NC Attorney General sues debt-settlement firm that collected more than $1.1 million

05/16/2014 5:59 PM

02/15/2015 11:20 AM

N.C. Attorney General Roy Cooper sued a Chicago debt-settlement firm Friday in Wake County Superior Court, alleging the illegal scheme bilked 412 residents for more than $1.1 million over two years.

The AG’s lawsuit said Legal Helpers Debt Resolution illegally collected advance fees for debt settlement services and then didn’t provide the services it advertised. AG Roy Cooper’s lawsuit also names four company principals and is seeking to ban Legal Helper from doing business in North Carolina and issue refunds to state residents.

According to the suit, Legal Helpers advertised on radio, online and by mass mailings, promising to have customers debt-free within four years. The company claimed to be a national law firm and pledged to assign an attorney to work with clients throughout the debt settlement process.

The suit said the “classic advance fee scam” preyed on North Carolina residents between 2010 and 2012. The company took in more than $1.5 million from state residents and used only 15 percent to pay off customer debt.

“LHDR targeted financially distressed homeowners in North Carolina and around the country, many of whom were facing foreclosure by their mortgage lenders,” the AG’s suit says. “LHDR charged consumers substantial up-front fees for its purported loan modification services ... typically between $2,500.00 and $3,000.00.”

One of the victims was Joy Mickle, a 37-year-old Durham resident who accumulated $22,000 in debt on two credit cards after her wages were cut because of the recession, according to court filings. She paid LHDR about $2,500 for services never rendered. The company issued a $90 refund.

Another victim, Albert Cooper, 59, of Knightdale, paid Legal Helpers $2,600 after he fell behind in mortgage payments and faced foreclosure. Cooper, a retiree from the N.C. Department of Human Resources, said in an affidavit filed with the court that his Legal Helpers attorney repeatedly failed to show up for court dates in the foreclosure matter, and the clerk of court explained to him that Legal Helpers was an illegal operation.

When Cooper demanded a refund, Legal Helpers offered $500 and made a final offer of $800, both of which Cooper refused.

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