The U.S. District Court for the Western District of New York issued a temporary restraining order and asset freeze against a Buffalo, NY-based debt collection operation Monday, at the request of the Federal Trade Commission and the New York Attorney General’s Office. In a joint complaint, the FTC and New York Attorney General charged three individuals – Joseph C. Bella, III, Diane Bella, Luis A. Shaw – and nine interrelated companies they control with using lies and threats against consumers in violation of federal and state laws. The court also appointed a temporary receiver to take over the defendants’ business pending trial.

The FTC alleges in the complaint that the defendants lied and told consumers that they had committed check fraud or other criminal acts; falsely threatened to arrest, imprison or sue consumers; falsely threatened to garnish consumers’ wages or put a lien on their property; failed to verify that consumers owed the debt; charged illegal fees; and revealed consumers’ debts to third parties. All of these practices are huge violations of Section 5(a) of the FTC Act and the Fair Debt Collection Practices Act on the national level, as well as New York Executive Law and New York General Business Law.

“These debt collectors continued to harass consumers and violate the law after the validity of the debt was called into question, and after the New York Attorney General’s office ordered them to stop,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “By working together with our state partners, we can leverage our resources to stop these illegal tactics.”

Joseph C. Bella, III did not respond to repeated requests for comment.

While the defendant listed on the TRO was National Check Registry, LLC, this group operated under a number of different aliases, including eCapital Services, LLC; Check Systems, LLC; Interchex Systems, LLC; Goldberg Maxwell, LLC; Morgan Jackson, LLC; Mullins & Kane, LLC; Buffalo Staffing, Inc.; and American Mutual Holdings, Inc. Upon closer examination of these organizations, there are some red flags.

For example, InterChecks Systems, LLC and Morgan Jackson LLC both have the exact same copy on their websites: “Focusing mainly on managing consumer debt, [Morgan Jackson/Interchecks] has an up and coming group of dedicated team players working together to make the entire collection process as seamless as possible and enjoyable for the consumer as well.  We understand the circumstances of debt and try to help get our clients back in good standing with their creditors.” The sites even have the same verbatim testimonials from “Aaron Smith” in Michigan and “Gladys Meecher” in Poughkeepsie, NY. Neither site makes any mention of being related to the other in any way.

Also, American Mutual Holdings, Inc. claims on its website that it is “a proud member of DBA International.” However, according to DBA International’s most recent member roster, that is not the case. DBA Executive Director Jan Stieger said American Mutual Holdings was a member of the organization until December 2013, and that DBA has requested that the company remove any language about DBA membership from its website.

ACA International reported that none of the companies listed in the complaint are ACA members.

UPDATE: The court-appointed receiver placed over Buffalo Staffing, one of the nine companies named in the original TRO, determined that the company“did not appear to be currently engaged in activities connected with the debt collection business.” As a result, the FTC, New York Attorney General and the defendants’ attorney agreed to a stipulated preliminary injunction for Buffalo Staffing only; it was later adopted by U.S. District Judge Richard J. Arcara.

“As a result of our agreement with the government, Buffalo Staffing was removed from the oversight of the receiver and is free to operate its business accordingly,” Dennis C. Vacco, an attorney representing the accused companies, said.

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