Consumer Bureau Action Tracker

CFPB v. Morgan Drexen, Inc. and Walter Ledda


State

Nationwide

target

Morgan Drexen, Inc, Walter Ledda

Topics

Enforcement, Debt Relief

In August 2013, the CFPB sued Morgan Drexen and its president, Walter Ledda, for allegedly charging upfront “illegal fees” to “more than 22,000 customers” to “help them resolve outstanding debts” and for allegedly using “false and misleading advertising.” Morgan Drexen allegedly deceived consumers into “signing up for costly bankruptcy-related services by telling them they would be ‘debt-free in months.'” In June 2015, Morgan Drexen was prohibited from “collecting any more money from its customers and charging fees,” leading to bankruptcy and in August 2016, a judge ordered Morgan Drexen to pay “about $133 million in restitution and $40 million in civil penalties” for misrepresenting its services and charging illegal upfront fees.

  • The CFPB filed a lawsuit against Morgan Drexen, Inc. and Walter Ledda in US District Court, Central District of California. [CFPB v. Morgan Drexen, Inc. and Walter Ledda, case no. SACV13-01267 JST (JEMx), filed 08/20/13]
  • In August 2013, the CFPB sued Morgan Drexen and its President, Walter Ledda, for allegedly charging “illegal fees” and deceiving consumers. Morgan Drexen allegedly violated “the Telemarketing Sales Rule and the Dodd Frank Act by charging an upfront fee for its debt relief services” and allegedly using “false and misleading advertising.” [Richard Pollock, “CFPB counters firm’s suit with charges of illegal fees, deceiving consumers,” The Examiner, 08/20/13 and Lauren Williams, “Debt firm Morgan Drexen to pay $173 million in penalties, restitution,” Orange County Register, 3/21/16]
  • The CFPB alleged that Morgan Drexen “charged more than 22,000 customers millions of dollars in illegal upfront fees to help them resolve outstanding debts.” The lawsuit alleged that they “illegally deceived consumers into signing up for costly bankruptcy-related services by telling them they would be ‘debt-free in months.'” The CFPB claimed that “‘little to no bankruptcy work is actually performed for consumers.'” [Jim Puzzanghera, “Consumer bureau suit says debt-relief firm charged improper fees,” Los Angeles Times, 08/20/13]
  • In August 2016, a federal judge ordered Morgan Drexen to pay “about $133 million in restitution and $40 million in civil penalties” for misrepresenting its services and charging illegal upfront fees. According to the CFPB, the customers were charged fees and signed “contracts for both debt relief and bankruptcy services, when many only sought debt relief services.” In June 2015, “a permanent injunction was issued against Morgan Drexen, prohibiting the company from collecting any more money from its customers and charging fees. The next day, the company filed for bankruptcy.” [Lauren Williams, “Debt firm Morgan Drexen to pay $173 million in penalties, restitution,” Orange County Register, 3/21/16]

Status

Open


SACV13-01267 JST (JEMx) 8/20/2013 3/16/2016

CFPB Files Suit Against Morgan Drexen for Charging Illegal Fees and Deceiving Consumers; CFPB Wins Final Judgment Against Morgan Drexen for Illegal Debt-Relief Scheme
http://www.consumerfinance.gov/policy-compliance/enforcement/actions/morgan-drexen-inc-walter-ledda/

  • Consumer Financial Protection Bureau (CFPB)
  • Federal district court case
  • U.S. District Court Central District of California
  • Nonbank
  • $173,000,000
  • Not Available

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