Filing # E-Filed 12/15/ :11:41 PM

Transcription

1 Filing # E-Filed 12/15/ :11:41 PM IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT, IN AND FOR BROWARD COUNTY, FLORIDA OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, STATE OF FLORIDA, v. PLAINTIFF, (14) LIBERTY UNSECURED INC., d/b/a Improvecredit.me, d/b/a Unsecured Loan Capital, a Florida corporation; UNSECURED LOAN SOURCE II, INC., d/b/a Unsecured Loan Capital, a Florida corporation; FIRST SOLUTIONS, INC., d/b/a Credit One, d/b/a Unsecured Loan Capital, a Florida corporation; ANDREW MANGINI, an individual; and MICHAEL PUGLISI, an individual; and DAVID ALAN STERN, DEFENDANTS. / COMPLAINT Plaintiff, OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, STATE OF FLORIDA ( PLAINTIFF or the ATTORNEY GENERAL ), sues the Defendants, LIBERTY UNSECURED INC., a Florida corporation d/b/a Improvecredit.me, d/b/a Unsecured Loan Capital, UNSECURED LOAN SOURCE II, INC., a Florida corporation d/b/a Unsecured Loan Capital, FIRST SOLUTIONS, INC., a Florida corporation d/b/a Credit One, d/b/a Unsecured Loan Capital (collectively, the CORPORATE DEFENDANTS ), ANDREW MANGINI, an Individual, MICHAEL PUGLISI, an Individual, and DAVID ALAN STERN, an Individual, (collectively, the INDIVIDUAL DEFENDANTS ) and states the following in support hereof. Complaint 1

2 SUMMARY OF THE COMPLAINT 1. Since at least 2008, the CORPORATE DEFENDANTS, INDIVIDUAL DEFENDANTS, and their representatives (collectively THE DEFENDANTS ) have functioned as a common enterprise for the purpose of generating illicit proceeds, by unfairly and deceptively marketing and selling to the public unsecured loan services. 2. In summary, THE DEFENDANTS deceive financially-strapped consumers into paying illegal and large fees for unsecured loans from their lender network. However, in most cases, consumers never receive the promised loans. 3. Contrary to what consumers are told, THE DEFENDANTS do not broker loans and do nothing more than spend a few minutes sending consumers sensitive personal information to online lead generators and/or online lenders which consumers could do themselves and pocket the fees. 4. For most of the relevant time period, THE DEFENDANTS charged consumers illegal up-front fees for their putative services. Upon information and belief, THE DEFENDANTS may have ceased charging up-front fees and now charge contingency fees for the same services. THE DEFENDANTS other illegal and deceptive sales practices remain substantially unchanged. 5. The ATTORNEY GENERAL has reviewed more than two hundred (200) consumer complaints registered against THE DEFENDANTS for engaging in false, unfair and deceptive business practices. 6. Plaintiff, the ATTORNEY GENERAL, petitions this Court to enjoin THE DEFENDANTS deliberate and systematic scheme to exploit consumers, freeze THE DEFENDANTS assets, and find THE DEFENDANTS liable for consumers harm. Complaint 2

3 JURISDICTION and VENUE 7. This action is brought pursuant to Florida s Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Florida Statutes ( FDUTPA ). 8. Plaintiff is an enforcing authority of FDUTPA and is authorized by (1)(b), Florida Statutes, to bring an action to enjoin any person who has violated, is violating, or is otherwise likely to violate FDUTPA and by (3), Florida Statutes, to obtain further equitable relief as appropriate. 9. This Court has jurisdiction pursuant to , Florida Statutes and FDUTPA. 10. Venue is proper in the Seventeenth Judicial Circuit as Defendants engaged in business in Broward County, Florida and their actions affected more than one judicial circuit in the State of Florida. 11. THE DEFENDANTS, at all times material hereto, provided goods or services within the definition of (8), Florida Statutes. 12. THE DEFENDANTS, at all times material hereto, solicited consumers within the definition of (7), Florida Statutes. 13. THE DEFENDANTS, at all times material hereto, were engaged in a trade or commerce as defined by (8), Florida Statutes. 14. At all material times, the INDIVIDUAL DEFENDANTS have operated credit service organizations, namely the CORPORATE DEFENDANTS, within the definition of the Florida Credit Services Organization Act, Chapter 817, Part III, Florida Statutes ( CSOA ). The CSOA defines a credit service organization, in part, as any person who sells, provides, performs, or represents that he or she can, will, or will assist to, sell, provide, perform, in return for the Complaint 3

4 payment of money or other valuable consideration, services that will obtain an extension of credit for a buyer (1)2-3, Fla. Stat. 15. Plaintiff has conducted an investigation and the head of the enforcing authority, Attorney General Pamela Jo Bondi, has determined that an enforcement action serves the public interest. THE DEFENDANTS 16. Defendant LIBERTY UNSECURED INC., d/b/a Improvecredit.me, d/b/a Unsecured Loan Capital, ( LIBERTY ), is a for-profit Florida corporation organized on or about January 25, 2008, with a principal place of business in Weston, Broward County, Florida. 17. At all times material to this complaint, Defendant LIBERTY advertised, solicited, offered and sold services that purportedly would obtain unsecured loans on behalf of consumers for an up-front fee, and recently, for a contingency fee. 18. Defendant UNSECURED LOAN SOURCE II, INC., d/b/a Unsecured Loan Capital ( UNSECURED II ), is a for-profit Florida corporation, organized on or about July 20, 2010, with a principal place of business in Lighthouse Point, Broward County, Florida and was administratively dissolved on September 25, At all times material to this complaint, Defendant UNSECURED II advertised, solicited, offered and sold services that purportedly would obtain unsecured loans on behalf of consumers for an up-front fee, and recently, for a contingency fee. 20. Defendant FIRST SOLUTIONS, INC., d/b/a Credit One, d/b/a Unsecured Loan Capital ( FIRST SOLUTIONS ), is a for-profit Florida corporation organized on or about December 13, 2010, with a principal place of business in Weston, Broward County, Florida. Complaint 4

5 21. At all times material to this complaint, Defendant FIRST SOLUTIONS has been a business which processes and collects funds paid by consumers to Defendants LIBERTY and UNSECURED II for their purported unsecured loan services. 22. Defendant ANDREW MANGINI ( MANGINI ) is an individual residing in Weston, Broward County, Florida, is not in the military and is otherwise sui juris. 23. Defendant MANGINI, at all times material hereto, has actively participated directly or indirectly through affiliates, agents, owners, servants, employees, or other representatives, in THE DEFENDANTS unfair and deceptive acts and practices as set forth herein, and has managed, controlled, and/or has had the authority to control THE DEFENDANTS operations and activities described in the instant complaint. DEFENDANTS LIBERTY AND FIRST SOLUTIONS principal places of business are currently listed as Defendant MANGINI s home address. 24. Defendant MANGINI and Defendant PUGLISI actively manage the day-to-day operations of THE DEFENDANTS as equal partners. Defendant MANGINI directs the activities of THE DEFENDANTS employees, including, but not limited to, employees misrepresentations to lenders and consumers, acceptance of up-front fees before the promised services have been completed and charging fees for loan services generally available to the public. Defendant MANGINI has acted as a closer when THE DEFENDANTS sales staff was unable to make a sale. Additionally, Defendant MANGINI makes false representations to consumers during phone calls. 25. At all material times, Defendant MANGINI possessed actual and/or constructive knowledge of all unfair and deceptive acts and practices complained of in this Complaint. Additionally, Defendant MANGINI commingles his personal funds with the illicit funds Complaint 5

6 generated by THE DEFENDANTS and uses the consumers monies to pay his personal expenses. 26. Defendant MICHAEL PUGLISI ( PUGLISI ) is an individual residing in Coral Springs, Broward County, Florida, is not in the military and is otherwise sui juris 27. At all material times, Defendant PUGLISI at all times material hereto, has actively participated directly or indirectly through affiliates, agents, owners, servants, employees, or other representatives, in THE DEFENDANTS unfair and deceptive acts and practices as set forth herein, and has managed, controlled, and/or has had the authority to control THE DEFENDANTS operations and activities. 28. Defendant PUGLISI and Defendant MANGINI actively manage THE DEFENDANTS day-to-day operations as equal partners. Defendant PUGLISI directs the activities of THE DEFENDANTS employees, including, but not limited to, employees misrepresentations to lenders and consumers, acceptance of up-front fees before the promised services have been completed and charging fees for loan services generally available to the public. Defendant PUGLISI makes false representations to consumers during phone calls and in correspondence with consumers. 29. Further, at all material times, Defendant PUGLISI possessed actual and/or constructive knowledge of the unfair and deceptive acts and practices complained of in this Complaint. 30. Defendant DAVID ALAN STERN ( STERN ) is an individual residing in Delray Beach, Palm Beach County, Florida, is not in the military and is otherwise sui juris. Complaint 6

7 31. Since at least 2013, DEFENDANT STERN had actual or constructive knowledge of and directly participated in the unfair and deceptive acts and practices complained of in this Complaint. 32. During times material to this complaint, DEFENDANT STERN managed the the loan scheme s call staff and made false representations to consumers during phone calls and in correspondence with consumers. Additionally, DEFENDANT STERN communicated with disgruntled consumers. 33. The INDIVIDUAL DEFENDANTS have operated their scheme using the CORPORATE DEFENDANTS as a common enterprise, along with other affiliated entities, including, but not limited to Unsecured Loan Services, LLC. THE DEFENDANTS DECEPTIVE ACTS AND PRACTICES 34. Since as early as January 25, 2008, THE DEFENDANTS have operated an unlawful and deceptive unsecured loan scheme through the use of multiple corporate entities and unregistered business names. THE DEFENDANTS scheme exploits consumers who need financial resources but may not otherwise qualify for loans through traditional lenders due to poor credit scores and/or low income. The Defendants Fees and Contracts 35. From at least 2008 until mid-2014, when they began charging contingency fees, THE DEFENDANTS advertised and sold services that would purportedly obtain unsecured loans on behalf of consumers in exchange for up-front fees. These fees varied in amount, but typically were approximately Five Hundred Dollars ($500.00) for personal unsecured loans and more than One Thousand Dollars ($1,000.00) for unsecured business loans. Complaint 7

8 36. THE DEFENDANTS requested and accepted these up-front fees from any consumer willing to pay the fee, regardless of the consumers ability to qualify for a loan. 37. THE DEFENDANTS, at times, pressured hesitant consumers into paying the upfront fees by untruthfully representing that the loan would only be available for 24 hours, or assuring the consumers they were approved for loans that well exceeded the amount of the upfront fees. 38. At the time these representations were made, THE DEFENDANTS were well aware that consumers could not afford the up-front fees. 39. Since about mid-2014, THE DEFENDANTS began charging consumers a contingency fee of approximately nine (9) to ten (10) percent. 40. Additionally, THE DEFENDANTS require consumers to sign and return a service agreement. The service agreement and the accompanying documents provided to consumers fail to disclose consumers right to cancel services within five (5) days, do not contain and do not include a separate Notice of Cancellation Form. The Defendants Deceptive Solicitations 41. THE DEFENDANTS marketing materials and sales pitches are rife with misrepresentations and false information, including, but not limited to, misrepresentations and/or omissions relating to THE DEFENDANTS ability to quickly and successfully obtain a loan for the consumer and the nature of THE DEFENDANTS services. 42. For example, THE DEFENDANTS falsely misrepresent to consumers that they: a. maintain a lender network that consists of more than ten thousand (10,000) lenders; b. work with private lenders that consumers cannot contact on their own; Complaint 8

9 c. analyze loan options and identify lenders that will meet the consumers personalized needs; and d. negotiate the terms of the loan on behalf of the consumer. 43. However, THE DEFENDANTS do not work to broker a loan on behalf of clients and do not provide any of the above-described services. 44. Instead, THE DEFENDANTS merely send consumers sensitive personal information to online lead generators and/or online lenders. 45. After THE DEFENDANTS send consumers information to online lead generators, those companies then refer their sensitive personal information to lenders. Lenders then contact consumers and provide them information regarding loan options with substantially the same terms that are accessible to the general public. 46. THE DEFENDANTS frequently fail to disclose that they submit consumers information to online lead generators that sell the consumers' information to third-party lenders, thereby aggravating the future harm to those consumers. 47. As part of THE DEFENDANTS efforts to obscure their scheme, they create fake addresses, which they use to submit consumers personal information to lead generators and/or lenders. Accordingly, THE DEFENDANTS are able to hide the true nature and/or the results of their services from consumers, including a) the parties to whom consumers sensitive information is submitted, b) the loan terms, and c) lenders loan application denials. 48. Further, THE DEFENDANTS efforts help conceal their involvement from lenders; most legitimate lenders refuse to approve loan applications when a third party is involved. Accordingly, THE DEFENDANTS tell consumers not to disclose THE DEFENDANTS involvement and to lie to lenders if asked whether they paid a third party for assistance. Complaint 9

10 The Defendants Deceptive and Unfair Refund and Cancellation Practices Delay Tactics 49. During the period THE DEFENDANTS charged up-front fees, THE DEFENDANTS engaged in a deceptively scripted charade to create the impression that they were working to secure loans for consumers. 50. In reality, at the time THE DEFENDANTS made these representations, they had not communicated with a single lender or lead generator. 51. Under Florida law, consumers who purchase credit services, such as those offered by THE DEFENDANTS, have a five (5) day period to cancel their agreement and receive a full refund ( refund period ). 52. THE DEFENDANTS engaged in the week-long charade to prevent consumers from timely discovering that THE DEFENDANTS sales pitch was false and that their services were worthless during the refund period, thereby running out the clock on the refund period. 53. When THE DEFENDANTS eventually sent consumers loan information, they frequently knowingly submitted false information such as inflated income and back-dated work and residency information. 54. Few, if any, consumers received loans for the promised amounts and terms and by the time they found out, it was too late to cancel and receive a refund. Unauthorized Charges 55. On numerous occasions, THE DEFENDANTS have made unauthorized withdrawals from consumers bank accounts using information provided purportedly as part of the application process. Complaint 10

11 56. Consumers have suffered substantial injury as a result of the loss of funds from such unauthorized withdrawals and non-sufficient funds fees. Further, some consumers have had to close their bank accounts to prevent future unauthorized withdrawals and further potential dissemination of sensitive personal information. Misrepresentations Pertaining to Refunds and Failure to Provide Refunds 57. During the period THE DEFENDANTS charged up-front fees, THE DEFENDANTS falsely represented that they would refund such fees if they were unable to obtain a loan on behalf of the consumer. 58. THE DEFENDANTS failed to conspicuously disclose that they would only return consumers funds if the consumers were able to obtain a secured or unsecured loan on their own. 59. Moreover, THE DEFENDANTS unlawfully refused to honor cancellations made during the five-day refund period, willfully disregarded their own refund policy, and falsely represented that they would issue refunds to consumers, but ultimately did not. 60. THE DEFENDANTS have engaged in the above-described unfair and deceptive practices, knowing that consumers a) could not afford the up-front fee, b) would likely not be approved for the promised loan amounts, c) would suffer further financial hardship, d) may have their credit history adversely impacted, and e) may have their sensitive personal information sold to third parties by lead generators. Consumers have suffered significant harm as a result of THE DEFENDANTS unfair and deceptive practices. COMMON ENTERPRISE 61. Each of the CORPORATE DEFENDANTS exists to participate in the same unsecured loan swindle. These entities commingle and transfer funds between and among THE Complaint 11

12 DEFENDANTS, they provide the same services to consumers, and they share resources such as office space, call centers, billing forms and systems, mailing addresses, employees, advertising, and marketing. 62. In addition, the CORPORATE DEFENDANTS operate under the common (or overlapping) control of the INDIVIDUAL DEFENDANTS. The INDIVIDUAL DEFENDANTS serve as the owners, officers, directors, members and managers of the CORPORATE DEFENDANTS, and other affiliated entities. Moreover, the CORPORATE DEFENDANTS all participate in the selling of unsecured loan services which are readily available to the public. Further, upon information and belief, THE DEFENDANTS split the profits among themselves. 63. Because THE DEFENDANTS have operated as a common enterprise, each of them is jointly and severally liable for the acts and practices described in this Complaint. DEFENDANTS VIOLATIONS OF THE FLORIDA DECEPTIVE AND UNFAIR TRADE PRACTICES ACT CHAPTER 501, PART II, FLORIDA STATUTES ( FDUTPA ) 64. FDUTPA provides that unfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful. Misrepresentations, false statements, or omissions of material fact constitute deceptive acts or practices prohibited by FDUTPA. An unfair practice is one in which there is substantial injury to a consumer, which is not outweighed by any countervailing benefit, that consumers could not reasonably have avoided. 65. Further, Section (3) (c), Florida Statutes, establishes that a violation of any law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, Complaint 12

13 or unfair, deceptive, or unconscionable acts or practices is a per se violation of FDUTPA and is subject to the penalties and remedies provided for such violations. COUNT I Per Se FDUTPA Violations Based on Violations of the Florida Credit Services Organization Act, Section (1), Fla. Stat. 66. Plaintiff adopts, incorporates herein and re-alleges paragraphs 1 through 63 as if fully set forth herein. 67. Part III of Chapter 817, Florida Statutes, the Florida Credit Services Organization Act ( CSOA ), is a statute that proscribes fraudulent and deceptive acts or practices by credit service organizations and their representatives. Among the CSOA s other provisions, Subsection (1), Florida Statutes, makes it unlawful for individuals to charge or receive any money prior to full and complete performance of the services the credit service organization has agreed to perform for the buyer. 68. As described above, from at least 2008 until on or about mid-2014, THE DEFENDANTS charged consumers up-front fees ranging from approximately $500 to more than $1,000 before THE DEFENDANTS sent consumers information to an online lead generator and/or lender, and before providing full and complete performance of obtaining the promised loans. In fact, in some instances, THE DEFENDANTS charged consumers before consumers even returned a signed service agreement to THE DEFENDANTS. 69. Therefore, pursuant to Section (3)(c), Florida Statutes, THE DEFENDANTS practice of charging the above-described up-front fees in violation of the CSOA constitutes a per se FDUTPA violation subject to the penalties and remedies provided for such violations. Complaint 13

14 COUNT II Per Se Violations Of FDUTPA Based on Violations of the Florida Credit Services Organization Act, Section (2), Fla. Stat. 70. Plaintiff adopts, incorporates herein and re-alleges paragraphs 1 through 63 as if fully set forth herein. 71. As described in paragraph 67, the CSOA proscribes fraudulent and deceptive acts or practices. Among the CSOA s other provisions, Subsection (2), Florida Statutes, makes it unlawful for individuals, or credit service organizations, to charge or receive any money solely for the referral of a buyer to a retail seller, or to any other credit grantor, if the credit that is or will be extended to the buyer is upon substantially the same terms as those available to the general public. 72. THE DEFENDANTS do not broker loans on behalf of consumers, but instead facilitate the referral of consumers to various lenders. THE DEFENDANTS typically send consumers sensitive personal information to companies that then refer consumers information to lenders. Lenders then contact consumers and provide them information regarding the lenders services, i.e. loan options for consumers. The loan information provided to consumers is for loans with substantially the same terms that are accessible to the general public. 73. From at least 2008 until on or about mid-2014, THE DEFENDANTS charged consumers an up-front fee for their services. Subsequently, THE DEFENDANTS have charged consumers contingency fees for these services. 74. Therefore, pursuant to Section (3)(c), Florida Statutes, THE DEFENDANTS practice of charging the above-described fees for services that facilitate the referral of consumers information to lenders for the purpose of providing consumers information about loans with substantially the same terms that are accessible to the general public - violates Complaint 14

15 the CSOA, and constitutes a per se FDUTPA violation subject to the penalties and remedies provided for such violations. COUNT III Deceptive Advertisements and Solicitations in Violation of FDUTPA 75. Plaintiff adopts, incorporates herein and re-alleges paragraphs 1 through 63 as if fully set forth herein. 76. As described above, THE DEFENDANTS advertisements and/or solicitations deceptively and unfairly deceive reasonable consumers into paying THE DEFENDANTS for their purported services in violation of the provisions of Chapter 501, Part II of the Florida Statutes. Each deceptive and unfair advertisement and/or solicitation is therefore subject to the penalties and remedies provided for such violations. COUNT IV Unfair and Deceptive Acts and Practices Pertaining to Cancellations, Refunds, and Unauthorized Charges in Violation of FDUTPA 77. Plaintiff adopts, incorporates herein and re-alleges paragraphs 1 through 63 as if fully set forth herein. 78. As described in detail in paragraphs 49 60, THE DEFENDANTS engage in acts and practices pertaining to cancellations, refunds and/or unauthorized charges that are unfair and/or deceive reasonable consumers in violation of the provisions of Chapter 501, Part II of the Florida Statutes. Each unfair and/or deceptive act and/or practice is therefore subject to the penalties and remedies provided for such violations. Complaint 15

16 COUNT V Per Se Violations of FDUTPA Based on Violations of the Florida Credit Services Organization Act, Section , Fla. Stat. 79. Plaintiff adopts, incorporates herein and re-alleges paragraphs 1 through 63 as if fully set forth herein. 80. As described in paragraph 67, the CSOA prohibits unfair or deceptive acts or practices. Among other provisions, Section , Florida Statutes, requires credit service agreements to include specific express disclosures pertaining to consumers rights and particular terms of the agreement , Fla. Stat. As described above, THE DEFENDANTS service agreements fail to contain the following statutorily mandated statements and/or documents: a. A statement disclosing consumers right to cancel services within five days, (1)(a), Fla. Stat.; and b. A separate Notice of Cancellation Form, (2), Fla. Stat. 81. THE DEFENDANTS failure to include statutorily mandated disclosures is a violation of the CSOA and constitutes a per se FDUTPA violation subject to the penalties and remedies provided for such violations, pursuant to Section (3)(c), Florida Statutes. 82. As a result of THE DEFENDANTS unfair and deceptive trade practices, THE DEFENDANTS have caused significant damage to consumers in the State of Florida. 83. Unless THE DEFENDANTS are permanently enjoined from engaging further in the acts and practices complained of herein, the continued activities of THE DEFENDANTS will result in irreparable injury to the public and consumers in the State of Florida for which there is no adequate remedy at law. Complaint 16

17 PRAYER FOR RELIEF WHEREFORE, the Attorney General requests that this Honorable Court enter Judgment against THE DEFENDANTS, jointly and severally, to: A. ENTER judgment in favor of Plaintiffs and against THE DEFENDANTS for each Count alleged in this Complaint. B. AWARD Plaintiffs such temporary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action and to preserve the possibility of effective final relief, including but not limited to temporary and preliminary injunctions, and an order providing for the turnover of business records and an asset freeze. C. Permanently ENJOIN THE DEFENDANTS, their officers, agents, servants, employees, attorneys, and those persons in active concert or participation with THE DEFENDANTS who receive actual notice of this injunction to prevent future FDUTPA violations until a final judgment in this action is entered. D. AWARD such equitable or other relief as is just and appropriate pursuant to Section , Florida Statutes, including, but not limited to, consumer restitution, disgorgement of ill gotten gains and repatriation of assets necessary to satisfy any judgment. E. AWARD restitution to all consumers who are shown to have been injured, pursuant to Section , Florida Statutes. F. ASSESS civil penalties in the amount of Ten Thousand Dollars ($10,000.00) as prescribed by Section , Florida Statutes or Fifteen Thousand Dollars ($15,000.00) for victimized senior citizens as prescribed by Section , Florida Statutes for each act or practice found to be in violation of Chapter 501, Part II, of the Florida Statutes. Complaint 17

18 G. AWARD attorneys fees and costs pursuant to Section , Florida Statutes or as otherwise authorized by law. H. GRANT such other relief as this Court deems just and proper. Dated this 15th day of December, Respectfully Submitted, PAMELA JO BONDI Attorney General of the State of Florida /s/ Kristen Pesicek. By: Kristen Pesicek Assistant Attorney General Florida Bar No Sarah Shullman Assistant Attorney General Florida Bar No Office of the Attorney General Consumer Protection Division 110 Southeast 6th Street Ft. Lauderdale, Florida Telephone: Facsimile: Primary: Secondary: Primary: Secondary: Complaint 18