Two Years After Addison-Based Debt Relief USA Went Bankrupt, the Feds Take an Interest
And then it got worse: On June 18, 2009, Addison-based Debt Relief USA filed for Chapter 11 in United States Bankruptcy Court for the Northern District of Texas downtown; less than a week later, it was converted to Chapter 7. The Texas Attorney General got involved and said in December 2010 that a deal had been struck, that it has "obtained a court order disbursing $3.7 million to Texans and customers in other states who were defrauded by a now bankrupt debt relief firm." No word on whether anyone's yet seen a penny of that.
But now comes the Federal Trade Commission, which yesterday in federal court in Dallas filed its own suit against Debt Relief USA and its officers: Kelly Reilly, Alvin Bell, James Wojick and Valerie Leath. The complaint spells out how their scam worked, beginning with the promise that they had "special relationships with creditors" and "could negotiate significant discounts for consumers." But they didn't. And they couldn't. So the feds allege they violated Section 5 of FTC Act, the one concerned with unfair or deceptive acts or practices. And they want their pound of flesh. FTC v Debt Relief USA