Legal Helpers Debt Resolution LLC has agreed to settle charges it violated West Virginia consumer protection laws by misrepresenting to consumers that its lawyers could offer debt relief in the state.

The agreement with West Virginia Attorney General Patrick Morrisey's office bans the Nevada-based company from engaging in debt negotiations or modification services in the state. It also stipulates that Legal Helpers will pay the state $135,000, including $50,000 to be used for consumer restitution.

"This settlement sends a message to those who think they don’t have to follow the law that this kind of behavior will not be tolerated," Morrisey said in a press release. "Our Consumer Protection Division knows of at least 400 people who paid Legal Helpers a fee believing that the company would use every legal tool available to help them get out of debt. The company provided little assistance to consumers while reaping thousands of dollars in fees."

Legal Helpers and its principal owners Thomas Macey, Jeffrey Aleman, and Jason Searns, as well as former partner, Jeffrey Hyslip, denied any wrongdoing in the settlement.

Morrisey's office filed a lawsuit against Legal Helpers in Kanawha (W.Va.) Circuit Court in December. The AG's office believes more than 400 West Virginia consumers enrolled with the company and paid advance fees to help resolve their debt, only to not have the debt paid.

The lawsuit claimed that consumers who enrolled with Legal Helpers were told to stop paying creditors and instead open a new dedicated account with a third-party vendor. Consumers then made monthly payments to the third-party vendor instead of the creditor. Legal Helpers and their third-party vendors paid themselves from the dedicated account.

The lawsuit alleged Legal Helpers failed to clearly and conspicuously disclose that it would not provide debt relief services to consumers, including negotiation and debt settlement, until all of its fees have been paid.

The case followed a two-year investigation started under former West Virginia Attorney General Darrell McGraw. His office first subpoenaed Legal Helpers for documents in November 2011. Morrisey defeated McGraw in the 2012 general election. 

As part of the settlement, Macey, Aleman and Searns may engage in the practice of law in West Virginia as long as they become licensed in the state, or are admitted to practice before a court for a particular matter.

Attorneys general in Indiana, Illinois, Missouri, Rhode Island and Oregon previously filed lawsuits against Legal Helpers.

Last year, Missouri Attorney General Chris Koster alleged the company failed to deliver on promises to provide loan modification and mortgage relief to homeowners. The case is pending.

In late 2012, Oregon Attorney General Ellen Rosenblum's office sued the company for allegedly collecting an estimated $2.5 million in fees from Oregon residents since 2009, despite not being registered to conduct business in the state as required by law. The case is pending.

In Illinois, the company agreed to stop doing business in the state, and paid fines and restitution.

Illinois Attorney General Lisa Madigan's office first filed a lawsuit in March 2011 against Legal Helpers, alleging the company used lawyers as a front to illegally collect massive fees from consumers seeking help.

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