Los Angeles City Attorney Mike Feuer announced Wednesday the filing of a federal lawsuit against several businesses, claiming they ran a fraudulent student-loan debt-relief scam that bilked customers out of tens of millions of dollars.
“Students and families in Los Angeles and across California confront crushing student loan debt,” Feuer said. “The last thing they need is to have their burdens compounded by the so-called debt-relief practices we allege here. We’re fighting to secure the restitution we claim these consumers deserve and to prevent anyone else from being victimized by this alleged scam.”
The lawsuit, filed in federal court in downtown Los Angeles, was filed in conjunction with the Consumer Financial Protection Bureau, Attorney General Keith Ellison of Minnesota and Attorney General Josh Stein of North Carolina.
Named as defendants were Consumer Advocacy Center Inc., which does business as Premier Student Loan Center; True Count Staffing Inc., doing business as SL Account Management or “True Count”; Prime Consulting LLC, doing business as Financial Preparation Services or “Prime”; and affiliated entities and individuals.
Representatives of the companies could not be immediately reached for comment.
The lawsuit seeks a temporary restraining order blocking the businesses’ operations. It also asks that the court take immediate control of the businesses and freeze their assets and bank accounts, except for Consumer Advocacy Center, the assets of which under the control of a bankruptcy trustee.
Feuer said the companies told customers their student-loan debts would be forgiven shortly after paying for their services. They allegedly claimed to have “special relationships” with the federal government and federal debt-relief programs that would benefit consumers.
They also allegedly told people their payments would be credited to their outstanding loan amounts, according to Feuer.
The city attorney said the companies violated various federal and state laws designed to protect consumers and student borrowers from deceptive and fraudulent conduct, including California’s Unfair Competition Law.
One of the victims mentioned in the lawsuit claimed to have made payments to one of the defendants, Prime, for more than a year before discovering that none of the funds were sent to his actual loan servicer. Another claimed to have paid Prime more than $1,200 for promised entry into a “government-backed, student-loan-forgiveness program,” in which the company never enrolled him.
Anyone who believes they may have been victimized by one of the companies was urged to call the City Attorney’s Office at 213-978-8070.