Written by Craig D. Robins, Esq.Law Firm of Bill Collectors Dissolves Amid Law Suits Alleging that the Collection Firm Engaged in Fraud
I previously wrote about debt collector law firms in New York that had gotten in trouble with the law. Debt Collectors Shut Down by Attorney General [1].
Now it is coming to light that a large regional collection firm in Georgia crashed and burned amid allegations that the firm failed to file collection law suits on behalf of their clients and also used funds for those suits to pay the firm’s own expenses.
The firm, Trauner, Cohen & Thomas, located in Sandy Springs, Georgia, dissolved after operating for more than 30 years.
What led to the firm’s demise? Several of the firm’s clients, who are banks and credit card companies, sued the firm, alleging various gross improprieties.
NCO Financial Systems, (a company I regularly deal with on behalf of my Long Island bankruptcy clients as they purchase massive amounts of delinquent debt), brought suit against the Trauner collection firm alleging that it gave the firm more than $1.3 million to reimburse the firm for filing fees and other expenses of collection suit litigation relating to more than 15,000 lawsuits the firm was to handle on NCO’s behalf. Instead, the collection firm used the funds for its own operating expenses and inflated it reimbursement requests according to the pleadings.
Midland Credit Management brought another suit on similar grounds, alleging that they were defrauded $1.7 million. A third suit alleges that the Trauner collection law firm is affiliated with a collection company, National Asset Recovery Inc., and that this company and the law firm defaulted on $1.7 million in loans. There are even more similar law suits filed by Zenith Acquisition Corp. and Northstar Capital Acquisition.
One wonders if the financial pressures that many of these debt collection firms are suffering from encourages them to take shortcuts and violate consumer rights. Congress recently issued a scathing report about the illicit practices of bill collectors: Credit Card Debt Collectors Ripped in Federal Report [2].
