Jul 8

By Tim Cushing – TechDirt

We’ve seen government officials do some pretty questionable things to avoid turning over documents to FOIA requesters. The most common method is just to stick requesters with a bill they can’t pay. Stonewalling is popular, too — so much so that the federal government sends out “Still interested?” notices to people whose requests have been backburnered for years.

More rarely, officials will race requesters to the courthouse, hoping to secure a judgment in their favor stating that they’ve already fully complied with a FOIA request — even when they’ve done nothing but withhold and redact. Stripped of all the legal wrangling, this is basically the government suing individuals for asking for documents, forcing taxpayers to go out-of-pocket if they hope to counter the officials’ assertions.

But one thing we haven’t seen is a government official securing a grand jury indictment against open records requesters… for making open records requests.

A North Georgia newspaper publisher was indicted on a felony charge and jailed overnight last week – for filing an open-records request.

Fannin Focus publisher Mark Thomason, along with his attorney Russell Stookey, were arrested on Friday and charged with attempted identity fraud and identity fraud. Thomason was also accused of making a false statement in his records request.

The pair had been going after local judge Brenda Weaver and other court staff for some time, tracing back to her predecessor’s (former judge Roger Bradley) use of a racial slur in the courtroom. The slur was attached to a defendant’s name, and this slur was repeated by the district attorney and court deputies. Thomason acquired a copy of a transcript only to find the repeated use of the slur by court deputies had been removed. He asked for the audio recording of the hearing and was rejected. [read more]


Jul 6

By Nate Raymond – Reuters

Efforts to crack down on what U.S. officials view as unscrupulous debt collection practices are taking center stage at a trial of a Georgia man who prosecutors say oversaw a scheme that victimized more than 6,000 people nationwide.

A prosecutor told jurors in Manhattan federal court at the opening of a trial on Tuesday that John Williams, 50, encouraged employees at his debt collection firm – Williams, Scott & Associates LLC – to shake down consumers and coerce them into paying money they did not owe.

Assistant U.S. Attorney Sarah Paul said Williams’ firm defrauded 6,000 customers from 2009 to 2014 into paying about $4.1 million by misrepresenting how much they owed and by falsely claiming they could face prison time.

“The defendant did all of this so he could make money -millions of dollars for himself,” she said.

Williams has pleaded not guilty to the charge of conspiracy to commit wire fraud. His lawyer, Mark DeMarco, urged jurors to put aside their emotions as they heard evidence about unseemly practices.

“We ask that you give Mr. Williams a fair trial,” he said.

The trial comes amid heightened regulatory attention toward debt collection, which the Consumer Financial Protection Bureau (CFPB) lists as the No. 1 most-complained about area of consumer financial services. [read more]


Jul 1

By Lawrence Hurley – Reuters

The U.S. Supreme Court on Monday allowed a class-action lawsuit against debt collector Encore Capital Group Inc to move forward, declining to hear its claim that such companies should be protected from state “usury” laws barring money-lending at unreasonably high interest rates.

The court left in place a May 2015 ruling by the 2nd U.S. Circuit Court of Appeals in New York that found that Encore’s Midland Funding and Midland Credit Management units were not national banks with legal protection against state usury laws.

The class-action lawsuit was brought by a New York borrower named Saliha Madden who objected to the 27 percent annual interest rate she was being charged.

Debt collection companies typically buy debt from banks and other creditors for pennies on the dollar, then try to collect higher amounts from people who owe the debt.

Madden took issue with the interest rate that Midland sought to impose on roughly $5,000 in debt it had bought that she had incurred on a credit-card account opened years earlier at Bank of America, court papers showed [read more]


Jun 30

By Matthew Goldstein, Rachel Abrams and Ben Protess – The New York Times

When the housing crisis sent the American economy to the brink of disaster in 2008, millions of people lost their homes. The banking system had failed homeowners and their families.

New investors soon swept in — mainly private equity firms — promising to do better.

But some of these new investors are repeating the mistakes that banks committed throughout the housing crisis, an investigation by The New York Times has found. They are quickly foreclosing on homeowners. They are losing families’ mortgage paperwork, much as the banks did. And many of these practices were enabled by the federal government, which sold tens of thousands of discounted mortgages to private equity investors, while making few demands on how they treated struggling homeowners.

The rising importance of private equity in the housing market is one of the most consequential transformations of the post-crisis American financial landscape. A home, after all, is the single largest investment most families will ever make.

Private equity firms, and the mortgage companies they own, face less oversight than the banks. And yet they are the cleanup crew for the worst housing crisis since the Great Depression.

Out of the more than a dozen private equity firms operating in the housing industry, The Times examined three of the largest to assess their impact on homeowners and renters.

Lone Star Funds’ mortgage operation has aggressively pushed thousands of homeowners toward foreclosure, according to housing data, interviews with borrowers and records obtained through a Freedom of Information request. Lone Star ranks among the country’s biggest buyers of delinquent mortgages from the government and banks.

Nationstar Mortgage, which leaped over big banks to become the fourth-largest collector of mortgage bills, repeatedly lost loan files and failed to detect errors in other documents. These mistakes, according to confidential regulatory records from a 2014 examination, put “borrowers at significant risk of servicing and foreclosure abuses.”

Unlike the banks, Nationstar wears many hats at once: mortgage bill collector, auction house for foreclosed homes and lender to new borrowers. By working every angle, and collecting fees at each step, the company faces potential conflicts of interest that enable it to make money on what is otherwise a costly foreclosure process. [read more]


Jun 28

By Jamie Kelly – Legal NewsLine

A lawsuit against U.S. Attorney General Loretta Lynch filed in May seeks to eliminate restrictions imposed by the Telephone Consumer Protection Act (TCPA) on political organizations using automatic telephone dialing systems to call cell phones, which the plaintiffs argue violates their First Amendment rights to freedom of speech.

A group of five political organizations, ranging from an association of consultants to a Tea Party political action committee and the Democratic Party of Oregon filed the suit in North Carolina federal court and is seeking to have calls by political organizations exempted from the ban.

One of the suit’s main arguments is that the law already has exemptions for other purposes, prioritizing commercial speech above political speech.

“It is a settled rule under the First Amendment that the government may not treat lesser protected speech (e.g. commercial debt collection) better than fully protected speech (e.g. political speech),” William Raney, lead counsel for the American Association of Political Consultants, one of the plaintiffs, told Legal News Line. “The challenged section violates this rule on its face.” [read more]


Jun 22

By Cristina Corbin – FOX News

Oklahoma state police have suspended a program that uses scanner technology to detect counterfeit credit cards amid growing concerns that it could allow cops to empty the bank accounts of law-abiding citizens.

The decision was ordered by Gov. Mary Fallin hours after FoxNews.com published a report Friday about concerns that the scanners could make civil forfeiture too easy.

“The Department of Public Safety needs to formulate a clear policy for using this new technology,” said Fallin. “It can be a viable tool for law enforcement only if authorities are able to ensure Oklahoma motorists and others driving through our state that it will be used appropriately.”

The Oklahoma Highway Patrol was given the devices to freeze and seize money loaded onto prepaid debit cards by alleged drug traffickers, with the potential to net up to $8,000 per portable scanner.

Supporters of the program, which had only been in the field for about six weeks, say it’s an important tool for law enforcement agencies to interrupt the flow of illegal drugs into Oklahoma.

Critics were alarmed that the company supplying the machines would have gotten a percentage of seized assets, saying the arangement created an incentive for abuse of civil forfeiture laws by police and prosecutors. Opponents say such devices are an infringement on Fourth Amendment prohibitions of unreasonable search and seizure — and that police departments are in turn stuffing their wallets with the cash from innocent civilians. [read more]