J K Harris & Company: Complaint
|STATE OF MAINE||SUPERIOR COURT|
|KENNEBEC, SS.||CIVIL ACTION|
|DOCKET NO. CV-08-||)|
|STATE OF MAINE ex rel||)|
|G. STEVEN ROWE, Attorney General||)|
|J K HARRIS & COMPANY, L.L.C.; J K||)|
|HARRIS FINANCIAL RECOVERY||)|
|SYSTEM, L.L.C.; and PROFESSIONAL||)|
|FEE FINANCING ASSOCIATES, L.L.C.||)|
This action is brought by the State of Maine, by and through its Attorney General G. Steven Rowe to obtain an injunction prohibiting defendants from engaging in unfair and deceptive trade practices in connection with the offering of tax services and to obtain restitution, civil penalties and attorney fees, pursuant to 5 M.R.S.A. §§ 207 and 209 of the Maine Unfair Trade Practices Act.
1. Plaintiff is the State of Maine, acting on relation of G. Steven Rowe, Attorney General, pursuant to authority granted in 5 M.R.S.A. § 209 and the common law.
2. Defendant J K Harris and Company, L.L.C. (JKHC) is a limited liability company registered under the laws of South Carolina with the South Carolina Secretary of State's Office. Its principal address is 4995 Lacross Road, North Charleston, South Carolina 29406. JKHC is in the business of advertising its services to file offers in compromise (OIC) with the Internal Revenue Service (IRS) on behalf of consumers, who are behind on paying their taxes, and collecting a fee from Maine consumers prior to the services being completed.
3. Defendant J K Harris Financial Recovery System, L.L.C. (FRS) is a limited liability company registered under the laws of South Carolina with the South Carolina Secretary of State's Office. FRS was in the business of offering debt resolution services to consumers in Maine and collecting fees for services prior to rendering them.
4. Defendant Professional Fee Financing Associates, L.L.C. (PFFA) is a limited liability company registered under the laws of South Carolina with the South Carolina Secretary of State's Office. PFFA extends credit to consumers in Maine by financing the contracts Maine consumers entered into with JKHC and FRS.
5. Since 1999, the Consumer Protection Division of the Maine Attorney General's Office has received 62 complaints from Maine consumers concerning the practices of JKHC. According to the complaints, defendants and John Harris, a member manager for defendants, advertised widely that JKHC could assist consumers who owe money to the IRS and state revenue offices by filing for OIC so that consumers may repay the IRS and state revenue offices for "pennies on the dollar," but that was not the case.
6. Defendants and John Harris advertised JKHC had more than 450 offices nationwide. This advertisement led consumers to believe that the JKHC representative at the office near the consumer's home would be the one who would be handling the consumer's matter for JKHC when that was not the case. Instead, the offices were only sales offices which were not open during regular business hours unless a sales agent was present to meet with prospective clients, and the person handling the consumer's OIC was actually located at the JKHC home office in Charleston, South Carolina. Once the consumer met with the sales agent, the consumer was not able to meet in person with the person handling his or her case unless the consumer traveled to Charleston, South Carolina.
7. Defendants' advertising also led consumers to believe that the work on their files would be handled by "tax experts," "tax professionals," and "ex-IRS agents," but the work of preparing the OIC offers was not performed by the trained "experts." Instead the work was handled by employees without the advertised expertise.
8. Consumers complained that JKHC did not provide the services it advertised. Consumer complaints indicated that the consumers would have a case manager assigned to their "cases," but the case managers changed frequently, and the consumers were generally asked to provide the same documentation on several different occasions because the new case manager could not located the requested information in the file. Consumers also complained that in cases where the case manager actually filed an OIC for a consumer, the information was out of date and the IRS would request updated information, further delaying the consumer's attempt to receive approval on the proposed OIC. Consumers further complained that when they tried to reach their case manager to discuss their cases, they were unable to speak with the case manager to get an accurate report of the status of their cases.
9. According to IRS statistics, the percentage of consumers who are actually approved for an OIC is very small and defendants repeatedly took money from consumers without fully investigating whether the consumer would qualify for an OIC or while knowing that the consumer would not qualify for an OIC.
10. Defendants did not always perform the work promised by their contract and, in many cases, failed to ever apply for the OIC for the consumers, yet refused to return the money the consumers had paid for its services.
11. Defendant FRS sent deceptive mailings to residents of Maine informing the consumers that someone had filed a judgment against him or her in a Maine court when that was not the case. FRS deceptively offered to help consumer negotiate the debt and repair his or her credit when there was no debt which would affect the consumer's credit.
12. Defendant PFFA financed consumer contracts for consumers who entered into installment contracts with JKHC for the preparation and filing of an OIC and to FRS for services of negotiating a debt and credit repair. When these services were not provided as promised, PFFA would not release the consumer from the debt.
CLAIM FOR RELIEF
13. Plaintiffs reallege and incorporate herein the allegations in paragraphs 1 through 12.
14. Defendants' unfair and deceptive business practices were at all times in or affecting commerce in Maine.
15. In the course of offering and selling tax services, including but not limited to OIC, defendants have engaged in unfair and deceptive acts in violation of 5 M.R.S.A. § 207.
16. Defendants' unfair and deceptive business practices include, but have not been limited to:
(a) Advertising that defendants can resolve consumers' debts to the IRS for "pennies on the dollar" when that is not the case;
(b) Advertising that defendants have more than 450 offices nationwide when the offices are nothing but sales offices that kept no regular business hours and are instead open only for pre-set appointments;
(c) Leading consumers to think that the representative at the "local" office would be the one to handle the consumers' files when that is not the case, and the consumers can not meet personally with the agent handling their files without traveling to Charleston, South Carolina;
(d) Failing to perform work on the consumers' files as promised in the contract and failing to keep the consumers updated on the progress of their files;
(e) Continually asking consumers to provide duplicates of information already provided to defendants for preparation of the OIC;
(f) Failing to return calls to consumers who want to speak with the case managers about the progress of their files;
(g) Failing to follow through on consumers' cases and filing for the OIC in a timely manner, if at all; and
(h) Sending deceptive mailings to Maine residents that they have judgments filed against them when that was not the case.
17. Pursuant to 5 M.R.S.A. § 209, the Attorney General is authorized to seek and obtain injunctive relief to restrain defendants' violations of 5 M.R.S.A. § 207.
18. Pursuant to 5 M.R.S.A. § 209, the Attorney General is authorized to seek and obtain the restoration of all moneys obtained by defendants as a result of defendants' violations of 5 M.R.S.A. § 207.
19. Pursuant to 5 M.R.S.A. § 209, the Attorney General is authorized to seek and obtain civil penalties for each and every knowing violation of 5 M.R.S.A. § 207.
20. Pursuant to 14 M.R.S.A. § 1522, the Attorney General is authorized to seek and obtain a reasonable attorney fee for the prosecution of this action.
PRAYER FOR RELIEF
WHEREFORE, plaintiff prays the Court for the following relief:
1. That the Court issue a permanent injunction restraining defendants, their agents, employees, and persons acting in concert with them from unfair or deceptive acts or practices in violation of 5 M.R.S.A. § 207, including but not limited to, the acts and practices listed in paragraph 16 of plaintiff's Claim for Relief;
2. That, pursuant to 5 M.R.S.A. § 209, the Court cancel all contracts entered into by any of the defendants in violation of 5 M.R.S.A. § 207 and order all amounts consumers have paid to any defendants pursuant to such contracts to be refunded;
3. That, pursuant to 5 M.R.S.A. § 209, the Court order defendants to restore to consumers all money they have obtained, as commissions, fees or otherwise, as a result of a violation of 5 M.R.S.A. § 207;
4. That the Court assess civil penalties against defendants for each and every knowing violation of a statute, pursuant to 5 M.R.S.A. § 209;
5. That the Court award costs and reasonable attorneys fees to the Attorney General, pursuant to 14 M.R.S.A. § 1522 and 5 M.R.S.A. § 209; and
6. That the Court award such other and further relief as may be just and proper.
G. STEVEN ROWE
Dated: June 12, 2008 _____________________________
Linda J. Conti
Maine Bar No. 3638
Assistant Attorney General
Office of the Attorney General
6 State House Station Augusta, Maine 04333-0006