"Debt-Relief" Companies Get Hit By Lawsuit

Robert Lock, slapped with an injunction

​The West Virginia Attorney General has sued an alleged debt settlement company we investigated in December. However, one of the company's founders had told us the company -- predicated on the belief that when you get a credit card, the bank owes you money -- was totally not comprised of scum-sucking vultures preying on vulnerable people at their wit's end, so we don't know what the West Virginia AG's problem is. (Much thanks to Steve Rhode's debt advice blog for posting the entire lawsuit).

West Virginia's suit against the Chicago-based Credit Collections Defense Network  follows a 2008 investigation and 2009 injunction barring founders Robert Lock and Phil Manger from peddling their weird "debt elimination" service. Lock is a Chicago attorney; Manger is a former attorney in Connecticut who now runs a company called Credit Restore 123, with his son Charles. We're sure that company is totally awesome and legit. (We left a message for Phil and Charles this morning; we'll let you know if we hear back).

According to the lawsuit, the company "fails to provide debt relief services to consumers and refuses to refund their money, even though it has failed to settle any debts and has provided no credit services of any value to consumers" in violation of West Virginia code. And, among other things, the company "fails to clearly and conspicuously disclose that legal theories it claims entitles consumers to dispute their credit card debts are baseless...."

But our favorite part might be where the lawsuit points out that the company's former marketing director, S. John Hagenstein, filed for bankruptcy in a Minnesota court last January.

The suit alleges that he "filed for bankruptcy rather than enrolling in CCDN's debt relief program because he knows CCDN's debt relief services are ineffective and have no value." (Hagenstein never returned our calls for our December story. Now we understand a little better why).

The company has taken down its most recent website (a 2004 version still exists) and it also seems to have ceased operating under one of its other names, Legal Debt Cure. Could this mean the end of CCDN?

We certainly hope not. How else would people know where to get screwed?