IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA

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1 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, vs. Plaintiff, CASE NO.: DIVISION: 14 NEWOPP ENTERPRISES, INC., an active Florida Profit corporation; NEW OPPORTUNITY N.P.O INC., an inactive Florida Non Profit corporation; HENRY ROGER PUIG a/k/a HENRY ROGER, individually and as owner and director ofnewopp ENTERPRISES, INC. and individually and as owner and president of NEW OPPORTUNITY N.P.O INC. and d/b/a GENESIS LOAN SOLUTIONS; RED WASH CORP., an active Florida Profit corporation; RICARDO RESINO, individually and as owner, president and director of RED WASH CORP.; MINISTERIO DE EDUCACION FINANCIERA INC, a dissolved Florida Profit corporation; and ELOISA PARDO GALLARDO a/k/a ELOISA PARDO, individually and as owner and president of MINISTERIO DE EDUCACION FINANCIERA INC., Defendants ~/ AMENDED COMPLAINT FOR INJUNCTIVE AND OTHER STATUTORY RELIEF Plaintiff, STATE OF FLORIDA, DEPARTMENT OF LEGAL AFFAIRS, OFFICE OF THE ATTORNEY GENERAL ("Attorney General") sues NEWOPP ENTERPRISES, INC., a Florida profit corporation; NEW OPPORTUNITY N.P.O INC., a Florida non-profit corporation; HENRY ROGER PUIG a/k/a HENRY ROGER, individually and as owner and director of NEWOPP ENTERPRISES, INC., individually and as owner and president of NEW OPPORTUNITY N.P.O INC. and individually doing business as GENESIS LOAN SOLUTIONS;

2 RED WASH CORP., a Florida profit corporation; RICARDO RESINO, individually and as owner, president and director of RED WASH CORP.; MINISTERIO DE EDUCACION FINANCIERA INC, a dissolved Florida profit corporation and ELOISA PARDO, individually and as president and owner of MINISTERIO DE EDUCACION FINANCIERA INC (hereinafter collectively referred to as "Defendants" or "New Opportunity") and alleges: JURISDICTION AND VENUE 1. This is an action for monetary, injunctive, and other equitable and statutory relief, brought pursuant to the Florida Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Florida Statutes. 2. This court has jurisdiction pursuant to the provisions of Chapter 501, Part II, Florida Statutes. The acts or practices alleged herein occurred in the conduct of "trade or commerce" as defined in (8), Florida Statutes. 3. The Office of the Attorney General seeks relief in an amount greater than Fifteen Thousand Dollars ($15,000.00), exclusive of interest, costs, and attorneys fees. 4. The violations alleged herein affect more than one judicial circuit of the State of Florida. 5. Venue is proper in this court as statutory violations have occurred and continue to occur within and without Broward County, Florida. 6. All other conditions precedent to this action have occurred. 2

3 THE PARTIES 7. Plaintiff is an enforcing authority of Chapter 501, Part II, Florida Statutes, and is authorized to bring this action and to seek injunctive and other statutory relief pursuant thereto. 8. Plaintiff has conducted an investigation of the matters alleged herein, and Attorney General Pam Bondi has determined that this enforcement action serves the public interest. A copy of the Determination of Public Interest is incorporated herein as Exhibit At all times material hereto, Defendant NEWOPP ENTERPRISES, INC. (hereinafter referred to as "NEWOPP") is and has been an active Florida Profit corporation with its principal place of business in Miami Lakes, Florida and currently has a principal and mailing address of NW 77th Ct., Suite 316, Miami Lakes, FL Defendant HENRY ROGER PUIG a/k/a HENRY ROGER (hereinafter referred to as "ROGER") is an individual sui generis residing in the State of Florida, upon information and belief, at the address of SW 1th St., Pembroke Pines, FL Defendant ROGER is an owner, director, and principal day-to-day manager of NEWOPP and controls the acts and practices of said entity. He is individually liable for the misconduct ofnewopp as a primary participant in the deceptive acts and practices alleged herein and as a person with the authority to control same. 12. Defendant ROGER further does business under the fictitious name of Genesis Loan Solutions, co-owned by himself and Defendant RED WASH CORP. 13. Defendant NEW OPPORTUNITY N.P.O INC. (hereinafter referred to as "NEW OPP NPO") is and has been a Florida non-profit corporation with its principal place ofbusiness in Miami Lakes, Florida and with a principal and mailing address of NW 77t.h Ct., Suite 316, 3

4 Miami Lakes, FL According to Florida state corporate records, NEW OPP NPO became inactive and was administratively dissolved in June 2009 for failure to file an annual report. 14. Defendant ROGER is an owner, president, and principal day-to-day manager of NEW OPP NPO and controls the acts and practices of said entity. He is individually liable for the misconduct of NEW OPP NPO as a primary participant in the deceptive acts and practices alleged herein and as a person with the authority to control same. 15. At all times material hereto, Defendant RED WASH CORP. (hereinafter referred to as "RED WASH") is and has been an active Florida Profit corporation with its principal place of business in Miami Lakes, Florida and currently has a principal and mailing address of 8004 NW h St., Suite 117, Miami Lakes, FL RED WASH conducts business under the fictitious names of Genesis Loan Solutions, Genesis Solutions, Creditarget and/or Smart Decision. 17. Defendant RICARDO RESINO (hereinafter referred to as "RESINO") is an individual sui generis residing in the State of Florida at the address of SW 12th Lane, Miami, FL Defendant RESINO is an owner, president, director and principal day-to-day manager of RED WASH and controls the acts and practices of said entity. He is individually liable for the misconduct of RED WASH as a primary participant in the deceptive acts and practices alleged herein and as a person with the authority to control same. 19. At all times material hereto, Defendant MINISTERIO DE EDUCACION FINANCIERA INC (hereinafter referred to as "MINISTERIO") is and has been an active Florida profit corporation with its principal place of business in Miami Lakes, Florida and currently has a principal and mailing address of 8004 NW 154th St., Suite 313, Miami Lakes, FL

5 According to Florida state corporate records, MINISTERIO became inactive and was voluntarily dissolved on February 6, Defendant ELOISA PARDO GALLARDO alk/a ELOISA PARDO (hereinafter referred to as "PARDO") is an individual sui generis residing in the State of Florida, upon information and belief, at the address of SW 31st Ct., Miramar, FL Defendant PARDO is president of MINISTERIO and controls the acts and practices of said entity. She is individually liable for the misconduct of MINISTERIO as a primary participant in the deceptive acts and practices alleged herein and as a person with the authority to control same. 22. At all times material, the Defendants have conducted business in Florida and have advertised and marketed to residents of the state of Florida. Upon information and belief, Defendants RESINO, PARDO, RED WASH and MINISTERIO split from the other named Defendants in mid 2011 and may be engaged in similar alleged activities via other named and unnamed entities. Defendants' Relationship: 23. The corporate defendants acted as a single entity under the banner "New Opportunity" to systematically engage in numerous fraudulent, deceptive, and unfair business practices in a large-scale debt settlement operation. These practices included, but were not limited to, unlawfully charging significant advance fees before completing or, in many instances, commencing performance of its services, falsely representing the success rates of its program, and deceptively advertising and promoting its debt settlement program through misrepresentations and material omissions. 5

6 24. That the entities are intertwined and act as a single entity is demonstrated, in part, by the following: a. The Service Agreement used by New Opportunity to contract services with consumers states that "THIS AGREEMENT is made by and between NEW OPPORTUNITY, N.P.O. and/or its affiliates (hereinafter referred to as "NEW OPPORTUNITY")..." b. Defendant ROGER, owner and director of Defendant NEWOPP, represents himself, on business cards and otherwise, as Director of Operations for New Opportunity Educacion Financiera. c. The former name of Defendant NEWOPP was CACF Real Estate, Inc. CACF Real Estate, Inc. owned a fictitious name of New Opportunity Realty. New Opportunity Realty operated under the name "New Opportunity Ministerio De Educacion," which, in turn, showed the exact same address as both Defendants NEWOPP and NEW OPP NPO (14750 NW 77th Court, Suite 316, Miami Lakes, FL 33016). CACF Real Estate, Inc. contracted with Global Client Solutions, a company which services debt settlement entities, to provide settlement accounts for New Opportunity clients. d. When consumers signed up for New Opportunity services, they were requested to make a down payment called a "file initiation fee" to an entity called "Genesis." Genesis Loan Solutions was a fictitious name owned jointly by Defendants ROGER and RED WASH, a fictitious name which was cancelled on or about April 14, 2011 and replaced with the fictitious 6

7 name "Genesis Solutions." Portions of monies paid to Genesis/RED WASH for file initiation were subsequently redistributed back to Defendants ROGER (individually or through an entity known as Henry Roger P.A.), PARDO and NEWOPP. e. Defendant RED WASH employed the same principal address as Defendant MINISTERIO (RED WASH is or was in Suite 117, while MINISTERIO is or was in Suite 313, both at 8004 NW 154 Street, Miami Lakes, FL). f. There have been instances in which refunds were made from Defendant NEWOPP's business account after the consumer had made their deposits in the name of Genesis, with said checks deposited into Defendant RED WASH's account. When refunds were issued, there were instances in which consumers were requested to sign a general release for the benefit of "Genesis Solutions & New Opportunity ('Released Parties')." g. Defendant RESINO, president and director of Defendant RED WASH, represented himself as a "debt analyst" for "New Opportunity, Inc." Course of Conduct: 25. Defendants, upon information and belief, employed a scheme to defraud designed to entice debt-ridden consumers into their program based on false promises to settle consumers' debts for approximately one third of the amount owed. 26. Rather than offering a program to enable consumers to repay their entire indebtedness on a payment plan, New Opportunity purportedly offered a method of paying debts off, typically in a lump sum, at an amount significantly less than the total debt. The debt 7

8 settlement plan operated on the premise that the consumer's default status would induce creditors to accept a settlement for less than the amount owed. 27. During enrollment, New Opportunity either expressly instructed, or indirectly encouraged, consumers to stop paying their creditors, regardless of whether they were current on their obligations. 28. Consumers were instead directed to authorize New Opportunity to initiate a procedure whereby funds were taken on a monthly basis from consumers' personal bank accounts and direct-deposited into a dedicated account held by an independent entity, Global Client Solutions (hereinafter "Global"). 29. New Opportunity also arranged the creation of the Global account. The purported purpose of the Global account (sometimes referred to in New Opportunity documents as an "Attorney - Trust Debt Resolution" account, other times as a ''personal savings account") was to accumulate funds for future creditor settlements. 30. Contrary to this purported purpose, however, New Opportunity used the Global account as its own private fund from which it debited significant fees and expenses for its own use. 31. Pursuant to the paperwork consumers signed with Global, New Opportunity was the "sponsor" of the Global account. As a "sponsor", New Opportunity made debits from the account without any obligation on the part of Global to seek additional authorization from the consumer. 32. New Opportunity took so much out in undisclosed (or insufficiently disclosed) fees and costs that the Global accounts almost never accumulated sufficient funds to support the promised settlements. 8

9 33. In the event that sufficient funds were somehow accumulated, New Opportunity was the entity which then directed Global to make the payment from the Global account to the consumer's creditor(s). Advertisements and Solicitations: 34. Defendants advertised their services primarily over Christian Spanish language radio and further represented themselves to be a "faith-based Christian Ministry." The purpose of this "wolf-in-sheep's clothing" fa<;ade was to falsely engender trust in their intended targets. 35. Said advertisements conveyed the false impression that the recently enacted Dodd- Frank Wall Street Reform and Consumer Protection Act (hereinafter "the Act") required banks and other lenders to negotiate reductions in consumers' debts. They represented, in part: a. that the Act allows consumers who are facing financial difficulties to reduce their debts 80-90%; b. that the Act requires banks to explain consumer alternatives that would assist them in getting out of debt; c. that the Act allows consumers to negotiate the forgiveness of interest and late fees; d. that the Act allows consumers to negotiate the elimination of their entire debt; and e. that the Act could result in the principle amount of borrowed money being substantially reduced. 36. Said advertisements further misrepresented the costs of New Opportunity services, stating that "Henry Roger...is offering to help consumers for free ("Totalmente de manera gratuita"). 9

10 37. The announcer on the New Opportunity broadcasts exclaims how wonderful it would be for consumers to eliminate all of their debt and release all of the stress caused by financial burdens and otherwise paints a picture of a life free of debt with no adverse consequences. 38. Defendant ROGER re-enforced the representation that New Opportunity will secure gross reductions of consumers' unsecured debt by providing "mathematical examples" on these broadcasts, stating for instance, that if a consumer has a $10, credit card balance, he/she might end up paying just $1, Defendants further stated that New Opportunity could restore or Improve consumers' credit rating. 40. "New Opportunity'' advertisements and broadcasts requested consumers either to make an appointment to see company representatives or to attend "seminars" relating to debt reduction or financial counseling. Internet Page Representations: 41. Defendants maintained a website under the name ofnew Opportunity Educacion Financiera at Said website, which urges consumers to "reestablish your credit," contains representations, in Spanish, similar to those presented on radio broadcasts. They include, but are not limited to, the following (paraphrased for translation): a. the use of New Opportunity services will result in the payment of less money and will end the nightmare of consumers' debts; b. the use of New Opportunity services will result in lower monthly payments, lowering same by as much as 70%; c. New Opportunity currently averages a 65-85% reduction in clients' debts; 10

11 d. New Opportunity can arrange for a consumer to have a single monthly payment, freeing the consumer from different dates and methods of payment; e. New Opportunity has "an extensive network of resources;" f New Opportunity can achieve for a consumer a release of their debts in months; g. the Bank is not your friend; h. New Opportunity works with affiliate organizations that include legal representation to construct a customized and effective plan to help their clients reach their financial goals; 1. differences between New Opportunity and other services include a fast cancellation of your debt and an elimination of interest rates; J. ~ew Opportunity protects clients from creditors and unjust credit bureaus; k. New Opportunity will rehabilitate your credit; I. the negotiation process begins when the fee has been paid to open your account; m. in the majority of cases, creditors will not agree, when dealing directly with the consumer, to lower the consumer's debt. They know that the majority of people will yield to their pressure and threats. As a third party, New Opportunity can achieve better results; and n. by completing our program, your credit rating will probably be enriched or raised. 11

12 The above representations were either completely false or gross exaggerations of New Opportunity's ability to assist the consumer with the reduction of their debts. In-Person Seminars and Meetings: 42. At "New Opportunity" seminars, presentations were made by Defendants ROGER, PARDO and/or RESINO. The presentations were made in Spanish and often included slide shows. 43. Among the representations made to consumers by Defendants ROGER, PARDO and/or Resino were: a. that banks are the enemies of consumers; b. that consumers have no realistic ability to negotiate debt reductions with banks on their own; c. that, since the credit of the person attending is bad already, no substantial additional harm will come in discontinuing payments to creditors; d. that creditors will not negotiate with consumers as long as they are current in their payments; e. that it is therefore necessary for consumers to stop making their payments to creditors; f. that New Opportunity guarantees that they will secure a reduction of consumers' debts; and g. that the reduction would be greater than 50%. Once again, potential harmful consequences of withholding ongoing payments to creditors were either completely ignored or substantially downplayed. 12

13 44. Subsequent to the seminar, though sometimes pursuant to a direct call for an appointment, Defendants set an appointment for an individual, one-on-one meeting with the potential customer. 45. Defendants ROGER, PARDO or RESINO participated in these individual sales presentations. 46. Once again, Defendants ROGER, PARDO or RESINO generally conducted these meetings in Spanish. 47. The representations made to consumers during these individual presentations mirrored those made in the radio advertisements and in the seminars. Consumers were informed that a "realistic" outcome of negotiations will be that they will reduce their debts by approximately 70%. This is and was a substantially false representation, as it is by no means representative of savings achieved by the typical New Opportunity client. 48. In addition to the representations previously described, consumers were told the following about the processes to be employed by New Opportunity and about the costs for New Opportunity services: a. that the consumer will pay an up-front fee for New Opportunity services; b. that, in some cases, the up-front fee will be the total fee charged to consumers for New Opportunity services; c. that the consumer will have a specific amount debited from their bank accounts on a monthly basis and placed into a separate dedicated special purpose account with a third party (Global Client Solutions); d. that the funds in the Global account will be used to negotiate settlements with consumers' creditors; and 13

14 e. that New Opportunity would provide legal representation in cases where consumer creditors sought to enforce payment on consumer debts. Failure to Translate or Provide Spanish Language Versions o(material Documents: 49. In a significant majority of cases, New Opportunity clients spoke and read only Spanish. Advertisements for New Opportunity services were in Spanish. Promotional materials for New Opportunity were also presented in Spanish. 50. Despite the fact that advertisements and promotional materials were generated in Spanish, Spanish translations of the primary service agreement were generally not provided. Other significant documents, such as New Opportunity waivers and acknowledgments for New Opportunity were generally provided in English only and not translated verbatim to consumers. In addition to the primary service agreement, these documents would include, but not be limited to: a. a five-day cancellation provisions form; b. a client information form; c. an acknowledgement of understanding form which includes important New Opportunity disclaimers and requirements; d. the Global Client Solutions dedicated account agreement, which details the terms, conditions and requirements related to the consumer's dedicated account; and e. the Program Summary & Schedule of Fees form detailing specific fees and the allotment of consumer funds. 51. Material terms and conditions of the written contract, therefore, are and were not effectively disclosed as they were disclosed in a language not understood by the targeted consumer. Defendants employed consumers' inability to understand the English language as a 14

15 method by which to include oppressive terms and material disclaimers in their contracts and agreements. Said practices are and were both deceptive and unconscionable. 52. The New Opportunity contract contains or contained provisions which are not only inconsistent with New Opportunity verbal representations, but several are diametrically opposed and contradictory. For example: Verbal Representation: Contract provision: Consumers are specifically "New Opportunity has not, nor shall instructed not to make their credit it take any actions to disrupt the card payments - that creditors will contractual relationship between you not negotiate a debt reduction unless and your creditors and New the consumer account is in arrears. Opportunity has not provided any advice regarding the reduction or termination of payments to your creditors." Consumers' debts will be reduced "New Opportunity makes no claims by at least 50%. as to any specific amount of savings that may be affected and settlement We have a 100% success rate. projections are only estimates." Consumers are told that the up-front Client Service and Administrative fee is the only cost ofnew fees are charged, not to exceed 18% Opportunity services and that all of starting balances. In "exceptionally other monies deducted from their complex" cases, additional charges accounts on a monthly basis (and may apply based upon New placed into the Global Client Opportunity hourly rate plus expenses Solutions special purpose account) incurred... Monies placed in the will be applied to their credit card Special Purpose account can be used settlements. to "satisfy all fees for services rendered." Verbal representations by New Contract supersedes all verbal Opportunity accurately reflect the representations. contract provisions. New Opportunity will provide legal "Service does not extend to our representation should creditors intervention regarding these types of initiate legal action against issues." consumer. "Service does not include legal representation in any court oflaw or the preparation of legal documents." New Opportunity will discuss "This is NOT a loan; nor is it a debt 15

16 creditor payment options, will negotiate creditor settlements, will pay settlements from funds debited. from your bank account and placed with Global Client Solutions, Inc. consolidation, debt adjustment, or credit counseling program. New Opportunity will NOT be making monthly payments on my behalf to my creditors." 53. In addition to the blatant contradictions between the verbal and written representations of the Defendants, numerous material "disclosures" and "disclaimers" were made solely in English language documents. They include: a. "Late payments or your decision to terminate payments to your creditor will result in derogatory credit reporting by your creditors, which may include reporting accounts as 'charged-of '" b. "Derogatory reporting and collection accounts may impair your credit for up to seven and a half (7) (sic) years from the date of charge off." c. "Judgments and public records may stay on a credit report longer." d. "Fees paid to New Opportunity are not refundable and are not transferable to your bankruptcy case, except for funds held in reserves." e. "The discharge of indebtedness may be considered taxable income" (and may have to be reported as such). The Consequences: 54. After stgnmg with New Opportunity, and as a direct result of Defendants' representations and advice for debt reduction services, consumers stopped making their credit card and other payments to creditors. 55. As Defendants instructed consumers not to personally speak to creditor representatives, consumers repeatedly ignored calls from creditors relating to their accounts. 16

17 56. Consumer accounts were then sent to collection, legal actions were filed against them, their salaries were garnished and their credit rating was destroyed. 57. As this was occurring, Defendants removed consumers' money from the Global accounts as additional fees and costs. 58. While the fees and costs deducted are clearly excessive and exorbitant, there are numerous instances in which nearly all of the money deposited by consumers was appropriated as fees and costs. Examples of the manner in which Defendants took advantage of the very persons they claim to assist are as follows: a. Consumer F.R. retained New Opportunity in December An up-front payment of $600 was made. Monthly payments of $ were removed from his personal account and deposited into a dedicated account to be used for the negotiation of his debts. By September 2011, he had deposited approximately $5, During this same period, however, Defendants withdrew, or caused to be withdrawn, "customer" and "transaction" fees from P.R.'s account, fees which totaled approximately $5,195. No payments were made to F.R.' s creditors. b. Consumer L.Q. retained New Opportunity in June An up-front payment of $400 was made. Monthly payments of $146 were removed from his personal account and deposited into a dedicated account to be used for the negotiation of his debts. By October 2011, he had deposited approximately $3, During this same period, however, Defendants withdrew, or caused to be withdrawn, "customer" and "transaction" fees 17

18 from L.Q.'s account, fees which totaled approximately $2, No payments were made to H.P. 's creditors. c. Consumer O.F. retained New Opportunity in August of An up-front payment of $437 was made. Monthly payments of $ were removed from his personal account and deposited into a dedicated account to be used for the negotiation of his debts. By September 2011, he had deposited approximately $2,600. During this same period, however, Defendants withdrew, or caused to be withdrawn, "customer" and "transaction" fees from O.F. 's account, fees which totaled approximately $2,600. No payments were made to O.F.'s creditors. 59. When consumers finally received formal notice of legal actions and collections activities, they were uniformly confused as to why creditors had not been contacted by Defendants for the purpose of negotiating a reduction of their debts. 60. When consumers then contacted Defendants, they were routinely informed that no such negotiations have occurred because it is "too soon." They were told that there was not sufficient money in their dedicated accounts to support a negotiated settlement with creditors and encouraged to be patient and to continue depositing their monthly checks into the dedicated Global Client Solutions accounts. 61. As their personal checking accounts had been debited monthly for payments into the New Opportunity dedicated account, consumers could not understand why sufficient funds did not exist in these dedicated Global accounts to negotiate settlements of at least some of their debts. They contacted Global to learn the status of the dedicated account, only to find that the accounts are all but empty and that the Defendants have drained same for additional fees and costs. 18

19 62. Upon information and belief, these consumers were falsely informed that certain monies from their accounts had been segregated into a separate account in order to prevent their creditors from learning the extent of the consumers' assets. 63. When consumers contacted Defendants demanding a refund, they were refused. Defendants justify the raiding of the Global accounts by claiming unidentified administrative service expenses and otherwise citing terms and provisions of the very same agreements that the consumers were not able to read. The hann suffered by consumers/clients of New Opportunity is extensive, and it includes: a. the incurring of significant New Opportunity fees amounting to hundreds or thousands of dollars for New Opportunity services which were not performed at all or which were not performed as promised; b. the negative impact to their credit rating due to the reporting of a delinquent payment history, charge-offs, or collections, the effects of which impact the consumer for seven (7) years. This, in tum, could affect the consumer's: 1. ability to purchase or rent a home or other lodging; n. ability to purchase a car; 111. ability to make utility deposits; IV. ability to secure insurance at reasonable rates; v. employment; and v1. potentially, their ability to secure healthcare. c. increased debts on accounts unrelated to those "negotiated" by New Opportunity. A default on one credit card can lead not only to a default interest rate of over 30%, it can raise interest rates on cards for which there has been no default. This is due to universal or global default clauses in accounts enabling increased interest rates or other actions due to late payments of another debt; 19

20 d. increased debts on accounts "negotiated" by New Opportunity, e.g., default rates and penalties; e. lawsuits, garnishments, judgments, and increased collection calls and activities, once payments are stopped; f. bankruptcy filings to stop litigation; g. legal or other professional fees for attorneys, accountants or others to assist consumers in filing bankruptcy or mitigating the harm suffered by consumer or damage to consumer's credit, as result of enrollment with New Opportunity; h. delays in pursuing and obtaining viable and more suitable alternative debt relief options, including bankruptcy, some of which were deceptively disparaged or advised against in the sale ofnew Opportunity's program; and 1. potential income tax liability for taxable income due to significant amounts of debt reduction (more than $600) when settlements are completed. Said potential harm was either not disclosed at all or inadequately disclosed or explained. 64. Defendants, in their advertisements, seminars and in-person interviews, painted a deceptive picture not only of their ability to secure debt reductions on behalf of client consumers, but of the risks associated with their program. If the foregoing risks were disclosed at all, they were effectively minimized in Defendants' presentations. Minimizing those risks to consumers' credit and financial future, either affirmatively or through non-disclosure, is and was a material misrepresentation of their programs' worth and benefit to the consumer. 20

21 COUNT I DECEPTIVE AND UNFAIR TRADE PRACTICES CONDUCT VIOLATING CHAPTER 501, PART II, FLORIDA STATUTES 65. Paragraphs 1 through 64 are hereby re-alleged and incorporated herein by reference, as if fully set forth below. 66. As set forth in paragraphs 1 through 64 above, Defendants have engaged in and continue to engage in a pattern and practice of advertising, promoting and implementing its debt settlement program through deceptive and unfair acts and practices, specifically including materially false and deceptive statements regarding: a. the benefits and effectiveness of the New Opportunity program; b. the financial risks and consequences of actions recommended by Defendants in the New Opportunity program; c. the fees to be charged to the consumer; d. the terms and conditions of the New Opportunity contract or agreement, including but not limited to the representation that oral representations made during in person interviews reflect actual contract provisions; e. the success rate of the program; f. the nature and purpose of the Global Client Solutions account, including but not limited to Defendants' use of said account to secure additional fees and costs; and g. the actual actions and time frames within which those actions would be performed by Defendants (the settlement process). h. the reasons why consumers' Global Solutions accounts have been depleted. 67. Defendants have engaged in deceptive and unconscionable conduct in presenting English-only contracts and disclosures to consumers, knowing or having reason to know that the 21

22 consumers did not possess sufficient understanding of the English language to allow full comprehension of the documents' terms, conditions, disclaimers and disclosures in violation of F.S. 501, Part II. COUNT II VIOLATIONS OF CHAPTER 501, PART II, FLORIDA STATUTES, THROUGH THE IMPOSITION OF EXCESSIVE FEES PROHIBITED BY , FLORIDA STATUTES 68. Paragraphs 1 through 64 are hereby re-alleged and incorporated by reference, as if fully set forth below. 69. Defendants provided "debt settlement" services for a fee to effect the adjustment, compromise or discharge of unsecured debts including, credit card accounts, of consumer debtors residing in Florida, services included within "debt management services," as that term is defined under Florida law. 70. The Fraudulent Practices Act, Part IV, Credit Counseling Services, Section , et seq., Florida Statutes, provides the following definitions, in pertinent part, which apply to debt settlement services: (1) "Credit counseling agency" means any organization providing debt management services or credit counseling services. (4) "Debt management services" means services provided to a debtor by a credit counseling organization for a fee to: (a) (b) Effect the adjustment, compromise, or discharge of any unsecured account, note, or other indebtedness of the debtor, or Receive from the debtor and disburse to a creditor any money or other thing of value. (5) "Person" means any individual, corporation, partnership, trust, association, or other legal entity. 22

23 71. Section (1), Florida Statutes, provides: It is unlawful for any person, while engaging in debt management services or credit counseling services, to charge or accept from a debtor residing in this state, directly or indirectly, a fee or contribution greater than $50 for the initial setup or initial consultation. Subsequently, the person may not charge or accept a fee or contribution from a debtor residing in this state greater than $120 per year for additional consultations or, alternatively, if debt management services as defined in s (4)(b) are provided, the person may charge the greater of 7.5 percent of the amount paid monthly by the debtor to the person or $35 per month. 72. Defendants required down-payments well in excess of $50, most commonly charging in excess of $200-$400. In addition to the down-payments, they consistently withdrew additional funds for fees and expenses from the Global Client Solutions accounts. These fees and expenses could and would total in the thousands of dollars. 73. Section (1), Florida Statutes, explicitly provides that a person who violates Section , Florida Statutes, commits an unfair or deceptive trade practice as defined in Part II of Chapter 501, Florida Statutes. 74. Defendants, by charging fees clearly in excess of the statutory limitations, are engaging in and have engaged in deceptive and unfair acts and practices in trade or commerce, also in violation of Section (1 ), Florida Statutes, and are therefore subject to civil penalties and equitable remedies as imposed therein. 75. Pursuant to Section (3)(c), Florida Statutes, a violation of Chapter 501, Part II, may be based upon "[a]ny law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices." 23

24 76. Unless Defendants are permanently enjoined from engaging further in the acts and practices alleged herein, the continued activities of Defendants will result in irreparable injury to the public for which there is no adequate remedy at law. COUNT III VIOLATIONS OF CHAPTER 501, PART II, FLORIDA STATUTES. THROUGH VIOLATIONS OF , FLORIDA STATUTES 77. Paragraphs 1 through 64 are hereby re-alleged and incorporated herein by reference, as if fully set forth below. 78. Defendants provided "debt settlement" services for a fee to effect the adjustment, compromise or discharge of unsecured debts including, credit card accounts, of consumer debtors residing in Florida, services included within "debt management services," as that term is defined under Florida law. 79. Section (1), Florida Statutes, explicitly provides that a person who engages in debt management or credit counseling services must disburse all funds received from a debtor to a creditor within 30 days after receipt of the funds. This Section also provides that persons engaged in such services must maintain a separate trust account for the receipt of any funds from debtors and for the disbursement of such funds to creditors. 80. Upon information and belief, Defendants maintained a regular practice of holding debtor funds for periods in excess of 30 days after receipt of such funds, without disbursing the funds to a creditor. This is a violation of Section (1 ). 81. Defendants claim that the debtors retain control over the Global accounts and that Defendants do not hold the funds, instead categorizing the Global account as either a "personal savings account," controlled by the debtor or a "special purpose trust account," controlled by the debtor. 24

25 82. Under either categorization, the debtor retains control of the account and because there is no separation of the ownership interests in the account, it is not a trust account. 83. Therefore, in the alternative, Defendants have failed to maintain a trust account for the receipt of such fund-s, which is also a violation of Section (1 ). 84. Section (1), Florida Statutes, explicitly provides that a person who violates Section , Florida Statutes, commits an unfair or deceptive trade practice as defined in Part II of Chapter 501, Florida Statutes. 85. Pursuant to Section (3)(c), Florida Statutes, a violation of Chapter 501, Part II, may be based upon "[a]ny law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices." 86. Unless Defendants are permanently enjoined from engaging further in the acts and practices alleged herein, the continued activities of Defendants will result in irreparable injury to the public for which there is no adequate remedy at law. COUNT IV VIOLATIONS OF CHAPTER 501, PART II, FLORIDA STATUTES. THROUGH VIOLATIONS OF CREDIT REPAIR ORGANIZATIONS ACT 87. Paragraphs 1 through 64 are hereby re-alleged and incorporated herein by reference, as if fully set forth below. 88. As set forth above, Defendants have offered services to repair credit in the course of offering debt settlement services as a form of credit repair, including offering to settle consumers' outstanding debt balances and consequently improve their credit rating, credit report, or credit score. Defendants further provided advice to consumers about their credit rating and improving their credit score or purport to assist consumers in improving their credit rating, report or score. Before providing any of the promised services, Defendants' representatives requested 25

26 and obtained payment for services. Defendants have violated the Credit Repair Organizations Act, 15 U.S.C. 1679, et seq. 89. Section 1679a(3)(A) of the Credit Repair Organizations Act, provides, in pertinent part, that the term "credit repair organization": (a) means any person who uses any instrumentality of interstate commerce or the mails to sell, provide, or perform (or represent that such person can or will sell, provide, or perform) any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of- (i) improving any consumer's credit record, credit history, or credit rating; or (ii) providing advice or assistance to any consumer with regard to any activity or service described in clause (i). 90. Based on a review of the representations which have been disseminated on Defendants' website, the representations that New Opportunity makes or made through its debt consultants, and/or representations through documents provided to consumers or in communications with them, Defendants act as and have acted as a "credit repair organization" as that term is defined in Section 1679a(3) of the federal Credit Repair Organizations Act. 91. The purposes of the Credit Repair Organizations Act, according to Congress, are: a) to ensure that prospective buyers of the services of credit repair organizations are provided with the information necessary to make an informed decision regarding the purchase of such services; and b) to protect the public from unfair or deceptive advertising and business practices by credit repair organizations. 15 u.s.c. 1679(b). 92. Section 1679b(a)(3) of the Credit Repair Organizations Act prohibits all persons from making or using any untrue or misleading representation of the services of a credit repair organization. 26

27 93. Section 1679b(a)(4) of the Credit Repair Organizations Act prohibits all pers?ns from engaging, directly or indirectly, in any act, practice, or course of business that constitutes (or results in the commission of, or an attempt to commit) a fraud or deception on any person in connection with the offer or sale of the services of the credit repair organization. 94. In numerous instances, in connection with the performance of services for consumers by a credit repair organization, as that term is defined in 1679a(3) of the Credit Repair Organizations Act, Defendants have made and continue to make untrue or misleading statements to induce consumers to purchase their services, including, but not limited to, the representation that New Opportunity can improve credit reports or profiles by the consumers entering the Defendants' program. 95. In truth and fact, New Opportunity cannot improve substantially most consumers' credit reports or profiles by the consumers' participation in Defendants' program and in many instances, consumers' credit reports have been negatively impacted upon enrollment into the New Opportunity program. 96. Section 1679c of the Credit Repair Organizations Act further requires credit repair organizations to provide consumers with a written statement containing prescribed language concerning consumer credit file rights under state and federal law before any contract or agreement between the consumer and the credit repair organization is executed. Specifically included within the required disclosure is the following: "You have a right to dispute inaccurate information in your credit report by contacting the credit bureau directly. However, neither you nor any "credit repair" company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report. The credit bureau must remove accurate, negative information from your report only if it is over 7 years old. Bankruptcy information can be reported for 10 years." 27

28 97. In numerous instances, in connection with the performance of services for consumers by a credit repair organization, as that term is defined in 1679a(3) of the Credit Repair Organizations Act, Defendants have failed and continue to fail to provide a written statement to each consumer before any contract or agreement between the consumer and Defendant was or is executed, as required by 1679c of the Credit Repair Organizations Act in the form and manner required by that Act. Defendants have thereby violated section 1679c of the Credit Repair Organizations Act. 98. Section 1679b(b) of the Credit Repair Organizations Act prohibits credit repair organizations from charging or receiving any money or other valuable consideration for services which the credit repair organization has agreed to perform before such service is fully performed. 99. In numerous instances, in connection with the performance of services for consumers by a credit repair organization, as that term is defined in Section 1679a(3) of the Credit Repair Organizations Act, Defendants have charged or received money and continue to charge or receive money or other valuable consideration for the performance of services that the credit repair organization has agreed to perform before such service was fully performed. Defendants have thereby violated 1679b(b) of the Credit Repair Organizations Act Pursuant to 1679h(b) of the Credit Repair Organizations Act, violations of the Act constitute unfair or deceptive acts or practices Pursuant to (3)(c), Florida Statutes, a violation of chapter 501, Part II, Florida Statutes, may be based upon "[a]ny law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices." 102. Defendants willfully engaged in the acts and practices alleged herein. 28

29 1 03. As set forth herein, Defendants violated the Credit Repair Organizations Act, and therefore engaged in deceptive and unfair acts and practices in trade or commerce, in violation of , Florida Statutes Unless Defendants are permanently enjoined from engaging further in the acts and practices alleged herein, the continued activities of Defendants will result in irreparable injury to the public for which there is no adequate remedy at law. PRAYER FOR RELIEF WHEREFORE, Plaintiff, State of Florida, Department of Legal Affairs, Office of the Attorney General, respectfully requests that this Court: 1. Grant a temporary and permanent injunction against Defendants, and their officers, agents, servants, employees, attorneys and those persons in active concert or participation with them who receive actual notice of this injunction, prohibiting such persons from violating the provisions of Chapter 501, Part II, Florida Statutes, Sections (1 ), Florida Statutes, (1), Florida Statutes, and (1), Florida Statutes, and , Florida Statutes, as specifically alleged above and any similar acts and practices, and specifically enjoining Defendant, as follows: A. Prohibiting Defendants from initiating or directing electronic funds debits as payment of fees exceeding more than $ per year or otherwise obtaining funds for the benefit of Defendants from the bank accounts of Florida clients who are currently enrolled in a debt settlement program with Defendants, prior to providing documentation of a completed settlement to its client, until further Order of this Court; B. Prohibiting Defendants from enrolling new clients until further order of this Court; C. Prohibiting Defendants from advertising their services on radio stations and from conducting educational seminars or other marketing efforts. D. Requiring Defendants to provide a detailed accounting, audited by an independent third-party accounting firm at Defendants' expense, of each and every account of a Florida consumer enrolled with Defendants from the 29

30 period January 30, 2009 (or as otherwise ordered by the Court) through and including the date of Defendants' complete response, with such accounting to include enrollment, completion or cancellation dates and the following, together with any further documentation requested by the auditor: (i) (ii) (iii) (iv) (v) (vi) the amount of fees required to be paid to Defendants; the amount of fees which Defendant has debited from consumers' bank accounts or otherwise collected from consumers, including the total of fees received by Defendants; the total amount of debts enrolled by consumers; documentation of each settlement consummated and effected by Defendants for the benefit of the enrolled account, including the creditor, amount and date paid; documentation of each settlement offer communicated to the consumer, including the date, creditor and amount of the offer; and documentation of the amount of any refund paid to a consumer, indicating the purposes of the refund as general or service guarantees; Said accounting is to be provided to Plaintiff no later than 90 days from the entry of an order granting the present request for injunction. E. Requiring Defendants to designate a liaison, a web page with a web contact and complaint form, an address, and a toll free number staffed with sufficient personnel to assist with facilitating relief for Florida consumers currently enrolled with Defendants; F. Requiring Defendants to utilize an amount equal to the aggregate amount of any fees paid to it for debt settlement for each Florida consumer who is currently enrolled, to promptly facilitate and use its best efforts to consummate as many negotiated settlements for the respective Florida consumers as possible within thirty (30) days of the date of this Court's Order; G. Freezing any and all business of Defendants' business accounts and prohibiting withdrawals from same, with the exception of allowing withdrawals solely for the purpose of meeting current reasonable business expenses. H. Enjoining any Defendant from removing any money or assets from consumers' Global Client Solutions settlement accounts for any purpose other than to apply said funds to consumer creditor settlements. I. Imposing reasonable restrictions upon the future activities of said Defendants, including posting of a bond, designating a liaison to assist with 30