~/

Transcription

1 IN THE CIRCUIT COURT OF THE NINTH JUDICIAL CIRCUIT, IN AND FOR ORANGE COUNTY, FLORIDA CIVIL ACTION STATE OF FLORIDA OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, v. Plaintiff, CASE NO: VANDERBILT & ASSOCIATES, LLC, a Florida limited liability company, BUCHANAN CAPITAL MANAGEMENT, LLC, a Florida limited liability company a/k!a Buchanon Capital Management, LLC, and MERRILL T. MILLER, an individual, Defendants ~/ COMPLAINT Plaintiff, State of Florida, Office of the Attorney General, Department of Legal Affairs (the "Plaintiff' or the "Attorney General"), sues Defendants, Vanderbilt & Associates, LLC, a Florida limited liability company ("Vanderbilt"), Buchanan Capital Management, LLC, a Florida limited liability company ("Buchanan"), and Merrill T. Miller ("Miller"), and alleges that: JURISDICTION AND VENUE I. This is an action for injunctive relief, restitution, declaratory relief, civil penalties and other relief against Defendants in excess of $15,000.00, pursuant to the Florida Deceptive and Unfair Trade Practices Act (the "Act"), Chapter 501, Part II, Florida Statutes (2012), and the Florida Consumer Collection Practices Act (the "FCCPA"), Chapter 559, Part VI, Florida Statutes (2012). 1

2 2. This Court has jurisdiction over the subject matter pursuant to Section , Florida Statutes (2012), the provisions of the Act and the FCCPA. The granting of injunctive and other equitable relief is within the jurisdiction of the Circuit Court, and the amount in controversy satisfies the jurisdictional threshold of the Circuit Court. 3. The principal place of business and residence of Defendants is in Orange County, Florida. The violations alleged herein affect or occurred in more than one judicial circuit in the State of Florida, including Orange County, Florida. Accordingly, venue is proper in Orange County in the Ninth Judicial Circuit pursuant to the provisions of the Act and Sections and , Florida Statutes (2012). 4. All actions material to this Complaint have occurred within four years of the filing date of this action. 5. All conditions precedent to this action have been performed or have occurred. THE PARTIES PLAINTIFF 6. Plaintiff is an "enforcing authority" of the Act and is authorized to bring this action and seek injunctive and other statutory and civil relief pursuant to the Act. 7. Plaintiff has conducted an investigation and has determined that enforcement action against the Defendants serves the public interest. DEFENDANTS 8. Vanderbilt and Buchanan are both active Florida limited liability companies with their principal places of business located in Orange County, Florida. Buchanan has also been known as Buchanon Capital Management, LLC. According to records of the Florida Department of State, Division of Corporation (the "Division"), Buchanan is a managing member of 2

3 Vanderbilt. 9. Miller is an individual residing in Orange County, Florida and is an owner and president of Buchanan and Vanderbilt. He controls, participates in or possesses the authority to control the acts and practices of Buchanan and Vanderbilt. FACTUAL ALLEGATIONS 10. Vanderbilt and Buchanan engage in the business of collecting consumer debt. Neither is currently licensed with the Florida Office of Financial Regulation ("OFR"). Buchanan was licensed with OFR as a Consumer Collection Agency ("CCA") under the FCCPA, but its license expired on December 31, Vanderbilt has never held a license as a CCA. It applied to OFR for the CCA license, but was denied. 11. In addition to his interests in Vanderbilt and Buchanan, Miller was the owner and president of Kam Financials, Inc., E & M Associates, Inc. d/b/a Rite Coast Financials, Inc., Five M Financial, Inc., and Levine & Cohen and Associates, LLC (collectively, the "Miller Companies") which were also engaged in consumer debt collection. 12. In 2011, OFR began an investigation of Miller and the Miller Companies for violations of the FCCPA. On July 12, 2011, OFR conducted an on-site visit to a strip mall location on Old Cheney Hwy in Orlando, Florida (the "Cheney Offices") where.miller and the Miller Companies were operating at the time. During the site visit, OFR collected business records, outbound call scripts and certain recordings of inbound calls from Miller and the Miller Companies. OFR representatives interviewed Miller, Richard Pugh ("Pugh"), the "office manager", and other employees of the Miller Companies. 13. The call scripts, audio recordings, and interviews of Miller, Pugh and the other employees revealed that Miller and the Miller Companies were engaged in unlawful debt 3

4 collection schemes based on false and misleading representations to consumers in violation of thefccpa. 14. The schemes unfolded in various ways. Sometimes a collection representative claimed to be a process server with legal papers to serve on the consumer. The representative gave the consumer a "case file number" for the "pending civil lawsuit" and instructed the consumer to call the "lawyer's office" which was, in fact, one of the Miller Companies. The Miller Companies perpetuated the scheme by pretending to be a law firm handling the lawsuit. Other times, collection representatives claimed to be law enforcement agents, representatives of government agencies or from a county clerk's office. 15. These representations were false and were designed to intimidate or scare consumers into paying debts which in many cases were non-existent, already paid in full, or for which neither Miller nor the Miller Companies had any legal right to collect. 16. On February 20, 2012, OFR filed an Administrative Action against Miller and the Miller Companies alleging violations of the FCCP A based on the unlawful debt collection schemes. On November 14, 2012, the parties entered into a Stipulation and Consent Agreement (the "Consent Agreement"), a copy of which is attached hereto as Exhibit "A". 17. Section 3 of Consent Agreement sets forth factual findings that Miller and the Miller Companies "have routinely attempted to enforce illegitimate debt or nonexistent legal rights in the collection of consumer debts in violation of Section (9), Florida Statutes", "have routinely utilized communication simulating legal or judicial process in the collection of consumer debts" and "have routinely utilized communication giving the false impression of attorney affiliation in the collection of consumer debts". 4

5 18. On November 16, 2012, OFR entered a Final Order against Miller and the Miller Companies. A copy of the Final Order is attached as Exhibit "B". The Final Order incorporated the Consent Agreement and required, among other things, that Miller and the Miller Companies pay an Administrative Fine of $40,000.00, undertake corrective actions regarding any current and future debt collection businesses, and not engage in further violations of the FCCP A. 19. Despite the Final Order, Miller continued the unlawful debt collection activities through his new companies, Vanderbilt and Buchanan, which operated for a time at the Cheney Offices. 20. Miller engages in the debt collection business through various companies, including Vanderbilt, Buchanan, the Miller Companies and others to disguise his identity, avoid consumer complaints, and evade responsibility for the unlawful activities. According to former employees whose affidavits were provided to OFR in the course of OFR's investigation, Miller trains the managers, employees and representatives of his debt collection companies to use false and misleading representations and other unlawful practices to collect consumer debts. 21. The Attorney General became aware of Defendants' continuing debt collection activities in May 2012 through consumer complaints that alleged the same or similar debt collection schemes as those engaged in by Miller and the Miller Companies. The Attorney General, the Better Business Bureau of Central Florida, OFR and the Florida Department of Agriculture and Consumer Services have received hundreds of consumer complaints against the Defendants. 22. Until recently, Miller, Vanderbilt, Buchanan and all the Miller Companies operated out of the Cheney Offices. The same collection representatives worked for Miller and 5

6 the Miller Companies and may still be working for Miller, Vanderbilt and Buchanan at their new location in Orange County, Florida. 23. Sometime after entry of the Final Order in 2012, Miller, the Miller Companies, Vanderbilt and Buchanan vacated the Cheney Offices. Through its investigation, Plaintifflocated Miller, Vanderbilt and Buchanan operating their debt collection schemes out of new offices in Orange County, Florida. COUNT I VIOLATION OF THE FLORIDA DECEPTIVE AND UNFAIR TRADE PRACTICES ACT, CHAPTER 501, PART II, FLORIDA STATUTES 24. Plaintiff incorporates and re-alleges paragraphs 1 through 23 above as if fully set forth hereinafter. 25. Section (1) of the Act provides that "[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." 26. At all times material hereto, Defendants were engaged in "trade or commerce" as defined in Section (8) of the Act. 27. The provisions of the Act are to be "construed liberally to promote the protection" of the "consuming public and legitimate business enterprises from those who engage in unfair methods of competition, or unconscionable, deceptive, or unfair acts or practices in the conduct of any trade or commerce." Section , Florida States (2012) 28. Section (3) of the Act defines a violation as "any violation of this act or the rules adopted under this act and may be based upon any of the following as of July 1, 2006: (a) Any rules promulgated pursuant to the Federal Trade Commission Act, 15 U.S.C. ss. 41 et seq.; 6

7 (b) The standards of unfairness and deception set forth and interpreted by the Federal Trade Commission or the federal courts; (c) Any law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices." 29. Here, Defendants make representations to consumers that they are process servers, law enforcement agents, representatives of government agencies or representatives of a county clerk's office. These representations are false and misleading. They are designed to intimidate consumers into paying debts that may not be valid, may already have been paid, or for which Defendants may not have any legal right to collect. The false and misleading representations constitute deceptive acts and practices in violation of the Act. 30. Defendants' violations of the Act are also based on violation of the FCCPA. The FCCP A was enacted to protect consumers from unlawful debt collection activity. It proscribes unfair, deceptive and unconscionable acts and practices in collecting consumer debts. Section ofthe FCCPA enumerates specific acts and practices which are prohibited. 31. Here, Defendants are violating several of the specific prohibitions of Section of the FCCPA. including, but not limited to: (a) Simulating a law enforcement officer or a representative of any governmental agency; (b) Orally communicating with a debtor in such a manner as to give the false impression or appearance that such person: is or is associated with an attorney; (c) Using profane, obscene, vulgar, or willfully abusive language in communicating with the debtor or any member of her or his family; (d) Refusing to provide adequate identification of herself or himself or her or his employer or other entity whom she or he represents when requested to do so by a debtor from whom she or he is collecting or attempting to collect a consumer debt; 32. In addition to engaging in the prohibited acts set forth above, Defendants are attempting to enforce illegitimate debt or nonexistent legal rights in the collection of consumer 7

8 debts in violation of Section (9) of the FCCPA. 33. Even if Defendants claim to have legal rights to collect the consumer debts, and that the debts have been properly assigned to them, Defendants fail to give debtors "written notice of such assignment as soon as practical after the assignment is made, but at least 30 days before any action to collect the debt", as required by Section of the FCCPA. The failure to give this written notice to consumers violates the FCCP A. 34. Although Vanderbilt and Buchanan are engageing in the collection of consumer debts in Florida, neither is a licensed CCA under the FCCP A. 35. Defendants have violated, and are likely to continue to violate, the Act by engaging in the deceptive acts or practices set forth above and by violating the FCCP A. As a result, consumers have suffered and will continue to suffer substantial injury. 36. Moreover, Defendants' continuing violations of the FCCPA despite the OFR Final Order show "willful conduct". Defendants knew or should have known their debt collection schemes were in violation of the FCCP A and the Act. 37. The Attorney General, as enforcing authority under the FDUTPA, has statutory authority to seek injunctive relief pursuant to Section (1)(b) of the Act. WHEREFORE, Plaintiff respectfully requests that this Court: A. Temporarily and permanently enjoin Defendants and their officers, agents, servants, employees, attorneys and those persons in active concert or participation with them who receive actual notice of the Court's orders: (i) from engaging in any unconscionable, deceptive, or unfair acts or practices in the collection of consumer debts in violation of the Act, including, but not limited to, violations of the FCCP A; and, 8

9 (ii) from engaging in any violation of the FCCP A, including a specific prohibition that in collecting any consumer debts, Defendants shall not; (!) Simulate in any manner a law enforcement officer or a representative of any govermnental agency; (2) Use or threaten force or violence; (3) Tell a debtor who disputes a consumer debt that she or he or any person employing her or him will disclose to another, orally or in writing, directly or indirectly, information affecting the debtor's reputation for credit worthiness without also informing the debtor that the existence of the dispute will also be disclosed as required by subsection (6); (4) Communicate or threaten to communicate with a debtor's employer prior to obtaining final judgment against the debtor, unless the debtor gives her or his permission in writing to contact her or his employer or acknowledges in writing the existence of the debt after the debt has been placed for collection, but this shall not prohibit a person from telling the debtor that her or his employer will be contacted if a final judgment is obtained; (5) Disclose to a person other than the debtor or her or his family information affecting the debtor's reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false; ( 6) Disclose information concerning the existence of a debt known to be reasonably disputed by the debtor without disclosing that fact; (7) Willfully communicate with the debtor or any member of her or his family with such frequency as can reasonably be expected to harass the debtor or her or his family, or willfully engage in other conduct which can reasonably be expected to abuse or harass the debtor or any member of her or his family; (8) Use profane, obscene, vulgar, or willfully abusive language in communicating with the debtor or any member of her or his family; (9) Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate or assert the existence of some other legal right when such person knows that the right does not exist; (1 0) Use a communication which simulates in any manner legal or judicial process or which gives the appearance of being authorized, issued or approved by a govermnent, govermnental agency, or attorney at law, when it is not; 9

10 (II) Communicate with a debtor under the guise of an attorney by using the stationery of an attorney or forms or instnunents which only attorneys are authorized to prepare; (12)0rally communicate with a debtor in such a manner as to give the false impression or appearance that such person is or is associated with an attorney; (13)Advertise or threaten to advertise for sale any debt as a means to enforce payment except under court order or when acting as an assignee for the benefit of a creditor; (14)Publish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts; (IS) Refuse to provide adequate identification of herself or himself or her or his employer or other entity whom she or he represents when requested to do so by a debtor from whom she or he is collecting or attempting to collect a consumer debt; (16)Mail any communication to a debtor in an envelope or postcard with words typed, written or printed on the outside of the envelope or postcard calculated to embarrass the debtor; (17)Communicate with the debtor between the hours of9 p.m. and 8 a.m. in the debtor's time zone without the prior consent of the debtor; (18)Communicate with a debtor if a person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the debtor's attorney fails to respond within a reasonable period of time to a communication from the person, unless the debtor's attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication; or (19)Cause charges to be made to any debtor for communications by concealment of the true purpose of the communication, including collect telephone calls and telegram fees. (iii) from destroying, mutilating, concealing, altering, or disposing of, in any manner, any and all books, records, papers, computer disks, computer memory retention devices or the like, 10

11 computers, documents, correspondence, and other property or materials of the Defendants in any way related to Defendants' debt collection activities until further order of this Court. (iv) from dissipating, transferring, conveying, encumbering, disposing of or otherwise alienating any corporate or personal assets of Defendants, including any funds in personal bank accounts or business accounts, that are in any way related to, or generated as a result of, Defendants' debt collection activities until further order of this Court. B. Assess civil penalties against Defendants pursuant to Section , Florida Statutes (2012), in an amount not to exceed $10,000 per violation, and $15, per violation for consumers who are disabled or senior citizens pursuant to Section , Florida Statutes (2012); C. Declare Defendants' collection of any consumer debt in violation of the Act and the FCCP A invalid and unenforceable; D. Require disgorgement of profits, and award restitution to consumers for each violation; E. Order an asset freeze on all bank accounts of Defendants and that Defendants not dissipate any of their assets and preserve them for purposes of restitution and refunds to consumers; F. A ward Plaintiff reasonable attorneys' fees and costs pursuant to the provisions of Section , Florida Statutes (2012), and as otherwise allowable by applicable statutes or law; G. Enter final judgment against Defendants, jointly and severally, for damages, restitution, refunds, disgorgement of profits, civil penalties, costs and reasonable attorneys' fees. 11

12 H. A ward such other relief as the interests of justice shall require and that this Honorable Court may deem just and proper. Dated this zg-tv- day of February nts Senio Assistant Attorney General Florida Bar# Office of the Attorney General Consumer Protection Division 135 W. Central Blvd., Suite 1000 Orlando, Florida Tel: ( 407) Fax: ( 407)

13 STATE OF FLORIDA OFFICE OF FINANCIAL REGULATION OFFICE OF FINANCIAL REGULATION, Petitioner, v. KAM FINANCIALS, INC., E&M AND ASSOCIATES, INC. d/b/a RITE COAST FINANCIAL, INC., FIVE M FINANCIAL, INC. d/b/a LEVINE & COHEN AND ASSOCIATES, MERRILL MILLER as President and Owner of Kam Financial, Inc., E&M and Associates d/b/a Right Coast Financial, Inc. and Five M Financial, Inc. d/b/a Levine & Cohen and Associates, MENDENHALL & ASSOCIATES, INC., RICHARD PUGH as President and Owner of Mendenhall & Associates, Inc., Administrative Proceeding No.: 3115-F-9/11 Respondents. STIPULATION AND CONSENT AGREEMENT The State of Florida, Office of Financial Regulation (the "Office") and KAM Financials, Inc. ("KAM Financials"), E & M and Associates, Inc. d/b/a Rite Coast Financials, Inc. ("Rite Coast''), Five M Financial, Inc. d/b/a Levine & Cohen and Associates ("Levine & Cohen"), Merrill Miller ("Miller") as President and Owner ofkam Financials, Inc., E&M and Associates, Inc., and Five M Financial, Inc., (each collectively referred to as the "Respondents"), in consideration of the mutual promises herein recite, stipulate, and agree as follows: I. BACKGROUND: (a) Respondent KAM Financials was previously registered as a Florida consumer collection agency under registration number CCA from February 16, ~ EXHIBIT i ''P{' I

14 20 lj. to December 31, 20 II, when its registration expired. Its address of record with the Office is 1417 N. Semoran, Suite 108, Orlando, Florida (b) Rite Coast was previously registered as a Florida consumer collection agency under registration number CCA , from September 10, 2010 to December 31, 20 II, when its registration expired. Its address of record with the Office is 5732 Old Cheney Hwy., Orlando, Florida (c) Levine & Cohen was previously registered as a Florida consumer collection agency under registration number CCA from June 27, 20 II until December 31, 2011, when its registration expired. Its address of record with the office is 5734 Old Cheney Hwy., Orlando, Florida Five M Financial, Inc. is the owner of Levine & Cohen. (d) Merrill Miller is President and owner of Kam Financials, Rite Coast and Five M Financial, Inc. On July 12, 2011, the Office initiated an examination of the Respondents' books and records concerning their consumer collection agency practices. On February 20, 2012, the Office issued an Administrative Complaint and Notice of Rigbts to Respondents, alleging violations of Chapter 559, Florida Statutes. The Respondents timely submitted an "Answer to Administrative Complaint and Request for Formal Administrative Hearing", denying the allegations. 2. JURISDICTION: The Office is the state agency charged with the administration and enforcement of Chapter 559, Florida Statutes, and the rules promulgated thereto. The Office has jurisdiction over the Respondents pursuant to Chapter 559, Florida Statutes. 2

15 3. FINDINGS: The Respondents neither admit nor deny the following findings alleged in the Administrative Complaint: (a) Respondents have routinely attempted to enforce illegitimate debt or nonexistent legal rights in the collection of consumer debts in violation of Section (9), Florida Statutes. (b) Respondents have routinely utilized communication simulating legal or judicial process in the collection of consumer debts, in violation of Section (10), Florida Statutes. (c) Respondents have routinely utilized communication giving the false impression of attorney affiliation in the collection of consumer debts, in violation of Section (12), Florida Statutes. (d) Respondents have routinely failed to provide adequate identification of themselves when requested by debtors in the collection of consumer debts, in violation of Section (15), Florida Statutes. 4. CONSIDERATION: The parties agree that the issues raised in this proceeding can be expeditiously resolved without the expense of litigation and a formal bearing. Therefore, in compromise and settlement of the matters contained herein, Respondents agree to the following: (a) Cease and Desist. Respondents agree to IMMEDIATELY CEASE AND DESIST from any and all violations of Chapter 559, Florida Statutes, and the Office's rules promulgated thereunder and shall henceforth strictly comply with all provisions of Chapter 559, Florida Statutes and the rules promulgated thereto. 3

16 (b) Invalidation of Registrations. 1. The registration of Respondent KAM Financials, Inc. expired on December 31, 20 II. No collection business may be conducted under this registration. 2. The registration of Respondent Five M Financial, Inc. d/b/a Levine & Cohen and Associates expired on December 31, No collection business may be conducted under this registration. 3. The registration of Respondent E&M and Associates d/b/a Right Coast Financial, Inc. expired on December 31,2011. No collection business may be conducted under this registration. (c) Corrective Action. Respondents shall take the following corrective action for any and all current and future collection businesses established pursuant to Chapter 559, Florida Statutes: I. Within I 0 days of the entry of a Final Order adopting this Stipulation, the Respondents will designate a person in writing to be responsible for timely calendaring, completing, and verizying the issuance of registrations and renewals. 2. Respondents will use an electronic collection and document management system. The system shall be designed to ensure compliance with the requirements of Rule 69V , Florida Administrative Code, concerning contents of books and records. Respondents will use the electronic collection and document management system to: (a) Sort and identity documents by consumer account and clearly save all consumer activity in the account including all necessary information as outlined in Rule 69V , F.A.C. (b) Catalog and sort the identity of creditors pertaining to individual consumer accounts. 4

17 (c) Create a clear record of payments to be sorted by consumer, allowing Respondents to create and manage a record of outbound contacts or attempted contacts with a debtor. (d) Sort and cross-reference all incoming and outgoing correspondence with regards to accounts, and enable Respondents' supervisors to monitor and enforce compliance with collection agents as well as to address any complaints that may arise. (e) Save all recordings of incoming and outgoing calls in their entirety, related to an account being collected, in a manner that allows managers to identil)r the employee making the call and the person and phone number being called, as well as the collection account related to the call. (t) Save recordings of consumers authorizing payments on accounts in order to minimize any dispute or confusion subsequent to the conversation with the consumer. (g) Ensure that all records are maintained for the statotorily required period of time by utilizing the time-stamping function of the electronic collection and document management system. Respondents will ensure that the software will not allow a collection agent or manager to delete information or activity prior to the period noted herein. 3. Furthermore, Respondents will develop clear and easy to follow policies that dictate the safe destruction of collection information per rule 69V , F.A.C. 4. Respondents will institute additional personnel training in order to maintain standards of compliance, putting into action the following procedures: (a) Weekly staff meetings with the personnel operating dialers. The focus of these meetings shall be on compliance and to serve as a refresher course for compliance related issues. (b) Weekly staff meetings with collection agents. These meetings shall be partially focused on compliance and identcying any technical issues that may be hindering compliance. Respondents will maintain record of these meetings, including meeting agendas, minutes and/or meeting notes, for the Office's review upon request. 5. Respondents will implement the following processes concerning complaint 5

18 handling: by: (a) Any and all complaints or lawsuits received by Respondent concerning collection activity will be cataloged and tracked. (b) Complaints will be placed into a tracking system within 24 hours of receipt and sent to Respondents' General Counsel for review within 72 hours of receipt. {c) Respondents shall ensure that responses are provided to inquiries from the Office with in the requested time frame. 6. Respondents will diligently verity that debts are legitimate and collectible (a) Requiring an affirmative guarantee from creditors of the validity of debts authenticating the data in each portfolio purchased with the original creditor or lender. {b) Requesting that creditors launch fraud investigations any time a dispute letter is received from a consumer from who Respondents are attempting to collect a debt. (c) Using the electronic collection and document management system to verity/validate accounts on an expedited process. 7. Communications with consumers shall only be conducted in a statutorily compliant manner. Specifically: (a) No threat to sue shall be made when a suit cannot be brought. (b) The bona fide amount owed and the method of calculation the amount shall be made clear to the consumer during the initial collection attempt. {c) Respondents will disclose their status as debt collectors and not attempt to simulate legal or judicial process. (d) Collection agents shall identify themselves using their alias when working for one of the Respondents collecting a debt. If a consumer requests more information, it shall be supplied so long as the collection agent does not have reason to believe his/her wellbeing is being placed at risk. Further, Respondents' managers shall maintain an accurate list of all authorized aliases of employees and former employees. (e) Respondents will provide to the Office for review, all scripts to be used by its collectors in the collection of debts from consumers. (e) Future Violations. Respondents agree that future statutory violations and 6

19 failure to otherwise comply with any of the terms of this Stipulation and Consent Agreement will result in increased administrative fines and additional adverse agency action permitted by law. (f) Administrative Fine: Respondents shall pay an ADMINISTRATIVE FINE of $40, (forty thousand dollars) in two equal payments. The first payment of $28, (twenty-eight thous'and dollars) will be paid with the return of this Stipulation and Consent Agreement. The remaining payment of $12, (twelve thousand dollars) will be made within 90 days Of entry of the Final Order adopting this Stipulation. This administrative fine shall be submitted in the form of a cashier's cheek or money order made payable to the "Department of Financial Services", and sent to the attention of Ekecia Grayson, Assistant General Counsel, OFR Division of Consumer Finance, P.O. Box 8050, Tallahassee, FL The checks or money orders should reference the case number on this Stipulation and Consent Agreement. Respondents agree that (1) in accordance with section , Florida Statutes, regarding the deposit of monies that the tendered fine or settlement check proceeds may be deposited in. advance of full execution or acceptance of the proposed settlement agreement and (2) such deposit shall not be construed as a final acceptance of the Stipulation absent full execution thereof and entry of the Final Order adopting same. 5. ENTRY AND EFFECT OF FINAL ORDER: The Respondents consent to the entry of a Final Order adopting and incorporating this Stipulation and Consent Agreement by reference. The Office and the Respondents further consent and agree to comply with the provisions of the Final Order upon its entry. The Parties understand and agree that the form and terms of the Final Order are material terms of this Stipulation and Consent Agreement. 7

20 6. WAIVER: By the Respondents' consent to the entry of the Final Order with respect to this Stipulation, the Respondents knowingly and voluntarily waive: (a) (b) any right to an administrative hearing provided by Chapter 120, Florida Statutes; any requirement that the Office's Final Order contain separately stated Findings of Fact and Conclusions oflaw or a Notice of Rights; (c) any right to issuance of a recommended order by an Administrative Law Judge from the Division of Administrative Hearings or a Hearing Officer from the Office; and (d) any and all rights to object to or challenge in any judicial proceeding, including but not limited to, an appeal pursuant to section , Florida Statutes, any term, condition, obligation, or duty expressly created by the Final Order. 7. RELEASES: Upon full execution of this Agreement, Respondents waive and release the Office's agents and representatives, and employees from any and all causes of action that Respondents may have arising from or relating to the subject matter hereof. The Office agrees to accept this release on behalf of itself, its agents, representatives and employees without acknowledging and expressly denying that any such cause or causes of action may exist. 8. FAILURE TO COMPLY: Respondents acknowledge, concur and stipulate that Respondents' intentional failure to comply with any of the terms, obligations and conditions of this Stipulation and Consent Agreement and the Final Order adopting same is a violation of the Stipulation and the Final Order entered pursuant to Chapters 120 & 559, Florida Statutes. Such non-compliance may result in the issuance of an emergency cease and desist order. However, nothing herein shall be construed to limit Respondents' right to contest any finding or determination of non-compliance. 8

21 9. ATTORNEY'S FEES: Each party herein shall be solely responsible for its attorneys' fees and costs incurred up to and including entry of the Final Order in this matter. I 0. SEVERABILITY: Each party herein agrees that if any provision of this Stipulation and Consent Agreement or the application thereof to any person or circumstance is invalid, the invalidity shall not affect other provisions of the Stipulation and Consent Agreement or the Final Order adopting it, which shall be given effect without the invalid provision(s), and to this end, the provisions of this Stipulation and Consent Agreement are severable. II. CORPORATE AUTIIORITY: The undersigned representatives of Respondents have full authority to enter into and bind Respondents to the terms and conditions of this Stipulation and Consent Agreement. WHEREFORE, the undersigned parties hereby acknowledge and agree to the terms and conditions of the foregoing Stipulation, subject to final approval by the Commissioner of the Office of Financial Regulation, by written consent on the last date executed below. (This page is intentionally left blank with signatures appearing on page eight.) 9

22 BY: By: u..-s- ~~ Date Its: Print Name BY: By: Its: E&M AND ASU, INC. d/b/a RITE COAST FINANCIAL, INC.?t. 11~5-t?. Si.9 ~ I Date rre e/\-'<;- Print Name BY: By: Its: 41,. 11~}-rz FIVE M FINANCIAL;za LEVINE & COHEN AND ASSOCIATES Sigf(.ture de 1 t'<st It-T Date Print Name BY: MERRILL MILLER By: qj(~ 1/-f-12 Its: Signature Date Print Name State of Florida County of 0 ron 5, Before me, the undersigned notary as Pc%;cl en± public, personally appeared of f>uchqnern C. ffil:p.c., who upon being duly sworn, states that (s)he has read and understands the foregoing Stipulation and 10

23 voluntarily signed same. Sworn to and subscribed before me this day of Ylovt'mh-e.r ' N tary Public Personally Known ---OR Produced Identification --- ~!2, L'. Type ofldentification Produced c:1 rf r< 1 (P yj S"f. OFFICE OF FINANCIAL REGULATION By:Gr~(_~ Director, Division of Consumer Finance Office of Financial Regulation II

24 STATE OF FLORIDA OFFICE OF FINANCIAL REGULATION INRE: KAM FINANCIALS, INC., E&M AND ASSOCIATES, INC. d/b/a RITE COAST FINANCIAL, INC., FIVE M FINANCIAL, INC. d/b/a LEVINE & COHEN AND ASSOCIATES, MERRILL MILLER as President and Owner of Kam Financial, Inc., E&M and Associates d/b/a Right Coast Financial, Inc. and Five M Financial, Inc. d/b/a Levine & Cohen and Associates, MENDENHALL & ASSOCIATES, INC., RICHARD PUGH as President and Owner of Mendenhall & Associates, Inc., Administrative Proceeding No F-9/11 Respondents ~' FINAL ORDER The State of Florida, Office of Financial Regulation (the "Office") and KAM Financials, Inc., E & M and Associates, Inc. d/b/a Rite Coast Financials, Inc., Five M Financial, Inc. d/b/a Levine & Cohen and Associates, and Merrill Miller, (each collectively referred to as the "Respondents") having entered into the Stipulation and <;:onsent Agreement ("Agreement"), attached hereto, last dated tv VFmS61( 14- J 2012, resolving and concluding this matter, only as to the above specified Respondents, it is therefore ORDERED: 1. The Agreement entered into by the Office and KAM Financials, Inc., E & M and Associates, Inc. d/b/a Rite Coast Financials, Inc., Five M Financial, Inc. d/b/a Levine & Cohen and Associates, and Merrill Miller, attached hereto, is incorporated EXHIBIT,, 6rr

25 herein by reference as if set forth at length; and Agreement. 2. The parties shall comply with the terms and conditions of the incorporated. lh DONE AND ORDERED at Tallahassee, Leon County, Florida this ~day of 1~,2012. ~s~: C~ssioner Office offinancial Regulation NOTICE OF RIGHT TO JUDICIAL REVIEW A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ' ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION , FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING THE ORIGINAL NOTICE OF APPEAL WITH THE AGENCY CLERK, OFFICE OF FINANCIAL REGULATION, OFFICE OF THE GENERAL COUNSEL, SUITE 526, FLETCHER BUILDING, 200 E. GAINES STREET, TALLAHASSEE, FLORIDA , AND A COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY SECTION 35.22, FLORIDA STATUTES, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, 2000 DRAYTON DRIVE, TALLAHASSEE, FLORIDA , TALLAHASSEE, FLORIDA , OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDmON OF THE ORDER TO BE REVIEWED. 2

26 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Final Order was served via certified U.S. Mail, return receipt requested, on counsel for Respondents, Kelly A,<f~-Brown, 215 S. Monroe Street, Suite 500, Tallahassee, Florida this~"!!kayof Nov~/M)a:.., b57 55b9 Ekecia M. Grayson Florida Bar No: Assistant General Counsel Office of Financial Regulation P.O. Box 8050 Tallahassee, FL Telephone: (850) Facsimile: (850) Ekecia.Grayson@tlofr.com 3

27 STATE OF FLORIDA OFFICE OF FINANCIAL REGULATION OFFICE OF FINANCIAL REGULATION, Petitioner, v. KAM FINANCIALS, INC., E&M AND ASSOCIATES, INC. d/b/a RITE COAST FINANCIAL, INC., FIVE M FINANCIAL, INC. d/b/a LEVINE & COHEN AND ASSOCIATES, MERRILL MILLER as President and Owner of Kam Financial, Inc., E&M and Associates d/b/a Right Coast Financial, Inc. and Five M Financial, Inc. d/b/a Levine & Cohen and Associates, MENDENIIALL & ASSOCIATES, INC., RICHARD PUGH as President and Owner of Mendenhall & Associates, Inc., Administrative Proceeding No.: 3115-F-9/11 Respondents. STIPULATION AND CONSENT AGREEMENT The State of Florida, Office of Financial Regulation (the "Office") and KAM Financials, Inc. ("KAM Financials"), E & M and Associates, Inc. d/b/a Rite Coast Financials, Inc. ("Rite Coast"), Five M Financial, Inc. d/b/a Levine & Cohen and Associates ("Levine & Cohen"), Merrill Miller ("Miller") as President and Owner of KAM Financials, Inc., E&M and Associates, Inc., and Five M Financial, Inc., (each collectively referred to as the "Respondents"), in consideration of the mutual promises herein recite, stipulate, and agree as follows: 1. BACKGROUND: (a) Respondent KAM Financials was previously registered as a Florida consumer collection agency under registration number CCA from February 16, 1

28 20ll to December 31, 2011, when its registration expired. Its address of record with the Office is 1417 N. Semoran, Suite 108, Orlando, Florida (b) Rite Coast was previously registered as a Florida consumer collection agency under registration number CCA , from September 10, 2010 to December 31,2011, when its registration expired. Its address of record with the Office is 5732 Old Cheney Hwy., Orlando, Florida (c) Levine & Cohen was previously registered as a Florida consumer collection agency under registration number CCA from June 27, 20 II until December 31,2011, when its registration expired. Its address of record with the office is 5734 Old Cheney Hwy., Orlando, Florida Five M Financial, Inc. is the owner of Levine & Cohen. (d) Merrill Miller is President and owner of Kam Financials, Rite Coast and Five M Financial, Inc. On July 12, 2011, the Office initiated an examination of the Respondents' books and records concerning their consumer collection agency practices. On February 20, 2012, the Office issued an Administrative Complaint and Notice of Rights to Respondents, alleging violations of Chapter 559, Florida Statutes. The Respondents timely submitted an "Answer to Administrative Complaint and Request for Formal Administrative Hearing", denying the allegations. 2. JURISDICTION: The Office is the state agency charged with the administration and enforcement of Chapter 559, Florida Statutes, and the rules promulgated thereto. The Office has jurisdiction over the Respondents pursuant to Chapter 559, Florida Statutes. 2

29 3. FINDINGS: The Respondents neither admit nor deny the following findings alleged in the Administrative Complaint: (a) Respondents have routinely attempted to enforce illegitimate debt or nonexistent legal rights in the collection of consumer debts in violation of Section (9), Florida Statutes. (b) Respondents have routinely utilized communication simulating legal or judicial process in the collection of consumer debts, in violation of Section (10), Florida Statutes. (c) Respondents have routinely utilized communication giving the false impression of attorney affiliation in the collection of consumer debts, in violation of Section (12), Florida Statutes. (d) Respondents have routinely failed to provide adequate identification of themselves when requested by debtors in the collection of consumer debts, in violation of Section (15), Florida Statutes. 4. CONSIDERATION: The parties agree that the issues raised in this proceeding can be expeditiously resolved without the expense oflitigation and a formal hearing. Therefore, in compromise and settlement of the matters contained herein, Respondents agree to the following: (a) Cease and Desist. Respondents agree to IMMEDIATELY CEASE AND DESIST from any and all violations of Chapter 559, Florida Statutes, and the Office's rules promulgated thereunder and shall henceforth strictly comply with all provisions of Chapter 559, Florida Statutes and the rules promulgated thereto. 3

30 (b) Invalidation of Registrations. I. The registration of Respondent KAM Financials, Inc. expired on December 31, 20 II. No collection business may be conducted under this registration. 2. The registration of Respondent Five M Financial, Inc. d/b/a Levine & Cohen and Associates expired on December 31, No collection business may be conducted under this registration. 3. The registration of Respondent E&M and Associates d/b/a Right Coast Financial, Inc. expired on December 31,2011. No collection business may be conducted under this registration. (c) Corrective Action. Respondents shall take the following corrective action for any and all current and future collection businesses established pursuant to Chapter 559, Florida Statutes: I. Within I 0 days of the entry of a Final Order adopting this Stipulation, the Respondents will designate a person in writing to be responsible for timely calendaring, completing, and verizying the issuance of registrations and renewals. 2. Respondents will use an electronic collection and document management system. The system shall be designed to ensure compliance with the requirements of Rule 69V , Florida Administrative Code, concerning contents of books and records. Respondents will use tbe electronic collection and document management system to: (a) Sort and identity documents by consumer account and clearly save all consumer activity in the account including all necessary infonnation as outlined in Rule 69V , F.A.C. (b) Catalog and sort the identity of creditors pertaining to individual consumer accounts. 4

31 (c) Create a clear record of payments to be sorted by consumer, allowing Respondents to create and manage a record of outbound contacts or attempted contacts witb a debtor. (d) Sort and cross-reference all incoming and outgoing correspondence witb regards to accounts, and enable Respondents' supervisors to monitor and enforce compliance witb collection agents as well as to address any complaints tbat may arise. (e) Save all recordings of incoming and outgoing calls in tbeir entirety, related to an account being collected, in a manner tbat allows managers to identify tbe employee making the call and the person and phone number being called, as well as tbe collection account related to tbe call. (f) Save recordings of consumers authorizing payments on accounts in order to minimize any dispute or confusion subsequent to tbe conversation witb the consumer. (g) Ensure tbat all records are maintained for tbe statutorily required period of time by utilizing the time-stamping function of the electronic collection and document management system. Respondents will ensure that the software will not allow a collection agent or manager to delete information or activity prior to the period noted herein. 3. Furthermore, Respondents will develop clear and easy to follow policies tbat dictate the safe destruction of collection information per rule 69V , F.A.C. 4. Respondents will institute additional personnel training in order to maintain standards of compliance, putting into action tbe following procedures: (a) Weekly staff meetings witb tbe personnel operating dialers. The focus of these meetings shall be on compliance and to serve as a refresher course for compliance related issues. (b) Weekly staff meetings witb collection agents. These meetings shall be partially focused on compliance and identifying any technical issues tbat may be hindering compliance. Respondents will maintain record of tbese meetings, including meeting agendas, minutes and/or meeting notes, for tbe Office's review upon request. 5. Respondents will implement the following processes concerning complaint 5

32 handling: by; (a) Any and all complaints or lawsuits received by Respondent concerning collection activity will be cataloged and tracked. (b) Complaints will be placed into a tracking system within 24 hours of receipt and sent to Respondents' General Counsel for review within 72 hours of receipt. (c) Respondents shall ensure that responses are provided to inquiries from the Office with in the requested time frame. 6. Respondents will diligently verity that debts are legitimate and collectible (a) Requiring an affirmative guarantee from creditors of the validity of debts authenticating the data in each portfolio purchased with the original creditor or lender. (b) Requesting that creditors launch fraud investigations any time a dispute letter is received from a consumer from who Respondents are attempting to collect a debt. (c) Using the electronic collection and document management system to verify/validate accounts on an expedited process. 7. Communications with consumers shall only be conducted in a statutorily compliant manner. Specifically: (a) No threat to sue shall be made when a suit cannot be brought. (b) The bona fide amount owed and the method of calculation the amount shall be made clear to the consumer during the initial collection attempt. (c) Respondents will disclose their status as debt collectors and not attempt to simulate legal or judicial process. (d) Collection agents shall identity themselves using their alias when working for one of the Respondents collecting a debt. If a consumer requests more information, it shall be supplied so long as the collection agent does not have reason to believe his/her wellbeing is being placed at risk. Further, Respondents' managers shall maintain an accurate list of all authorized aliases of employees and former employees. (e) Respondents will provide to the Office for review, all scripts to be used by its collectors in the collection of debts from consumers. (e) Future Violations. Respondents agree that future statutory violations and 6

33 failure to otherwise comply with any of the terms of this Stipulation and Consent Agreement will result in increased administrative fines and additional adverse agency action permitted by law. (f) Administrative Fine: Respondents shall pay an ADMINISTRATIVE FINE of $40, (forty thousand dollars) in two equal payments. The first payment of $28, (twenty-eight thousand dollars) will be paid with the return of this Stipulation and Consent Agreement. The remaining payment of $12, (twelve thousand dollars) will be made within 90 days of entry of the Final Order adopting this Stipulation. This administrative fine shall be submitted in the form of a cashier's check or money order made payable to the "Department of Financial Services", and sent to the attention of Ekecia Grayson, Assistant General Counsel, OFR Division of Consumer Finance, P.O. Box 8050, Tallahassee, FL The checks or money orders should reference the case number on this Stipulation and Consent Agreement. Respondents agree that (1) in accordance with section , Florida Statutes, regarding the deposit of monies that the tendered fine or settlement check proceeds may be deposited in advance of full execution or acceptance of the proposed settlement agreement and (2) such deposit shall not be construed as a final acceptance of the Stipulation absent full execution thereof and entry of the Final Order adopting same. 5. ENTRY AND EFFECT OF FINAL ORDER: The Respondents consent to the entry of a Final Order adopting and incorporating this Stipulation and Consent Agreement by reference. The Office and the Respondents further consent and agree to comply with the provisions of the Final Order upon its entry. The Parties understand and agree that the form and terms of the Final Order are material terms of this Stipulation and Consent Agreement. 7