The two principal owners of Rincon Debt Management – Jason R. Begley and Wayne W. Lunsford – will surrender more than $3.3 million worth of assets that will be used to provide refunds to victims under a settlement with the Federal Trade Commission.  In addition to the permanent ban from the debt collection business or participating in debt relief services, Begley and Lunsford are prohibited from misrepresenting the features of any financial products or services, including lending, credit repair, debt relief, and mortgage assistance relief services.

Part of the FTC’s continuing efforts to curb illegal debt collection practices, the settlement resolves FTC allegations that from April 2009 until October 2011 (when the Court shut down the operation at the FTC’s request), Begley and Lunsford deceived and abused consumers by making threats that consumers had been sued or could be arrested over debts they often did not owe.  “These debt collectors focused on Spanish-speaking consumers and other people who were strapped for cash, and preyed on them by using abusive collection tactics in violation of federal law,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.

The FTC’s complaint alleges the defendants violated the FTC Act and the FDCPA by calling consumers and their employers, family, friends, and neighbors, posing as process servers seeking to deliver legal papers that purportedly related to a lawsuit.  In some instances, the defendants threatened that consumers would be arrested if they did not respond to the calls.  The FTC also alleges defendants and their employees masqueraded as attorneys or employees of a law office, demanding that consumers pay “court costs” and “legal fees” even though the operation did not file lawsuits against consumers.

The order imposes a $23 million judgment against the defendants, which will be suspended due to their inability to pay, except for the $3 million in frozen funds held by the receiver and the personal assets both agreed to surrender.  Begley will also pay a $176,115 contempt judgment for having sold his home and other personal property in violation of the asset freeze that was imposed as part of the FTC’s case.  Lunsford is required to pay a $134,000 contempt judgment for the proceeds he received when he sold his home in violation of the asset freeze.  Litigation continues against several companies that Begley and Lunsford used as part of their debt collection scheme.