Florida Record

Tuesday, December 10, 2019

Settlement reached with paralegal accused of defrauding customers

By David Hutton | Mar 8, 2017


MIAMI — Accused of defrauding customers out of almost $2.4 million through a debt-reduction company, a Broward County paralegal has been ordered to pay $4,500 to settle the case.

The Miami Herald reported that Chastity Valdes reached an agreement with the Federal Trade Commission and the Florida attorney general’s office to settle the case.

According to Frank Dorman, who works with consumer fraud and debt collection in the FTC’s Office of Public Affairs, the dollar figure was settled on because it represented the value of the assets of Valdes and her businesses — Consumer Assistance LLC, Consumer Assistance Project and Palermo Global.

Dorman told the Florida Record that the FTC and the state of Florida obtained a $2.38 million judgment, based on an estimate of how much money the defendants got from consumers.

“Under the settlement, they submitted detailed, sworn financial statements showing they had spent nearly all of the money,” he said. “They were ordered to turn over all of the money that was left. If we later learn that they misrepresented their financial condition, the entire judgment will become due.”

According to Dorman, Valdes had told customers that she would help with their student-loan debt, but she didn’t deliver on promises while collecting $250 upfront and up to $303 per month.

The FTC claimed that the company pretended to evaluate these consumers for eligibility, Dorman said, and then tell them they qualify for government student loan forgiveness programs that will reduce their debt by at least 50 to 70 percent.

As it turned out, the consumers never were likely to meet the strict requirements of these loan-forgiveness programs.

Dorman said the court order requires Valdes to wire the funds to the FTC.

“It is earmarked for return to consumers or for consumer information remedies, or otherwise as disgorgement to the U.S. Treasury and the state of Florida,” he said.

While the case has garnered national attention, Dorman noted that crimes like this aren’t all that uncommon.

“The FTC has filed other law-enforcement actions against fraudulent student-loan debt relief operations similar to this one, including Good EBusiness, which settled, and Student Aid Center, which is still in litigation,” he said.

Good EBusiness agreed to a settlement with the FTC that will permanently ban them from the debt relief business, Dorman said.

The company allegedly charged consumers up-front fees of $500 to $800 based on phony claims that they could renegotiate, settle or alter payment terms on student-loan debt, Dorman said.

In the Student Aid Center case, the business allegedly told consumers that they were “approved” or “pre-approved” to get loan forgiveness or have monthly payments lowered, which they could get by paying upfront monthly fees that usually were $199 or more for five months.

“The FTC will remain vigilant to protect consumers from these kinds of illegal business practices,” Dorman added.

With the case against Valdes settled and others pursued, Dorman said it helps consumers have a level of confidence that their interests are protected.

“The court order bans the defendants from operating in the secured and unsecured debt-relief industry and the credit repair industry, so they’ll no longer be able to harm consumers seeking help with their student loans or other debts or their credit,” he said.

The order also prohibits them from making misrepresentations about financial or any other products or services, including misrepresentations about endorsements and unsubstantiated claims, Dorman added.

“The FTC’s enforcement division monitors compliance with final orders and has the ability to bring contempt actions for violations,” he said.

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U.S. Federal Trade Commission