'Operation Corrupt Collection' targeting illegal debt collection practices

Sep 29, 2020

New York Attorney General Letitia James is one of 16 attorneys general nationwide partnering with the Federal Trade Commission on an initiative designed to crack down on illegal debt collection practices.

Officials held a conference call about “Operation Corrupt Collector” Tuesday, in which the FTC said the national effort has resulted in 50 enforcement actions in 16 states, including New York.

James said her office had five such cases involving debtor intimidation originate in the Buffalo area.

Credit Federal Trade Commission

"A temporary restraining order was granted by Hon. Catherine Nugent Panepinto in Erie County State Supreme Court enjoining Kenneth Thomas, Wesley Newman and their business entity, Midway Resolution Services LLC a/k/a Midway Resolution Group a/k/a Greenland Recovery Group, as well as Johnfredrick Daniels, Jasmine Ashley Daniels and their business entity, Jax Management Company LLC, from engaging in debt collection and related practices, such as payment processing and placing debts for collection," she said. "The corporate respondents’ bank accounts were frozen and all respondents are prohibited from destroying business records."

She said New York vs. Kenneth Thomas demonstrates how pervasive and egregious the combination of call spoofing and illicit debt collection can be. The AG said Thomas and his uncles have been involved in "illegal debt collection" before and New York is seeking to ban them from participating in the industry.

In an ironic twist, the firms that agreed to financial settlements were unable to pay the full amounts.

The FTC is also rolling out a new information campaign so consumers know their rights when it comes to debt collection and what steps to take if they get a call about a debt collection they don’t recognize. Those tips are at FTC.gov.

Andrew Smith, director of the FTC’s Consumer Protection Bureau, said people should also do their research before agreeing to pay, validating the collector and the creditor, and dispute the debt if you think you don’t owe it.