A lawsuit filed by West Virginia Attorney General Patrick Morrisey's office against Nevada debt settlement company Legal Helpers Debt Resolution alleges the firm collected advance fees from customers but provided no services or help.
An estimated 250 customers in West Virginia paid nearly $200,000 in fees, mostly to settle credit card debts, according to the lawsuit filed in Kanawha (W. Va.) Circuit Court. The lawsuit follows 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. His office declined to say Thursday why it took more than two years to file the lawsuit.
The lawsuit alleges that Legal Helpers suggested its debt settlement lawyers could work in West Virginia. But the attorneys weren't licensed to practice in the state. Legal Helpers told its West Virginia customers to stop paying creditors, and instead make debt payments to an account operated by a third-party vendor, according to the lawsuit.
The lawsuit asks a judge to block Legal Helpers from doing business in West Virginia. The suit also requests that Legal Helpers refund fees to customers who signed up for debt relief services.
The lawsuit also names Legal Helpers' owners as defendants: Thomas Macey and Jeffrey Aleman, both of Illinois; Jason Searns, of Colorado; and former partner, Jeffrey Hyslip, who is licensed to practice law in Ohio.
"Debt settlement is one form of debt relief that may work for some people," Morrisey said. "But when lawyers claim they are going to provide services, they ought to handle licensing issues properly."
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.