersey, 07856, by way of Complaint against the defendants, says:
INTRODUCTION
The defendants created and engaged in a plan or scheme to defraud the residents of
the State of New Jersey and other states by performing unlawful debt adjustment and money
transmission activities and engaged in the unauthorized practice of law in the State of New
Jersey. The defendants and their individual members, recruits, representatives, employees and
agents employ and partners with both front-end lead generators and back-end service
companies, financial institutions and other attorneys in New Jersey and other states to
provide debt adjustment services as defined by New Jersey law creating the impression that
these services are to be performed or provided by attorneys and licensed debt adjusters. In
fact, these services are not performed by, nor were they ever intended to be performed by,
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attorneys and licensed debt adjusters.
This unlawful plan or scheme is in violation of the New Jersey Debt Adjustment and
Credit Counseling Act, N.J.S.A. 17:16G-1, et seq. since these services are performed by for-
profit entities or persons not permitted to operate such business in New Jersey under the Act.
Such debt adjustment activity further constitutes the unauthorized practice of law in
the State of New Jersey.
Both violations constitute crimes under New Jersey law and are in violation of the
New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq., the New Jersey Racketeer
Influenced and Corrupt Organizations Act, N.J.S.A. 2C:41-1, et seq., the New Jersey Money
Transmitters Act, N.J.S.A. 17:15C-1, et seq., and other State laws.
Plaintiffs seek recovery of monies paid to the defendants and other damages.
FACTS
I Plaintiff Christine Hovliaras ("Plaintiff") is a resident and citizen of the State
of New Jersey, residing in Mt. Adlington, New Jersey.
2 On or about October 25, 2012 plaintiff enrolled in a debt settlement program
with World Law Group ("WLG") of Austin, Texas, which promised to negotiate a reduction
of her indebtedness of over $50,000 by forty percent.
3 In order to accomplish that reduction, plaintiff was required to pay the sum of
$898.22 per month to be held in an escrow account for the purpose of accumulating funds of
a sufficient amount so that World Law Group could begin negotiating debt reduction.
4 On November 7, 2012 plaintiff signed a document entitled Dedicated Account
Agreement and Application which provided that defendant Global Client Solutions, L-L.C.
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("GCS"), located at 4343 South 118" E Avenue, Suite 220, Tulsa, OK 74146, would deduct
the sum of $898.22 from plaintiff's bank account in New Jersey and deposit it in an escrow
account to be established in a bank chosen by GCS in Oklahoma. GCS chose defendant
U.S. Bank, N.A. of Kansas City (with whom it has a special agreement for these debt
adjustment accounts) to receive the funds withdrawn from plaintiffs bank account. The
account was actually an escrow account for many people enrolled in the debt settlement
program. The account was entitled the Account of Global Client Solutions, L.L.C. -
Administrator - Master Account for Consumers on File Deposit Account. Plaintiff was given
a specific sub-account number for purposes of tracking her funds.
5 GCS deducted the sum of $898.22 per month from plaintiff's bank account
from November 2012 until May 2013 for a total of $6,287.54 (seven months).
6 Defendant World Law Group did not negotiate a reduction of any of plaintiff's
debts, rather defendant GCS disbursed the plaintiff's funds to defendant WLG and itself for
various fees it claimed were due for services rendered.
7 By May 7, 2013 there was only $813.58 left in plaintiff's escrow account.
8 Plaintiff discontinued participation in the debt settlement program and
stopped the authorization pemnitting GCS to deduct any additional funds from her bank
account.
9 Although plaintiff filed numerous complaints with WLG, consumer and law
enforcement agencies, and asked for refund of all of her money, the money was not refunded.
10. Since WLG had instructed plaintiff to cease all payments to her creditors when
she enrolled in the debt settlement program, her creditors began dunning her for payment
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and the balances on the debts continued to accumulated finance charges.
ll. WLG, its affiliated companies and its owners were sued by the Consumer
Financial Protection Bureau under the Consumer Financial Protection Action, 12 U.S.C.
5531, et seq., in the United States District Court for the Southern District of Florida on
August 7, 2015 (Case N. 15-23070) for operating an unlawful debt relief agency. A receiver
was appointed and all assets were liquidated. All have been banned from conducting any
further business, A default judgment was entered against almost all of the defendants in that
case on August 1, 2016 for the sum of $106,813,049, as well as assessment of a civil penalty
of $40 million.
12. Global markets and advertises itself as follows: It is a service provider to debt
settlement companies providing account management services for their customers. It is one
of the largest account management companies in the United States and has developed and
implemented its account management services specifically for the purpose of debt resolution,
utilizing among other things non-interest bearing special purpose or dedicated accounts
(hereinafter “SPA”) which it claims are insured by the FDIC. SPA’s are disbursement
accounts where monies are deposited usually through direct deposit arrangements with
customers of the debt settlement companies. Monies are disbursed from the SPA’s to pay its
fees and those of the debt settlement companies and creditors and other front-end or back-
end affiliates of these parties and their employees, agents or servants. Global claims not to
be associated with independent debt settlement companies. It markets itself as having
created some of today’s most cutting edge debt settlement account management products
and is recommended by over 500 highly regarded debt settlement companies. These debt
settlement companies receive benefits such as improved cash flow with separation of debts
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and company fees, improved retention rate, decrease in overall servicing costs, less time
managing client account information, decrease client set-up time, web-based software
interface and open integration with debt management software packages. Disbursement of
SPA’s are made only with the approval of the clients of the debt settlement companies, but
those companies have access to the account information. Global maintains and operates
debt management accounts for hundreds of third party businesses that offer debt adjusting
services, utilizing electronic withdrawal of funds from a debtors account or receipt of funds
forwarded by other means from the debtor and deposits these funds ina Special Purchase or
Dedicated Account, administered and maintained by Global.
13. Performance of debt adjustment and credit counseling services in New Jersey is
regulated by the New Jersey Debt Adjustment and Credit Counseling Act, N.LS.A.
17:16G-1, et seq. (hereinafter “the Act”) and the regulations promulgated by the
Commissioner of the Division of Banking and Insurance as authorized under N.J.S.A.
17:16G-4.
14, Under New Jersey law, no person other than a non-profit social service agency
or anon-profit credit counseling agency shall act as a debt adjuster, N.].S.A. 17:16G-2(a),
and such agencies must first obtain a license to do so from the Department of Banking and
Insurance, N.LS.A. 17:16G-2(b).
15. A debt adjuster under New Jersey law means a person who either (a) acts or
offers to act for a consideration as an intermediary between the debtor and his creditors for
the purpose of settling, compounding or otherwise altering the terms of payment of any
debts of the debtor or (b) who to that end receives money or other property from the debtor
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or on behalf of the debtor for payment to or distribution among the creditors of the debtor.
N.LS.A. 17:16G-1(c)(1).
16. An attorney at law admitted to practice in the State of New Jersey who is not
principally engaged as a debt adjuster shall not be deemed a debt adjuster under the Act and
therefore not subject to licensure.
17. The fees which a licensee may charge for debt adjustment services under the
Act shall not exceed one percent of the gross monthly income of the person to whom the
service is rendered, but in no case shall the fee exceed $15.00 per month, except as may be
otherwise provided by rule or regulation promulgated by the Commissioner. The
Comunissioner is authorized to set the maximum fee for credit counseling. N.LS.A.
17:16G-6.
18. Under N.J.A.C. 3:25-1.2, the fee for debt adjustment may not exceed $25.00
per month or $60.00 per month for credit counseling services.
19. Any debtor injured by violation of the Act may bring a civil action for recovery
of damages.
20. Under the Act, every licensee acting as a debt adjuster shall disburse to the
appropriate creditors all funds received from a debtor less any fees permitted by N.J.S.A.
17:16G-6 within ten days of receipt of those funds, maintain a separate trust account in a
qualified bank as defined under paragraph 12 of N.J.S.A. 17:9A-1 in the name of the debt
adjuster for the benefit of the debtors, serviced by the debt adjuster, and maintain an
appropriate ledger book for the trust account required, having at least one single page for
each debtor with the appropriate entries of all deposits into and disbursements from each
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debtor's account, including copies of all records showing disbursements to creditors and
receipts from debtors which legible records shall be maintained in accordance with generally
accepted accounting principals for not less than six years following the close of each debtor's
account.
21. Under NJ.S.A. 2C:21-19(f) (and NJ.A.C. 3:25-3.1(d)), any person who shall
act or offer to act as a debt adjuster without a license as required by the Act unless exempted
from licensure pursuant to the Act shall be guilty of a crime of the fourth degree.
22. The New Jersey Money Transmitters Act, N.J.S.A. 17:15C-1, et seq. (the
“Act") requires persons engaging in business in New Jersey of either (1) the receipt of money
for transmission or transmitting money within the United States or locations abroad by any
and all means, including but not limited to payment instrument, wire, facsimile, electronic
transfer or otherwise for a fee, commission or other benefit, or (2) the receipt of money for
obligors for the purpose of paying obligors' bills, invoices or accounts for a fee, commission or
other benefit paid by the obligor (N.J.S.A. 17:15C-2), to obtain a license (N.J.S.A. 17:15C-4)
and post a bond or other security N.J.S.A. 17:15C-6). The Act does not apply to licensed
debi adjusters N.J.S.A. 17:15C-3(a)(6) or banks N.J.S.A. 17:15C-3(a)(4)). Neither Global
nor the other defendants have money transmitters licenses allowing them to operate in New
Jersey which violation constitutes a crime of the third degree under the Act, N,J.S.A.
17:15C-24.
23. The actions of and the services provided by all of the defendants and all of
their individual servants, agents and employees are those of debt adjusters and money
transmitters as defined by New Jersey statute.
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24, None of the defendants are licensed by the Commissioner of the Department
of Banking and Insurance to perform debt adjustment or any other services, nor are they
qualified to do so as they are not non-profit social service agencies or consumer credit
counseling agencies as defined under N.J.S.A. 17:16G-1.
25. The defendants are not attorneys at law of the State of New Jersey and were
principally engaged as debt adjusters, thus, they are not exempt from the licensing
requirement of the statute and also are engaged in the unauthorized practice of law in the
State of New Jersey.
26. The business of debt adjustment and provision of debt resolution services are
considered the practice of law under the laws of the State of New Jersey.
27. The defendants and their agents, servants and employees, by operating as a
business providing debt adjustment and resolution services, are engaged in the unauthorized
practice of law.
28. Under N.LS.A. 2C:21-22(a), a person is guilty of a disorderly persons offense
if the person knowingly engages in the unauthorized practice of law and under subsection (b)
is guilty of a crime of the fourth degree if the person knowingly engages in the unauthorized
practice of law and creates the false impression that the person is licensed to practice law or
derives a benefit or in fact causes injury to another.
29. The defendants have also engaged in a criminal conspiracy as defined by
N.LS.A. 2C:5-2 by formulating, promoting, facilitating and engaging in the crimes of
unlawful debt adjustment and the unauthorized practice of law.
30. The defendants created the basic plan and operating procedure to engage in
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the debt adjustment business within the State of New Jersey and other states.
31. Consumers in New Jersey and other states were misled into believing they were
being represented by attorneys authorized to do business in New Jersey as debt adjusters and
thus would receive the professional services expected from an attorney by the general public.
32. In fact, none of the defendants provided legal services or any legal advice to
plaintiffs or any New Jersey or other customers, nor did they ever intend to do so.
33. The defendants and their non-attorney employees and agents were to hold
plaintiff's funds in the dedicated account for distribution for fees, costs and possible debt
reduction payments to creditors.
34, The defendants created a marketing and promotion program to attract debtors
through all forms of advertising in the media and contracting with lead providers for the
purpose of selling debt resolution services throughout New Jersey and the United States.
35. The customers were asked for information on the type and amount of
indebtedness, their employment and income, their social security number for purposes of
obtaining a credit report, their checking account number, the bank routing number and an
email address. They were told this information would be reviewed for a determination of
whether the customer qualified to participate in the plan. Customers were advised that, if
accepted, they would pay money every month to be accumulated in an account which would
be used for the purposes of negotiating with creditors and would pay a small percentage of
the debt including fees. Customers were not told that creditors might not accept any
negotiation of the debt.
36. The information obtained about the customer was utilized to determine how
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mutch the customers would pay. No one was accepted for a plan unless they had at least
$10,000 in debt. The information was inserted into a payment calculator which determined
how much the customer would pay without any consideration of the customer’s personal
circumstances and without any contact with the creditors.
37. Once the documents were signed, the customer was advised (1) that any future
contacts were to be through the defendants; (2) to avoid all contacts with creditors; (3) not
to negotiate with the creditors; and (4) missing payments would disqualify the customer from
the program.
COUNT ONE
New Jersey RICO Law
38. Plaintiff repeats the allegations of the first 37 paragraphs of the Complaint and
incorporate the same by reference as if set forth at length herein.
39. All of the defendants are debt adjusters as defined under N.J.S.A. 17:16G-
1(c)(1) and GCS is a money transmitter as defined by the Money Transmitters Act.
40. All defendants are enterprises either separately and/or in unison as defined
under N_J.S.A. 2C:41-1(c).
41. At all relevant times, all defendants were engaged in trade or commerce or in
activities affecting trade or commerce in connection with the sale of debt adjustment services
in the State of New Jersey to New Jersey residents and residents of other states.
42, ‘The defendants are persons as defined by N.J.S.A. 2C:41-2(b).
43 These persons were either employed by or associated with each other and
conducted or participated directly or indirectly in the conduct of the affairs of these
enterprises through a pattem of racketeering activity in violation of N.J.S.A. 2C:41-2(c) and
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received income derived directly or indirectly from a pattern of racketeering activity by
engaging in crimes under Chapter 20 and Chapter 21 of Title 2C of the New Jersey Statutes.
44, All the defendants have, among other things, engaged in a pattern of
racketeering, including criminal conduct that has either the same or similar purposes, results,
participants, victims, methods of commission or are otherwise inter-related by distinguishing
characteristics and are not isolated incidents.
45. The criminal conduct includes, but is not limited to, violation of the following
New Jersey Statutes:
A Theft by deception, N.J.S.A. 2C:20-4;
B Deceptive business practices, N.J.S.A. 2C:21-7(h) by making false and
misleading written statements for the purposes of obtaining property;
c. Falsifying records or uttering any writing or record knowing that it
contains a false statement or information with purpose of deceive or injury anyone or to
conceal any wrongdoing, N.J.S.A. 2C:21-4(a);
D Engaging in bank fraud, 18 U.S.C. 1344;
E. Engaging in wire fraud, 18 U.S.C. 1343;
F. Issuing false financial statements, N.J.S.A. 2C:21-4(b);
G. Making false or misleading statements in any advertisement addressed
to the public or to a substantial segment thereof for the purpose of promoting the purchase
or sale of services, N.J.S.A. 2C:21-7e;
H Selling, offering or exposing for sale or delivery less than the
represented quantity of services, N.J.S.A, 2C:21-7b;
I]
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I Applying or disposing of property that has been entrusted to one as a
fiduciary in the manner one knows is unlawful and involves substantial risk of loss or
detriment to the owner of the property or to a person for whose benefit the property was
entrusted, whether or not the actor has derived a pecuniary benefit, N.J.S.A. 2C:21-15;
J Causing or inducing another by deception as to the contents of the
instrument to execute the instrument effecting or purposely to effect or likely to effect the
pecuniary interest of the person, N.J.S.A. 2C:21-16;
K. Impersonating another or assuming a false identity to obtain a benefit
for one’s self or another or to injure or defraud another, N.J.S.A. 2C:21-17(a)(1), (2), (3),
(4) and (5);
L. Acting or offering to act as a debt adjuster without a license and
without qualifying for any exemption from the license requirement, N.J.S.A. 2C:21-19(f);
M. Knowingly engaging in the unauthorized practice of law, N_J.S.A.
2C:2 1-22(a);
N Knowingly engaging in the unauthorized practice of law and creating or
reinforcing a false impression that the person is licensed to engage in the practice of law or
derives a benefit therefrom or in fact causes injury to another, N.J.S.A. 2C:21-22(b)(1), (2)
and (3);
O Transporting or possessing property known or which a reasonable
person would believe to be derived from criminal activity, N.J.S.A. 2C:21-25(a), (b)(1),
(2){a), (b), (c) and (d);
P Conspiracy to commit the aforesaid crimes, N.J.S.A. 2C:5-2 and all its
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subparts;
Conspiring to violate any of the provisions of N.J.S.A. 2C:41-2(c);
Engaging in fraud or swindles, 18 U.S.C. 1341,
Engaging in a conspiracy to fraud and swindle, 18 U.S.C. 1349; and
Knowing and willfully violating the Money Transmitters Act, N.J.S.A.
17:15C-24.
46. The acts undertaken by the defendants in furtherance of racketeering activity
include, but are not limited to:
A Recruiting front-end and back-end affiliates to commit violation of the
aforesaid crimes, which include lead generators, debt relief companies and service companies
and their agents, servants and employees;
B Lending a name to others for the purpose of creating a false pretense
that legal and debt adjustment services are being performed by an attomey solely incidental
to that attorney’s practice of law thereby ostensibly exempting the services from the licensing
requirement;
Cc. Marketing and soliciting materials and preparing and providing
documentation and making oral representations giving the false impression the person was
being represented by an attorney or licensed debt adjuster;
D. Unlawfully engaging in the solicitation of clients for a law firm,
E. Unlawfully managing, counseling, selling, pro rating or liquidating of
the indebtedness of a debtor and involving a designated third party’s receipt of debtor’s
funds for the purpose of distributing said funds among creditors in payment of debt
obligations;
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F. Conspiracy to carry out an unlawful business scheme described in this
Complaint;
G Falsely promising to provide debt relief services and accepting money
from debtors in reliance on those promises;
H Receiving or paying commissions, fees and other renumeration for
unlawful services rendered by defendants to debtors;
I Advertising, marketing, promoting and providing contracts and other
documentation which falsely create an illusion or impression that debt relief services are
being or will be lawfully performed, constitute the practice of law or being performed
incidental to the practice of law;
) Collecting illegal fees, charges and costs for performing illegal services
and services not permitted by law;
K Accepting money from New Jersey residents or residents of other states
doing business with the defendants within the State of New Jersey or with connection to the
State of New Jersey knowing that it is unlawful to do so;
L Conspiracy with and amongst themselves and others to violate the
provisions of N.J.S.A. 2C:41-2(d); and
M Receiving income or proceeds directly from the pattern of racketeering.
WHEREFORE, the plaintiff demands judgment:
A Finding that the acts and omissions of the defendants constitute
multiple violations of Civil RICO, NJ.S.A. 2C:41-1, et seq.;
B Finding that the acts and omissions of the defendants constitute
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multiple instances of unlawful practices in violation of the Consumer Fraud Act, N.J.S.A.
56:8-1, et seq.;
Cc Disgorgement of all illegal fees, charges and costs and other funds not
already paid to creditors of the victimized plaintiff so as to restore to him any money
acquired by the unlawful acts of the defendants;
D Compensatory and punitive damages and trebling of the damages of
plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act;
E. Requiring the defendants to pay all attorney’s fees, costs and litigation
expenses incurred by the plaintiff;
EF Requiring defendants to pay pre-judgment interest on all of plaintiff's
damages;
G Such other relief as the Court deems equitable and just under the
circumstances.
COUNT TWO
New Jersey Consumer Fraud Act
47. Plaintiff repeats the allegations of the first 46 paragraphs of her Complaint and
incorporates the same by reference as if set forth at length herein.
48. The defendants in the operation of this unlawful business scheme and plan
and their individual actions as part thereof have engaged in unconscionable commercial
practices and fraudulent activity, made false promises and misrepresentations and knowingly
omitted facts as described above in violation of N.J.S.A. 56:8-2 which include but are not
limited to those acts set forth above, which have damaged the plaintiff.
WHEREFORE, the plaintiff demands judgment:
1S
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A. Finding that the acts and omissions of the defendants constitute
multiple instances of unlawful practices in violation of the Consumer Fraud Act, N.J.S.A.
56:8-1, et seq. and the New Jersey RICO Act, N.J.S.A. 2C:41-1, et seq.
B Disgorgement of all illegal fees, charges and costs and other funds not
already paid to creditors of the victimized plaintiff so as to restore to him any money
acquired by the unlawful acts of the defendants;
C Compensatory and punitive damages and trebling of the damages of
plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act;
D. Requiring the defendants to pay all attorney’s fees, costs and litigation
expenses incurred by the plaintiff;
E. Requiring defendants to pay pre-judgment interest on all of plaintiff's
damages;
F, Such other relief as the Court deems equitable and just under the
circumstances.
COUNT THREE
New Jersey Debt Adjustment and Credit Counseling Act
and Money Transmitters Act
49, Plaintiff repeats the allegations of the first 48 paragraphs of her Complaint and
incorporates the same by reference as if set forth at length herein.
50. The acts of the defendants have damaged the plaintiff who is entitled to
recover his damages pursuant to N,J.S.A. 17:16G-8 and the provisions of the New Jersey
Money Transmitters Act.
WHEREFORE, the plaintiff demands judgment:
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A Finding that the acts and omissions of the defendants constitute
multiple instances of unlawful practices in violation of the New Jersey Credit Counseling and
Debt Adjustment Act; N.J.S.A. 17:16G-1, et seq. and the New Jersey Money Transmitters
Act.
B Disgorgement of all illegal fees, charges and costs and other funds not
already paid to creditors of the victimized plaintiff so as to restore to him any money
acquired by the unlawful acts of the defendants;
Cc Compensatory and punitive damages and trebling of the damages of
plaintiff as permitted by the New Jersey Debt Adjustment and Credit Counseling Act, the
New Jersey Money Transmitters Act, the Consumer Fraud Act and New Jersey Civil RICO
Act;
D Requiring the defendants to pay all attorney’s fees, costs and litigation
expenses incurred by the plaintiff;
E, Requiring defendants to pay pre-judgment interest on all of plaintiff's
damages;
F Such other relief as the Court deems equitable and just under the
circumstances.
COUNT FOUR
Civil Conspiracy
51. Plaintiff repeats the allegations of the first 50 paragraphs of the Complaint and
incorporates the same by reference as if set forth at length herein.
52. The defendants, acting in concert, committed the aforesaid unlawful acts or
lawful acts by unlawful means for the purpose of injuring the plaintiffs.
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53. Defendants understood the objectives of the conspiracy, accepted and agreed,
either explicitly or implicitly, to do their part to further those objectives.
34. As a result thereof, the plaintiff has suffered damages.
WHEREFORE, the plaintiff demands judgment:
A Finding that the acts and omissions of the defendants constitute
multiple instances of unlawful practices in violation of the aforesaid New Jersey laws and that
defendants conspired to commit such violations;
B Disgorgement of all illegal fees, charges and costs and other funds not
already paid to creditors of the victimized plaintiff so as to restore to him any money
acquired by the unlawful acts of the defendants;
Cc. Compensatory and punitive damages and trebling of the damages of
plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act and other
New Jersey law;
D Requiting the defendants to pay all attorney’s fees, costs and litigation
expenses incurred by the plaintiff;
E Requiring defendants to pay pre-judgment interest on all of plaintiff's
damages;
F. Such other relief as the Court deems equitable and just under the
circumstances.
COUNT FIVE
Tilegal Contract and Unjust Enrichment
55. Plaintiff repeats the allegations of the first 54 paragraphs of the Complaint and
incorporate the same by reference as if set forth at length herein.
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56. ‘The purported contracts between the plaintiff and defendants were illegal
under New Jersey law and are void ab initio.
57. Defendants will be unjustly enriched if permitted to retain the monies paid to
them by the plaintiff or emanating from plaintiff's payments to other defendants as a result
of the illegal and void contract. As a result thereof, plaintiff has suffered damages.
WHEREFORE, the plaintiff demands judgment:
A. Finding that the acts and omissions of the defendants constitute
ultiple instances of unlawful practices in violation of the aforesaid New Jersey laws, that
any contracts are illegal and that defendants have been unjustly enriched.
B Disgorgement of all illegal fees, charges and costs and other funds not
already paid to creditors of the victimized plaintiff so as to restore to him any money
acquired by the unlawful acts of the defendants;
Cc Compensatory and punitive damages and trebling of the damages of
plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act and other
New Jersey law;
D Requiring the defendants to pay all attorney’s fees, costs and litigation
expenses incurred by the plaintiff;
E. Requiring defendants to pay pre-judgment interest on all of plaintiff's
damages;
F, Such other relief as the Court deems equitable and just under the
circumstances.
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COUNT SIX
Unconscionability
58. Plaintiff repeats the allegations of the first 57 paragraphs of the Complaint and
incorporate the same by reference as if set forth at length herein.
59. Any purported contracts between plaintiff and defendants are unconscionable,
both procedurally and substantively, and are therefore unenforceable and void.
60. As a result of the illegal, unlawful and unconscionable acts of the defendants,
the plaintiff has suffered damages.
WHEREFORE, the plaintiff demands judgment:
A Finding that the acts and omissions of the defendants constitute
multiple instances of unlawful practices in violation of the aforesaid New Jersey laws and any
agreements directly or indirectly related thereto are unconscionable, unenforceable and void
ab initio;
B Disgorgement of all illegal fees, charges and costs and other funds not
already paid to creditors of the victimized plaintiff so as to restore to him any money
acquired by the unlawful acts of the defendants;
Cc. Compensatory and punitive damages and trebling of the damages of
plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act and other
New Jersey law;
D. Requiring the defendants to pay all attorney’s fees, costs and litigation
expenses incurred by the plaintiff;
E Requiring defendants to pay pre-judgment interest on all of plaintiff's
damages;
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F Such other relief as the Court deems equitable and just under the
circumstances.
POLINO and PINTO, P.C.
BY:
Joseph M. Pint , Esquire
Date: May 6, 2019 Attorney for aintiffs
Certification
Pursuant to Rule 4:5-1, it is hereby certified that the matter in controversy is not the
subject of any other action pending in any Court or of a pending arbitration proceeding, nor
is any other action or arbitration proceeding contemplated. I am aware of no other parties
who should be made a part of this action at the present time.
POLINO and PINTO, P.C.
By:
Joseph 0, juire
Date: May 6, 2019 Attorney ¢ Plaintiff
Designation of Trial Counsel
Joseph M. Pinto, Esquire is hereby designated as trial counsel for plaintiffs in this
action.
POLINO and PINTO, P.C.
nC Joseph
NL o,E
(S
Date: May 6, 2019 Attorney for Plainti!
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SPOLIATION NOTICE
TO ALL DEFENDANTS
You are hereby given notice not to destroy, conceal or alter any paper or electronic
files and other data generated by and/or stored on your computers and storage media (e.g.,
hard disks, floppy disks, backup tapes, Zip cartridges, CDs, DVDs, etc.), or any other
electronic data, such as voice mail. As you know, your failure to comply with this notice can
result in severe sanctions being imposed by the Court for spoliation of evidence or potential
evidence.
Through discovery we expect to obtain from you a number of documents and things,
including files stored on your computers and your computer storage media.
As part of our initial discovery efforts, you will soon receive initial interrogatories and
requests for documents and things, requests for admissions and other forms of discovery.
In order to avoid spoliation, you will need to provide the data requested on the
original media, or on exact copies of that media (sometimes referred to as image, evidentiary,
or mirror copies), and be able to prove that the copy matches the original in every respect.
Do not reuse any media to provide this data.
Additionally, in order to avoid spoliation you may have to suspend certain normal
computer maintenance procedures, including but not limited to such procedures as
defragmenting hard drives, deleting internet cookies, deleting browser history and favorites,
and running any “disk clean-up” processes.
Although we may bring a motion for an order preserving documents and things from
destruction or alteration, your obligation to preserve documents and things for discovery in
this case arises in law and equity independently from any order on such motion.
Electronic documents and the storage media on which they reside contain relevant,
discoverable information beyond that which may be found in printed documents. Therefore,
even where a paper copy exists, we will seek all documents in their electronic form along with
information about those documents contained on the media. We also will seek paper
ptintouts of only those documents that contain unique information after they were printed
out (such as paper documents containing handwriting, signatures, marginalia, drawings,
annotations, highlighting and redactions) along with any paper documents for which no
corresponding electronic files exist.
Our discovery requests will ask for certain data on the hard disks, floppy disks and
backup media used in your computers, some of which data are not readily available to an
ordinary computer user, such as "deleted" files and "file fragments." As you may know,
although a user may "erase" or "delete" a file, all that is really erased is a reference to that file
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in a table on the hard disk; unless overwritten with new data, a "deleted" file can be as intact
on the disk as any "active" file you would see in a directory listing.
Accordingly, electronic data and storage media that may be subject to our discovery
requests and that you are obligated to maintain and not alter or destroy, include but
are not limited to the following:
Introduction: Description of Files and File Types Sought
All digital or analog electronic files, including "deleted" files and file fragments, stored
in machine-readable format on magnetic, optical or other storage media, including the hard
drives or floppy disks used by your computers and their backup media (e.g., other hard
drives, backup tapes, floppies, Jaz or Zip cartridges, CD-ROMs, DVDs) or otherwise,
whether such files have been reduced to paper printouts or not. More specifically, you are to
preserve all e-mails, both sent and received, whether internally or externally; all word-
processed files, including drafts and revisions; all spreadsheets, including drafts and revisions;
all databases; all CAD (computer-aided design) files, including drafts and revisions; all
presentation data or slide shows produced by presentation software (such as Microsoft
PowerPoint); all graphs, charts and other data produced by project management software
(such as Microsoft Project); all data generated by calendaring, task management and personal
information management (PIM) software (such as Microsoft Outlook or Lotus Notes); all
data created with the use of personal or portable data assistants (PDAs), such as Blackberry,
PalmPilot, HP Jornada, Cassiopeia or any other Windows CE-based or Pocket PC device; all
data created with the use of document management software; all data created with the use of
paper and electronic mail logging and routing software; all Internet and Web browser-
generated history files, caches and "cookie" files generated at the workstation of each
employee and/or agent in your employ and on any and all backup storage media; and any
and all other files generated by users through the use of computers and/or
telecommunications, including but not limited to voice mail.
Further, you are to preserve any log or logs of network use by employees or otherwise,
whether kept in paper or electronic form, and to preserve all copies of your backup tapes and
the software necessary to reconstruct the data on those tapes, so that there can be made a
complete, bit-by-bit "mirror" evidentiary image copy of the storage media of each and every
personal computer (and/or workstation) and network server in your control and custody, as
well as image copies of all hard drives retained by you and no longer in service, but in use at
any time from six (6) years before the date the Complaint was filed to the present.
You are also to preserve and not destroy all passwords, decryption procedures
(including, if necessary, the software to decrypt the files); network access codes, manuals,
tutorials, written instructions, decompression or reconstruction software, and any and all
other information and things necessary to access, view and (if necessary) reconstruct the
electronic data we will request through discovery.
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1 Business Records: All documents and information about documents
containing backup and/or archive policy and/or procedure, document retention policy, names
of backup and/or archive software, names and addresses of any offsite storage provider.
A All e-mail and information about e-mail (including message contents,
header information and logs of e-mail system usage) sent or received concerning the subject
matter of this Complaint;
B. All databases (including all records and fields and structural
information in such databases), containing any reference to and/or information about or
related to the subject matter of this Complaint;
Cc All logs of activity (both in paper and electronic formats) on computer
systems and networks that have or may have been used to process or store electronic data
containing information about or related to the subject matter of this Complaint;
D. All word processing files, including prior drafts, "deleted" files and file
fragments, containing information about or related to the subject matter of this Complaint;
E. With regard to electronic data created by application programs which
process financial, accounting and billing information, all electronic data files, including prior
drafts, "deleted" files and file fragments, containing information about or related to the
subject matter of this Complaint;
FE All files, including prior drafts, "deleted" files and file fragments,
containing information from electronic calendars and scheduling programs regarding or
related to the subject matter of this Complaint;
G All electronic data files, including prior drafts, "deleted" files and file
fragments about or related to the subject matter of this Complaint.
2 Online Data Storage on Mainframes and Minicomputers: With regard to
online storage and/or direct access storage devices attached to your mainframe computers
and/or minicomputers: you are not to modify or delete any electronic data files, "deleted" files
and file fragments existing at the time of service of the Summons and this Complaint upon
you, which meet the definitions set forth in this notice, unless a true and correct copy of each
such electronic data file has been made and steps have been taken to assure that such a copy
will be preserved and accessible for purposes of this litigation.
3 Offline Data Storage, Backups and Archives, Floppy Diskettes, Tapes and
Other Removable Electronic Media: With regard to all electronic media used for offline
storage, including magnetic tapes and cartridges and other media that at the time of service
of the Summons and this Complaint upon you containing any electronic data meeting the
criteria listed in paragraph 1 above: you are to stop any activity that may result in the loss of
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such electronic data, including rotation, destruction, overwriting and/or erasure of such
media in whole or in part. This request is intended to cover all removable electronic media
used for data storage in connection with your computer systems, including magnetic tapes
and cartridges, magneto-optical disks, floppy diskettes and all other media, whether used
with personal computers, minicomputers or mainframes or other computers, and whether
containing backup and/or archive data sets and other electronic data, for all of your computer
systems.
4 Replacement of Data Storage Devices: You are not to dispose of any
electronic data storage devices and/or media that may be replaced due to failure and/or
upgrade and/or other reasons that may contain electronic data meeting the criteria listed in
paragraph 1 above.
5 Fixed Drives on Stand-Alone Personal Computers and Network
Workstations: With regard to electronic data meeting the criteria listed in paragraph 1
above, which existed on fixed drives attached to stand-alone microcomputers and/or network
workstations at the time of service of the Summons and this Complaint upon you: you are
not to alter or erase such electronic data, and not to perform other procedures (such as data
compression and disk de-fragmentation or optimization routines) that may impact such data,
unless a true and correct copy has been made of such active files and of completely restored
versions of such deleted electronic files and file fragments, copies have been made of all
directory listings (including hidden files) for all directories and subdirectories containing such
files, and arrangements have been made to preserve copies during th
Preview
BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 1 of 26 Trans ID: LCV2019793804 POLINO and PINTO, P.C. A Professional Corporation Attorneys at Law 720 East Main Street, Suite 1C Moorestown, NJ 08057 (856) 727-1777 By: Joseph M. Pinto, Esquire/012951977 Attorneys for Plaintiff CHRISTINE HOVLIARAS SUPERIOR COURT OF NEW JERSEY BURLINGTON COUNTY Plaintiff LAW DIVISION Vv. DOCKET NO. BUR-L-588-19 Civil Action GLOBAL CLIENT SOLUTIONS, L.L.C.; WORLD LAW GROUP; U.S. BANK, NA Defendants FIRST AMENDED COMPLAINT Plaintiff, CHRISTINE HOVLIARAS, residing at 17 Shadetree Lane, Mt. Arlington, New Jersey, 07856, by way of Complaint against the defendants, says: INTRODUCTION The defendants created and engaged in a plan or scheme to defraud the residents of the State of New Jersey and other states by performing unlawful debt adjustment and money transmission activities and engaged in the unauthorized practice of law in the State of New Jersey. The defendants and their individual members, recruits, representatives, employees and agents employ and partners with both front-end lead generators and back-end service companies, financial institutions and other attorneys in New Jersey and other states to provide debt adjustment services as defined by New Jersey law creating the impression that these services are to be performed or provided by attorneys and licensed debt adjusters. In fact, these services are not performed by, nor were they ever intended to be performed by, BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 2 of 26 Trans ID: LCV2019793804 attorneys and licensed debt adjusters. This unlawful plan or scheme is in violation of the New Jersey Debt Adjustment and Credit Counseling Act, N.J.S.A. 17:16G-1, et seq. since these services are performed by for- profit entities or persons not permitted to operate such business in New Jersey under the Act. Such debt adjustment activity further constitutes the unauthorized practice of law in the State of New Jersey. Both violations constitute crimes under New Jersey law and are in violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq., the New Jersey Racketeer Influenced and Corrupt Organizations Act, N.J.S.A. 2C:41-1, et seq., the New Jersey Money Transmitters Act, N.J.S.A. 17:15C-1, et seq., and other State laws. Plaintiffs seek recovery of monies paid to the defendants and other damages. FACTS I Plaintiff Christine Hovliaras ("Plaintiff") is a resident and citizen of the State of New Jersey, residing in Mt. Adlington, New Jersey. 2 On or about October 25, 2012 plaintiff enrolled in a debt settlement program with World Law Group ("WLG") of Austin, Texas, which promised to negotiate a reduction of her indebtedness of over $50,000 by forty percent. 3 In order to accomplish that reduction, plaintiff was required to pay the sum of $898.22 per month to be held in an escrow account for the purpose of accumulating funds of a sufficient amount so that World Law Group could begin negotiating debt reduction. 4 On November 7, 2012 plaintiff signed a document entitled Dedicated Account Agreement and Application which provided that defendant Global Client Solutions, L-L.C. BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 3 of 26 Trans ID: LCV2019793804 ("GCS"), located at 4343 South 118" E Avenue, Suite 220, Tulsa, OK 74146, would deduct the sum of $898.22 from plaintiff's bank account in New Jersey and deposit it in an escrow account to be established in a bank chosen by GCS in Oklahoma. GCS chose defendant U.S. Bank, N.A. of Kansas City (with whom it has a special agreement for these debt adjustment accounts) to receive the funds withdrawn from plaintiffs bank account. The account was actually an escrow account for many people enrolled in the debt settlement program. The account was entitled the Account of Global Client Solutions, L.L.C. - Administrator - Master Account for Consumers on File Deposit Account. Plaintiff was given a specific sub-account number for purposes of tracking her funds. 5 GCS deducted the sum of $898.22 per month from plaintiff's bank account from November 2012 until May 2013 for a total of $6,287.54 (seven months). 6 Defendant World Law Group did not negotiate a reduction of any of plaintiff's debts, rather defendant GCS disbursed the plaintiff's funds to defendant WLG and itself for various fees it claimed were due for services rendered. 7 By May 7, 2013 there was only $813.58 left in plaintiff's escrow account. 8 Plaintiff discontinued participation in the debt settlement program and stopped the authorization pemnitting GCS to deduct any additional funds from her bank account. 9 Although plaintiff filed numerous complaints with WLG, consumer and law enforcement agencies, and asked for refund of all of her money, the money was not refunded. 10. Since WLG had instructed plaintiff to cease all payments to her creditors when she enrolled in the debt settlement program, her creditors began dunning her for payment BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 4 of 26 Trans ID: LCV2019793804 and the balances on the debts continued to accumulated finance charges. ll. WLG, its affiliated companies and its owners were sued by the Consumer Financial Protection Bureau under the Consumer Financial Protection Action, 12 U.S.C. 5531, et seq., in the United States District Court for the Southern District of Florida on August 7, 2015 (Case N. 15-23070) for operating an unlawful debt relief agency. A receiver was appointed and all assets were liquidated. All have been banned from conducting any further business, A default judgment was entered against almost all of the defendants in that case on August 1, 2016 for the sum of $106,813,049, as well as assessment of a civil penalty of $40 million. 12. Global markets and advertises itself as follows: It is a service provider to debt settlement companies providing account management services for their customers. It is one of the largest account management companies in the United States and has developed and implemented its account management services specifically for the purpose of debt resolution, utilizing among other things non-interest bearing special purpose or dedicated accounts (hereinafter “SPA”) which it claims are insured by the FDIC. SPA’s are disbursement accounts where monies are deposited usually through direct deposit arrangements with customers of the debt settlement companies. Monies are disbursed from the SPA’s to pay its fees and those of the debt settlement companies and creditors and other front-end or back- end affiliates of these parties and their employees, agents or servants. Global claims not to be associated with independent debt settlement companies. It markets itself as having created some of today’s most cutting edge debt settlement account management products and is recommended by over 500 highly regarded debt settlement companies. These debt settlement companies receive benefits such as improved cash flow with separation of debts 4 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 5 of 26 Trans ID: LCV2019793804 and company fees, improved retention rate, decrease in overall servicing costs, less time managing client account information, decrease client set-up time, web-based software interface and open integration with debt management software packages. Disbursement of SPA’s are made only with the approval of the clients of the debt settlement companies, but those companies have access to the account information. Global maintains and operates debt management accounts for hundreds of third party businesses that offer debt adjusting services, utilizing electronic withdrawal of funds from a debtors account or receipt of funds forwarded by other means from the debtor and deposits these funds ina Special Purchase or Dedicated Account, administered and maintained by Global. 13. Performance of debt adjustment and credit counseling services in New Jersey is regulated by the New Jersey Debt Adjustment and Credit Counseling Act, N.LS.A. 17:16G-1, et seq. (hereinafter “the Act”) and the regulations promulgated by the Commissioner of the Division of Banking and Insurance as authorized under N.J.S.A. 17:16G-4. 14, Under New Jersey law, no person other than a non-profit social service agency or anon-profit credit counseling agency shall act as a debt adjuster, N.].S.A. 17:16G-2(a), and such agencies must first obtain a license to do so from the Department of Banking and Insurance, N.LS.A. 17:16G-2(b). 15. A debt adjuster under New Jersey law means a person who either (a) acts or offers to act for a consideration as an intermediary between the debtor and his creditors for the purpose of settling, compounding or otherwise altering the terms of payment of any debts of the debtor or (b) who to that end receives money or other property from the debtor BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 6 of 26 Trans ID: LCV2019793804 or on behalf of the debtor for payment to or distribution among the creditors of the debtor. N.LS.A. 17:16G-1(c)(1). 16. An attorney at law admitted to practice in the State of New Jersey who is not principally engaged as a debt adjuster shall not be deemed a debt adjuster under the Act and therefore not subject to licensure. 17. The fees which a licensee may charge for debt adjustment services under the Act shall not exceed one percent of the gross monthly income of the person to whom the service is rendered, but in no case shall the fee exceed $15.00 per month, except as may be otherwise provided by rule or regulation promulgated by the Commissioner. The Comunissioner is authorized to set the maximum fee for credit counseling. N.LS.A. 17:16G-6. 18. Under N.J.A.C. 3:25-1.2, the fee for debt adjustment may not exceed $25.00 per month or $60.00 per month for credit counseling services. 19. Any debtor injured by violation of the Act may bring a civil action for recovery of damages. 20. Under the Act, every licensee acting as a debt adjuster shall disburse to the appropriate creditors all funds received from a debtor less any fees permitted by N.J.S.A. 17:16G-6 within ten days of receipt of those funds, maintain a separate trust account in a qualified bank as defined under paragraph 12 of N.J.S.A. 17:9A-1 in the name of the debt adjuster for the benefit of the debtors, serviced by the debt adjuster, and maintain an appropriate ledger book for the trust account required, having at least one single page for each debtor with the appropriate entries of all deposits into and disbursements from each BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 7 of 26 Trans ID: LCV2019793804 debtor's account, including copies of all records showing disbursements to creditors and receipts from debtors which legible records shall be maintained in accordance with generally accepted accounting principals for not less than six years following the close of each debtor's account. 21. Under NJ.S.A. 2C:21-19(f) (and NJ.A.C. 3:25-3.1(d)), any person who shall act or offer to act as a debt adjuster without a license as required by the Act unless exempted from licensure pursuant to the Act shall be guilty of a crime of the fourth degree. 22. The New Jersey Money Transmitters Act, N.J.S.A. 17:15C-1, et seq. (the “Act") requires persons engaging in business in New Jersey of either (1) the receipt of money for transmission or transmitting money within the United States or locations abroad by any and all means, including but not limited to payment instrument, wire, facsimile, electronic transfer or otherwise for a fee, commission or other benefit, or (2) the receipt of money for obligors for the purpose of paying obligors' bills, invoices or accounts for a fee, commission or other benefit paid by the obligor (N.J.S.A. 17:15C-2), to obtain a license (N.J.S.A. 17:15C-4) and post a bond or other security N.J.S.A. 17:15C-6). The Act does not apply to licensed debi adjusters N.J.S.A. 17:15C-3(a)(6) or banks N.J.S.A. 17:15C-3(a)(4)). Neither Global nor the other defendants have money transmitters licenses allowing them to operate in New Jersey which violation constitutes a crime of the third degree under the Act, N,J.S.A. 17:15C-24. 23. The actions of and the services provided by all of the defendants and all of their individual servants, agents and employees are those of debt adjusters and money transmitters as defined by New Jersey statute. BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 8 of 26 Trans ID: LCV2019793804 24, None of the defendants are licensed by the Commissioner of the Department of Banking and Insurance to perform debt adjustment or any other services, nor are they qualified to do so as they are not non-profit social service agencies or consumer credit counseling agencies as defined under N.J.S.A. 17:16G-1. 25. The defendants are not attorneys at law of the State of New Jersey and were principally engaged as debt adjusters, thus, they are not exempt from the licensing requirement of the statute and also are engaged in the unauthorized practice of law in the State of New Jersey. 26. The business of debt adjustment and provision of debt resolution services are considered the practice of law under the laws of the State of New Jersey. 27. The defendants and their agents, servants and employees, by operating as a business providing debt adjustment and resolution services, are engaged in the unauthorized practice of law. 28. Under N.LS.A. 2C:21-22(a), a person is guilty of a disorderly persons offense if the person knowingly engages in the unauthorized practice of law and under subsection (b) is guilty of a crime of the fourth degree if the person knowingly engages in the unauthorized practice of law and creates the false impression that the person is licensed to practice law or derives a benefit or in fact causes injury to another. 29. The defendants have also engaged in a criminal conspiracy as defined by N.LS.A. 2C:5-2 by formulating, promoting, facilitating and engaging in the crimes of unlawful debt adjustment and the unauthorized practice of law. 30. The defendants created the basic plan and operating procedure to engage in BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 9 of 26 Trans ID: LCV2019793804 the debt adjustment business within the State of New Jersey and other states. 31. Consumers in New Jersey and other states were misled into believing they were being represented by attorneys authorized to do business in New Jersey as debt adjusters and thus would receive the professional services expected from an attorney by the general public. 32. In fact, none of the defendants provided legal services or any legal advice to plaintiffs or any New Jersey or other customers, nor did they ever intend to do so. 33. The defendants and their non-attorney employees and agents were to hold plaintiff's funds in the dedicated account for distribution for fees, costs and possible debt reduction payments to creditors. 34, The defendants created a marketing and promotion program to attract debtors through all forms of advertising in the media and contracting with lead providers for the purpose of selling debt resolution services throughout New Jersey and the United States. 35. The customers were asked for information on the type and amount of indebtedness, their employment and income, their social security number for purposes of obtaining a credit report, their checking account number, the bank routing number and an email address. They were told this information would be reviewed for a determination of whether the customer qualified to participate in the plan. Customers were advised that, if accepted, they would pay money every month to be accumulated in an account which would be used for the purposes of negotiating with creditors and would pay a small percentage of the debt including fees. Customers were not told that creditors might not accept any negotiation of the debt. 36. The information obtained about the customer was utilized to determine how BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 10 of 26 Trans ID: LCV2019793804 mutch the customers would pay. No one was accepted for a plan unless they had at least $10,000 in debt. The information was inserted into a payment calculator which determined how much the customer would pay without any consideration of the customer’s personal circumstances and without any contact with the creditors. 37. Once the documents were signed, the customer was advised (1) that any future contacts were to be through the defendants; (2) to avoid all contacts with creditors; (3) not to negotiate with the creditors; and (4) missing payments would disqualify the customer from the program. COUNT ONE New Jersey RICO Law 38. Plaintiff repeats the allegations of the first 37 paragraphs of the Complaint and incorporate the same by reference as if set forth at length herein. 39. All of the defendants are debt adjusters as defined under N.J.S.A. 17:16G- 1(c)(1) and GCS is a money transmitter as defined by the Money Transmitters Act. 40. All defendants are enterprises either separately and/or in unison as defined under N_J.S.A. 2C:41-1(c). 41. At all relevant times, all defendants were engaged in trade or commerce or in activities affecting trade or commerce in connection with the sale of debt adjustment services in the State of New Jersey to New Jersey residents and residents of other states. 42, ‘The defendants are persons as defined by N.J.S.A. 2C:41-2(b). 43 These persons were either employed by or associated with each other and conducted or participated directly or indirectly in the conduct of the affairs of these enterprises through a pattem of racketeering activity in violation of N.J.S.A. 2C:41-2(c) and 10 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 11 of 26 Trans ID: LCV2019793804 received income derived directly or indirectly from a pattern of racketeering activity by engaging in crimes under Chapter 20 and Chapter 21 of Title 2C of the New Jersey Statutes. 44, All the defendants have, among other things, engaged in a pattern of racketeering, including criminal conduct that has either the same or similar purposes, results, participants, victims, methods of commission or are otherwise inter-related by distinguishing characteristics and are not isolated incidents. 45. The criminal conduct includes, but is not limited to, violation of the following New Jersey Statutes: A Theft by deception, N.J.S.A. 2C:20-4; B Deceptive business practices, N.J.S.A. 2C:21-7(h) by making false and misleading written statements for the purposes of obtaining property; c. Falsifying records or uttering any writing or record knowing that it contains a false statement or information with purpose of deceive or injury anyone or to conceal any wrongdoing, N.J.S.A. 2C:21-4(a); D Engaging in bank fraud, 18 U.S.C. 1344; E. Engaging in wire fraud, 18 U.S.C. 1343; F. Issuing false financial statements, N.J.S.A. 2C:21-4(b); G. Making false or misleading statements in any advertisement addressed to the public or to a substantial segment thereof for the purpose of promoting the purchase or sale of services, N.J.S.A. 2C:21-7e; H Selling, offering or exposing for sale or delivery less than the represented quantity of services, N.J.S.A, 2C:21-7b; I] BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 12 of 26 Trans ID: LCV2019793804 I Applying or disposing of property that has been entrusted to one as a fiduciary in the manner one knows is unlawful and involves substantial risk of loss or detriment to the owner of the property or to a person for whose benefit the property was entrusted, whether or not the actor has derived a pecuniary benefit, N.J.S.A. 2C:21-15; J Causing or inducing another by deception as to the contents of the instrument to execute the instrument effecting or purposely to effect or likely to effect the pecuniary interest of the person, N.J.S.A. 2C:21-16; K. Impersonating another or assuming a false identity to obtain a benefit for one’s self or another or to injure or defraud another, N.J.S.A. 2C:21-17(a)(1), (2), (3), (4) and (5); L. Acting or offering to act as a debt adjuster without a license and without qualifying for any exemption from the license requirement, N.J.S.A. 2C:21-19(f); M. Knowingly engaging in the unauthorized practice of law, N_J.S.A. 2C:2 1-22(a); N Knowingly engaging in the unauthorized practice of law and creating or reinforcing a false impression that the person is licensed to engage in the practice of law or derives a benefit therefrom or in fact causes injury to another, N.J.S.A. 2C:21-22(b)(1), (2) and (3); O Transporting or possessing property known or which a reasonable person would believe to be derived from criminal activity, N.J.S.A. 2C:21-25(a), (b)(1), (2){a), (b), (c) and (d); P Conspiracy to commit the aforesaid crimes, N.J.S.A. 2C:5-2 and all its 12 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 13 of 26 Trans ID: LCV2019793804 subparts; Conspiring to violate any of the provisions of N.J.S.A. 2C:41-2(c); Engaging in fraud or swindles, 18 U.S.C. 1341, Engaging in a conspiracy to fraud and swindle, 18 U.S.C. 1349; and Knowing and willfully violating the Money Transmitters Act, N.J.S.A. 17:15C-24. 46. The acts undertaken by the defendants in furtherance of racketeering activity include, but are not limited to: A Recruiting front-end and back-end affiliates to commit violation of the aforesaid crimes, which include lead generators, debt relief companies and service companies and their agents, servants and employees; B Lending a name to others for the purpose of creating a false pretense that legal and debt adjustment services are being performed by an attomey solely incidental to that attorney’s practice of law thereby ostensibly exempting the services from the licensing requirement; Cc. Marketing and soliciting materials and preparing and providing documentation and making oral representations giving the false impression the person was being represented by an attorney or licensed debt adjuster; D. Unlawfully engaging in the solicitation of clients for a law firm, E. Unlawfully managing, counseling, selling, pro rating or liquidating of the indebtedness of a debtor and involving a designated third party’s receipt of debtor’s funds for the purpose of distributing said funds among creditors in payment of debt obligations; 13 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 14 of 26 Trans ID: LCV2019793804 F. Conspiracy to carry out an unlawful business scheme described in this Complaint; G Falsely promising to provide debt relief services and accepting money from debtors in reliance on those promises; H Receiving or paying commissions, fees and other renumeration for unlawful services rendered by defendants to debtors; I Advertising, marketing, promoting and providing contracts and other documentation which falsely create an illusion or impression that debt relief services are being or will be lawfully performed, constitute the practice of law or being performed incidental to the practice of law; ) Collecting illegal fees, charges and costs for performing illegal services and services not permitted by law; K Accepting money from New Jersey residents or residents of other states doing business with the defendants within the State of New Jersey or with connection to the State of New Jersey knowing that it is unlawful to do so; L Conspiracy with and amongst themselves and others to violate the provisions of N.J.S.A. 2C:41-2(d); and M Receiving income or proceeds directly from the pattern of racketeering. WHEREFORE, the plaintiff demands judgment: A Finding that the acts and omissions of the defendants constitute multiple violations of Civil RICO, NJ.S.A. 2C:41-1, et seq.; B Finding that the acts and omissions of the defendants constitute 14 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 15 of 26 Trans ID: LCV2019793804 multiple instances of unlawful practices in violation of the Consumer Fraud Act, N.J.S.A. 56:8-1, et seq.; Cc Disgorgement of all illegal fees, charges and costs and other funds not already paid to creditors of the victimized plaintiff so as to restore to him any money acquired by the unlawful acts of the defendants; D Compensatory and punitive damages and trebling of the damages of plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act; E. Requiring the defendants to pay all attorney’s fees, costs and litigation expenses incurred by the plaintiff; EF Requiring defendants to pay pre-judgment interest on all of plaintiff's damages; G Such other relief as the Court deems equitable and just under the circumstances. COUNT TWO New Jersey Consumer Fraud Act 47. Plaintiff repeats the allegations of the first 46 paragraphs of her Complaint and incorporates the same by reference as if set forth at length herein. 48. The defendants in the operation of this unlawful business scheme and plan and their individual actions as part thereof have engaged in unconscionable commercial practices and fraudulent activity, made false promises and misrepresentations and knowingly omitted facts as described above in violation of N.J.S.A. 56:8-2 which include but are not limited to those acts set forth above, which have damaged the plaintiff. WHEREFORE, the plaintiff demands judgment: 1S BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 16 of 26 Trans ID: LCV2019793804 A. Finding that the acts and omissions of the defendants constitute multiple instances of unlawful practices in violation of the Consumer Fraud Act, N.J.S.A. 56:8-1, et seq. and the New Jersey RICO Act, N.J.S.A. 2C:41-1, et seq. B Disgorgement of all illegal fees, charges and costs and other funds not already paid to creditors of the victimized plaintiff so as to restore to him any money acquired by the unlawful acts of the defendants; C Compensatory and punitive damages and trebling of the damages of plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act; D. Requiring the defendants to pay all attorney’s fees, costs and litigation expenses incurred by the plaintiff; E. Requiring defendants to pay pre-judgment interest on all of plaintiff's damages; F, Such other relief as the Court deems equitable and just under the circumstances. COUNT THREE New Jersey Debt Adjustment and Credit Counseling Act and Money Transmitters Act 49, Plaintiff repeats the allegations of the first 48 paragraphs of her Complaint and incorporates the same by reference as if set forth at length herein. 50. The acts of the defendants have damaged the plaintiff who is entitled to recover his damages pursuant to N,J.S.A. 17:16G-8 and the provisions of the New Jersey Money Transmitters Act. WHEREFORE, the plaintiff demands judgment: 16 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 17 of 26 Trans ID: LCV2019793804 A Finding that the acts and omissions of the defendants constitute multiple instances of unlawful practices in violation of the New Jersey Credit Counseling and Debt Adjustment Act; N.J.S.A. 17:16G-1, et seq. and the New Jersey Money Transmitters Act. B Disgorgement of all illegal fees, charges and costs and other funds not already paid to creditors of the victimized plaintiff so as to restore to him any money acquired by the unlawful acts of the defendants; Cc Compensatory and punitive damages and trebling of the damages of plaintiff as permitted by the New Jersey Debt Adjustment and Credit Counseling Act, the New Jersey Money Transmitters Act, the Consumer Fraud Act and New Jersey Civil RICO Act; D Requiring the defendants to pay all attorney’s fees, costs and litigation expenses incurred by the plaintiff; E, Requiring defendants to pay pre-judgment interest on all of plaintiff's damages; F Such other relief as the Court deems equitable and just under the circumstances. COUNT FOUR Civil Conspiracy 51. Plaintiff repeats the allegations of the first 50 paragraphs of the Complaint and incorporates the same by reference as if set forth at length herein. 52. The defendants, acting in concert, committed the aforesaid unlawful acts or lawful acts by unlawful means for the purpose of injuring the plaintiffs. 17 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 18 of 26 Trans ID: LCV2019793804 53. Defendants understood the objectives of the conspiracy, accepted and agreed, either explicitly or implicitly, to do their part to further those objectives. 34. As a result thereof, the plaintiff has suffered damages. WHEREFORE, the plaintiff demands judgment: A Finding that the acts and omissions of the defendants constitute multiple instances of unlawful practices in violation of the aforesaid New Jersey laws and that defendants conspired to commit such violations; B Disgorgement of all illegal fees, charges and costs and other funds not already paid to creditors of the victimized plaintiff so as to restore to him any money acquired by the unlawful acts of the defendants; Cc. Compensatory and punitive damages and trebling of the damages of plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act and other New Jersey law; D Requiting the defendants to pay all attorney’s fees, costs and litigation expenses incurred by the plaintiff; E Requiring defendants to pay pre-judgment interest on all of plaintiff's damages; F. Such other relief as the Court deems equitable and just under the circumstances. COUNT FIVE Tilegal Contract and Unjust Enrichment 55. Plaintiff repeats the allegations of the first 54 paragraphs of the Complaint and incorporate the same by reference as if set forth at length herein. 18 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 19 of 26 Trans ID: LCV2019793804 56. ‘The purported contracts between the plaintiff and defendants were illegal under New Jersey law and are void ab initio. 57. Defendants will be unjustly enriched if permitted to retain the monies paid to them by the plaintiff or emanating from plaintiff's payments to other defendants as a result of the illegal and void contract. As a result thereof, plaintiff has suffered damages. WHEREFORE, the plaintiff demands judgment: A. Finding that the acts and omissions of the defendants constitute ultiple instances of unlawful practices in violation of the aforesaid New Jersey laws, that any contracts are illegal and that defendants have been unjustly enriched. B Disgorgement of all illegal fees, charges and costs and other funds not already paid to creditors of the victimized plaintiff so as to restore to him any money acquired by the unlawful acts of the defendants; Cc Compensatory and punitive damages and trebling of the damages of plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act and other New Jersey law; D Requiring the defendants to pay all attorney’s fees, costs and litigation expenses incurred by the plaintiff; E. Requiring defendants to pay pre-judgment interest on all of plaintiff's damages; F, Such other relief as the Court deems equitable and just under the circumstances. 19 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 20 of 26 Trans ID: LCV2019793804 COUNT SIX Unconscionability 58. Plaintiff repeats the allegations of the first 57 paragraphs of the Complaint and incorporate the same by reference as if set forth at length herein. 59. Any purported contracts between plaintiff and defendants are unconscionable, both procedurally and substantively, and are therefore unenforceable and void. 60. As a result of the illegal, unlawful and unconscionable acts of the defendants, the plaintiff has suffered damages. WHEREFORE, the plaintiff demands judgment: A Finding that the acts and omissions of the defendants constitute multiple instances of unlawful practices in violation of the aforesaid New Jersey laws and any agreements directly or indirectly related thereto are unconscionable, unenforceable and void ab initio; B Disgorgement of all illegal fees, charges and costs and other funds not already paid to creditors of the victimized plaintiff so as to restore to him any money acquired by the unlawful acts of the defendants; Cc. Compensatory and punitive damages and trebling of the damages of plaintiff as permitted by the Consumer Fraud Act and New Jersey Civil RICO Act and other New Jersey law; D. Requiring the defendants to pay all attorney’s fees, costs and litigation expenses incurred by the plaintiff; E Requiring defendants to pay pre-judgment interest on all of plaintiff's damages; 20 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 21 of 26 Trans ID: LCV2019793804 F Such other relief as the Court deems equitable and just under the circumstances. POLINO and PINTO, P.C. BY: Joseph M. Pint , Esquire Date: May 6, 2019 Attorney for aintiffs Certification Pursuant to Rule 4:5-1, it is hereby certified that the matter in controversy is not the subject of any other action pending in any Court or of a pending arbitration proceeding, nor is any other action or arbitration proceeding contemplated. I am aware of no other parties who should be made a part of this action at the present time. POLINO and PINTO, P.C. By: Joseph 0, juire Date: May 6, 2019 Attorney ¢ Plaintiff Designation of Trial Counsel Joseph M. Pinto, Esquire is hereby designated as trial counsel for plaintiffs in this action. POLINO and PINTO, P.C. nC Joseph NL o,E (S Date: May 6, 2019 Attorney for Plainti! 21 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 22 of 26 Trans ID: LCV2019793804 SPOLIATION NOTICE TO ALL DEFENDANTS You are hereby given notice not to destroy, conceal or alter any paper or electronic files and other data generated by and/or stored on your computers and storage media (e.g., hard disks, floppy disks, backup tapes, Zip cartridges, CDs, DVDs, etc.), or any other electronic data, such as voice mail. As you know, your failure to comply with this notice can result in severe sanctions being imposed by the Court for spoliation of evidence or potential evidence. Through discovery we expect to obtain from you a number of documents and things, including files stored on your computers and your computer storage media. As part of our initial discovery efforts, you will soon receive initial interrogatories and requests for documents and things, requests for admissions and other forms of discovery. In order to avoid spoliation, you will need to provide the data requested on the original media, or on exact copies of that media (sometimes referred to as image, evidentiary, or mirror copies), and be able to prove that the copy matches the original in every respect. Do not reuse any media to provide this data. Additionally, in order to avoid spoliation you may have to suspend certain normal computer maintenance procedures, including but not limited to such procedures as defragmenting hard drives, deleting internet cookies, deleting browser history and favorites, and running any “disk clean-up” processes. Although we may bring a motion for an order preserving documents and things from destruction or alteration, your obligation to preserve documents and things for discovery in this case arises in law and equity independently from any order on such motion. Electronic documents and the storage media on which they reside contain relevant, discoverable information beyond that which may be found in printed documents. Therefore, even where a paper copy exists, we will seek all documents in their electronic form along with information about those documents contained on the media. We also will seek paper ptintouts of only those documents that contain unique information after they were printed out (such as paper documents containing handwriting, signatures, marginalia, drawings, annotations, highlighting and redactions) along with any paper documents for which no corresponding electronic files exist. Our discovery requests will ask for certain data on the hard disks, floppy disks and backup media used in your computers, some of which data are not readily available to an ordinary computer user, such as "deleted" files and "file fragments." As you may know, although a user may "erase" or "delete" a file, all that is really erased is a reference to that file 22 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 23 of 26 Trans ID: LCV2019793804 in a table on the hard disk; unless overwritten with new data, a "deleted" file can be as intact on the disk as any "active" file you would see in a directory listing. Accordingly, electronic data and storage media that may be subject to our discovery requests and that you are obligated to maintain and not alter or destroy, include but are not limited to the following: Introduction: Description of Files and File Types Sought All digital or analog electronic files, including "deleted" files and file fragments, stored in machine-readable format on magnetic, optical or other storage media, including the hard drives or floppy disks used by your computers and their backup media (e.g., other hard drives, backup tapes, floppies, Jaz or Zip cartridges, CD-ROMs, DVDs) or otherwise, whether such files have been reduced to paper printouts or not. More specifically, you are to preserve all e-mails, both sent and received, whether internally or externally; all word- processed files, including drafts and revisions; all spreadsheets, including drafts and revisions; all databases; all CAD (computer-aided design) files, including drafts and revisions; all presentation data or slide shows produced by presentation software (such as Microsoft PowerPoint); all graphs, charts and other data produced by project management software (such as Microsoft Project); all data generated by calendaring, task management and personal information management (PIM) software (such as Microsoft Outlook or Lotus Notes); all data created with the use of personal or portable data assistants (PDAs), such as Blackberry, PalmPilot, HP Jornada, Cassiopeia or any other Windows CE-based or Pocket PC device; all data created with the use of document management software; all data created with the use of paper and electronic mail logging and routing software; all Internet and Web browser- generated history files, caches and "cookie" files generated at the workstation of each employee and/or agent in your employ and on any and all backup storage media; and any and all other files generated by users through the use of computers and/or telecommunications, including but not limited to voice mail. Further, you are to preserve any log or logs of network use by employees or otherwise, whether kept in paper or electronic form, and to preserve all copies of your backup tapes and the software necessary to reconstruct the data on those tapes, so that there can be made a complete, bit-by-bit "mirror" evidentiary image copy of the storage media of each and every personal computer (and/or workstation) and network server in your control and custody, as well as image copies of all hard drives retained by you and no longer in service, but in use at any time from six (6) years before the date the Complaint was filed to the present. You are also to preserve and not destroy all passwords, decryption procedures (including, if necessary, the software to decrypt the files); network access codes, manuals, tutorials, written instructions, decompression or reconstruction software, and any and all other information and things necessary to access, view and (if necessary) reconstruct the electronic data we will request through discovery. 23 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 24 of 26 Trans ID: LCV2019793804 1 Business Records: All documents and information about documents containing backup and/or archive policy and/or procedure, document retention policy, names of backup and/or archive software, names and addresses of any offsite storage provider. A All e-mail and information about e-mail (including message contents, header information and logs of e-mail system usage) sent or received concerning the subject matter of this Complaint; B. All databases (including all records and fields and structural information in such databases), containing any reference to and/or information about or related to the subject matter of this Complaint; Cc All logs of activity (both in paper and electronic formats) on computer systems and networks that have or may have been used to process or store electronic data containing information about or related to the subject matter of this Complaint; D. All word processing files, including prior drafts, "deleted" files and file fragments, containing information about or related to the subject matter of this Complaint; E. With regard to electronic data created by application programs which process financial, accounting and billing information, all electronic data files, including prior drafts, "deleted" files and file fragments, containing information about or related to the subject matter of this Complaint; FE All files, including prior drafts, "deleted" files and file fragments, containing information from electronic calendars and scheduling programs regarding or related to the subject matter of this Complaint; G All electronic data files, including prior drafts, "deleted" files and file fragments about or related to the subject matter of this Complaint. 2 Online Data Storage on Mainframes and Minicomputers: With regard to online storage and/or direct access storage devices attached to your mainframe computers and/or minicomputers: you are not to modify or delete any electronic data files, "deleted" files and file fragments existing at the time of service of the Summons and this Complaint upon you, which meet the definitions set forth in this notice, unless a true and correct copy of each such electronic data file has been made and steps have been taken to assure that such a copy will be preserved and accessible for purposes of this litigation. 3 Offline Data Storage, Backups and Archives, Floppy Diskettes, Tapes and Other Removable Electronic Media: With regard to all electronic media used for offline storage, including magnetic tapes and cartridges and other media that at the time of service of the Summons and this Complaint upon you containing any electronic data meeting the criteria listed in paragraph 1 above: you are to stop any activity that may result in the loss of 24 BUR-L-000588-19 05/06/2019 2:38:19 PM Pg 25 of 26 Trans ID: LCV2019793804 such electronic data, including rotation, destruction, overwriting and/or erasure of such media in whole or in part. This request is intended to cover all removable electronic media used for data storage in connection with your computer systems, including magnetic tapes and cartridges, magneto-optical disks, floppy diskettes and all other media, whether used with personal computers, minicomputers or mainframes or other computers, and whether containing backup and/or archive data sets and other electronic data, for all of your computer systems. 4 Replacement of Data Storage Devices: You are not to dispose of any electronic data storage devices and/or media that may be replaced due to failure and/or upgrade and/or other reasons that may contain electronic data meeting the criteria listed in paragraph 1 above. 5 Fixed Drives on Stand-Alone Personal Computers and Network Workstations: With regard to electronic data meeting the criteria listed in paragraph 1 above, which existed on fixed drives attached to stand-alone microcomputers and/or network workstations at the time of service of the Summons and this Complaint upon you: you are not to alter or erase such electronic data, and not to perform other procedures (such as data compression and disk de-fragmentation or optimization routines) that may impact such data, unless a true and correct copy has been made of such active files and of completely restored versions of such deleted electronic files and file fragments, copies have been made of all directory listings (including hidden files) for all directories and subdirectories containing such files, and arrangements have been made to preserve copies during th