New York lawsuit targets student loan debt relief fraud
(Reuters) — New York’s attorney general on Thursday sued 10 companies and two executives over their alleged roles in a scam to induce thousands of struggling borrowers into buying student loan debt relief services that they could have received for free.
Barbara Underwood, the attorney general, said defendants typically charged more than $1,000 for their services, often imposing usurious interest rates, after luring borrowers with false claims such as being affiliated with the government, or that their help was needed if borrowers wanted relief.
Ms. Underwood said about $1.34 trillion of federal student loan debt is outstanding, and that the defendants targeted many of the nearly 10 million borrowers who are late on their payments.
The defendants include Debt Resolve Inc., a Hawthorne, New York-based company that owns some of the other defendants, and its current and former chief executives, Bruce Bellmare and Stanley Freimuth.
Hutton Ventures LLC, which is based in Santa Ana, California and is a business partner of Debt Resolve, and a financing company, Equitable Acceptance Corp. of Minnetonka, Minnesota, are also among the defendants.
“These companies sought to line their own pockets by taking advantage of students who were simply trying to pay for their education,” Ms. Underwood said in a statement.
She said the defendants’ alleged “deceptive, fraudulent and illegal conduct” has occurred since at least 2014.
Debt Resolve, Hutton and Equitable did not immediately respond to requests for comment.
The lawsuit seeks civil fines, restitution and a permanent injunction against future wrongdoing.
Read Next
-
CNA underwriter charged with fraud
A CNA Financial Corp. health care liability underwriter has been charged by federal prosecutors with fraudulently obtaining more than $13.5 million in premium payments from policies not authorized by the insurer.
