- What's at Stake: A federal appeals court found that Nexus Services and Libre by Nexus violated multiple court orders and failed to produce documents in discovery.
- Key Insight: The defendants allegedly perpetrated a scheme to get non-English-speaking immigrants held in federal detention centers to pay hefty fees for immigration bonds.
- Expert quote: "The case is a cautionary tale of the danger in playing discovery games," said Manny Newburger, with the law firm Barron & Newburger.
A federal appeals court upheld a $366 million default judgment against two Virginia bail bond services companies and their owners for violating multiple court orders. The Consumer Financial Protection Bureau and three states had alleged that the companies perpetrated a nationwide fraud scheme against immigrants held in custody by U.S. Immigration and Customs Enforcement.
On Wednesday, the 4th Circuit Court of Appeals upheld the $366 million judgment against Nexus Services, its subsidiary Libre by Nexus, and the firms' executives Michael Donovan, Richard Moore, and Evan Ajin.
The case never went to trial because Nexus, Libre by Nexus and the other defendants refused to engage in pretrial discovery.
"Put simply, the defendants refused to meaningfully participate in discovery, including by failing to respond to the plaintiffs' discovery requests, ignoring multiple court orders compelling the disclosure of documents and other information, and by disregarding pertinent deadlines," the appeals court found.
The appeals court upheld a district court's monetary award of permanent injunctive relief totaling $366.5 million. That sum includes $230.9 million in restitution to immigrants, along with more than $111 million in civil penalties to the CFPB, $7.1 million to Virginia, $3.4 million to Massachusetts and $13.9 million to New York.
"The case is a cautionary tale of the danger in playing discovery games," said Manny Newburger, founding shareholder and vice president of the Austin, Texas, law firm Barron & Newburger.
The case dates to 2021, when the CFPB, along with the attorneys general of Virginia, Massachusetts and New York, alleged that the defendants perpetrated a scheme in which Libre by Nexus claimed it would pay immigration bonds to secure the release of non-English-speaking immigrants held in federal detention centers.
The CFPB alleged that Libre by Nexus threatened to re-detain or deport the detained immigrants for nonpayment, even as the company's owners concealed or misrepresented the true costs of services and engaged in deceptive and abusive acts or practices.
Libre by Nexus did not actually pay off the immigrants' bonds but rather created the impression that it paid cash for their bonds, and then required their immigrant customers to repay the bonds through upfront fees and monthly payments.
Further, the companies required the immigrants to pay $420 a month to wear GPS ankle monitors. Since an immigration case at the time typically took three years to resolve, a client with a $10,000 bond could expect to pay in excess of $17,000 before their immigration proceedings were even resolved, according to
In 2022, U.S. Magistrate Judge Joel C. Hoppe, who's based in Virginia's Western District, moved to sanction the defendants for noncompliance and for failing to engage in pretrial litigation. The district court found that from late 2013 to mid-2022, the companies collected more than $230 million from immigrants that had not been refunded.
In 2023, the district court entered a default judgment against the defendants. The appeals court affirmed that decision.
"We reject the Nexus defendants' confusing last-ditch effort to undermine the district court's monetary award," the appeals court said. "With austere reverence for our judicial system and its rules concerning the orderly and fair disposition of pending disputes — we reject the Nexus defendants' appellate contentions and affirm the final judgment."
Zachary Lawrence, the lawyer representing Nexus and Libre by Nexus, declined to comment.
