WASHINGTON (3/22/16)--A federal district court found last week that a debt relief company violated federal law, resulting in an order for Morgan Drexen Inc. to pay more than $132 million in restitution and a $40 million civil penalty.
In a release announcing the finding, the Consumer Financial Protection Bureau (CFPB) said it first brought suit against Morgan Drexen in 2013, alleging violations of the Telemarking Sales Rule and the Dodd-Frank Act.
The CFPB alleges that Morgan Drexen charged illegal upfront fees for debt relief services and misrepresented their services to consumers. In January 2015, before the trial was scheduled to start, the bureau also informed the court that it believed Morgan Drexen had created and altered bankruptcy petitions that it submitted to the court as evidence of having provided bankruptcy services.
Final judgment came March 16, with Morgan Drexen ordered to:
Because Morgan Drexen has declared bankruptcy, any payment of this judgment will occur through the bankruptcy process.
Walter Ledda, Morgan Drexen’s president/CEO, was also found by the court to have violated Dodd-Frank and the Telemarketing Sales Rule, and he is required to pay $500,000 to the CFPB for consumer redress and to exit the debt relief industry.