A Buffalo man who ran several debt collection companies here must pay $165,000 in restitution and penalties for illegal practices in trying to collect debts under a settlement with the state.
Joseph Bella III, who operates Check Systems DBA Lighthouse Recovery, agreed to stop collecting on payday loans, which are illegal in New York, according to State Attorney General Eric T. Schneiderman.
Bella also agreed not to violate the privacy of debtors by soliciting their personal information through employers and to stop sending them letters purporting to be from an attorney trying to collect debts.
Seven consumers with payday loans, most of whom live in the eastern end of the state, will receive a total of $2,261 in restitution.
The rest of the settlement – $162,738 in penalties – will be paid to the state.
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“Across the state, we’ve worked aggressively to ensure that debt collectors who exploit desperate consumers and break the law pay a price for their behavior,” Schneiderman said. “In this case, we’re pleased that consumers who paid on payday loans will receive full restitution and Bella will receive heavy penalties.”
Bella settled the case without admitting or denying the attorney general’s findings.
Dennis C. Vacco, Bella’s attorney, said his client “intends to be fully compliant with state and federal law and, to that end, many of the reforms described in the agreement were already being implemented by Mr. Bella.”
Since November 2008, Bella has run various debt collection companies, including Check Systems, Interchex Systems, Goldberg Maxwell, Mullins & Kane, Morgan Jackson and National Check Registry. Most of the companies are in Buffalo, including 268 Main St. and 1673 Hertel Ave., plus one on Niagara Falls Boulevard in Amherst.
Bella operated several of the companies one-at-a-time for short periods, usually for less than six months. Then he would shut down the company and begin operations under a new name. The attorney general found these companies repeatedly violated the federal Fair Debt Collection Practices Act.
The companies routinely sent verification-of-employment forms to the employers of debtors seeking information that debt collectors are not entitled to under federal law, which prohibits them from communicating with employers except to obtain location information about the employee, according to the attorney general.
The debt collection companies illegally sought information about the debtor’s Social Security number, hourly wage, date of hire and whether the debtor’s wages were being garnisheed, the attorney general said.
The forms improperly implied that Bella’s companies would garnishee the wages of debtors even though the companies had never obtained a judgment against them and, thus, could not garnishee their pay, according to the attorney general.
The companies failed to send debtors verification-of-rights notices containing the amount of debt, the name of the creditor and the right to dispute the debt, the attorney general said. Such notices are required by law.
The companies also violated the law by sending letters to debtors under the name of an attorney, who worked for Bella, according to the attorney general. But the attorney general said the lawyer did not have any direct personal involvement in sending the letters, had not reviewed the debtors’ files before the letters were sent, had not determined that the letters should be sent and did not know the identity of those receiving the letters.
The attorney general said despite the fact Bella terminated the attorney in November 2012, as late as February 2013, one of his companies continued to send letters to consumers from a legal assistant that were copied to the lawyer who no longer worked for Bella. The attorney general noted the law places strict limits on the use of attorneys’ names and stationery when collecting debts.
Bella’s companies collected, or tried to collect, on payday loans, a type of short-term borrowing where an individual borrows a small amount at a very high rate of interest, often 450% or more, until the borrower gets his paycheck at work, according to the attorney general. These loans are illegal in New York.
email: jstaas@buffnews.com
