Frederick J. Hanna Sued For Attempting To Collect Debt Already Paid

Frederick J. Hanna Sued For Attempting To Collect Debt Already Paid

Mr. Hanna claims not to know the meaning of the word subterfuge; it should have been his middle name…

November 23, 2011: A St. Clair County man accuses several banks and collection agencies of improperly attempting to collect a debt.

Roger Benson filed a lawsuit Nov. 16 in St. Clair County Circuit Court against LVNV Funding LLC, Resurgent Capital Services LP and Chase Bank USA. United Collection Bureau Inc., Frederick J. Hanna & Associates PC and Weltman, Weinberg & Reis Company LPA are also named as defendants.

The suit seeks a judgement of more than $1.5 million in compensatory and punitive damages plus court costs.

Benson says he was living in Arkansas in November 2008 when he reached a settlement agreement on a debt with Chase Bank. The payment was made by money order and endorsed by the bank, allegedly satisfying the debt on the account.

In June 2009, Benson says he started receiving several demand letters after
moving to Illinois. He says the notices from United Collection Bureau demanded he pay $4,700 on the previously-settled account. In August 2009 Benson claims he wrote the company asking for validation of the debt, which he says he never received.

In October 2009, Benson says Frederick J. Hanna & Associates sent him a demand letter for the same amount on the same account. Again, Benson claims he asked for validation and verification of the amount owed, which he allegedly never received. Two years later Weltman, Weinberg & Reis allegedly sent Benson a demand letter for the same Chase Bank debt which was now held by LVNV Funding.

Benson claims the defendants violated the federal Fair Debt Collection Practices Act and Illinois' Collection Agency Act by not providing validation of the debt, repeatedly demanding payment on an account that had been settled and transferring collection activities to new debt agencies. He also accuses the companies of consumer fraud.

Attorney David M. Duree of O'Fallon is representing Benson. They ask for a jury trial.

http://frederickjhannawatch.blogspot.com/2011 ... attempting.html

WOW!! Glad to see this.  His company was another big timer on invalid collection calls. thanks for sharing!

This is precisely how "settling" debt and "doing the right thing" can lead to greater punishment, despite the "pay youse bills" drumbeat of collection industry cheerleaders and the civil courts they overrun. This case may be of some value in describing the very common problem of junk debt accounts trading hands for years on end, not to mention calling out some of the top names among consistent FDCPA violators. Each collection agency in turn thinks it's entitled to a payday regardless of the actual account circumstances, which are never studied anyway unless such scrutiny is forced upon them.

The bad news is that the plaintiff can't do much under the FDCPA with any collection activity prior to mid-November 2010. Other federal consumer laws grant two to four years to seek relief. FDCPA sorely needs the same kind of SoL on claims, as the full truth of messy debt disputes may take more than twelve months to extract.

What's more, validation requests don't travel with accounts. Reselling or reassigning them without trying to collect is not illegal. The cited Illinois "mini FDCPA" mirrors federal in not requiring collectors to validate. (Texas law is a rare exception which does force validation.) It does, however, carry a generous five year SoL, so I can only hope Mr. Benson has plenty of juicy abuse and deception violations stacked against his parade of past collectors. He can't use either collection law against Chase, but maybe his state UCC can help. If he's forced to ride on "misrepresentation of debt" alone, all the defendants will cry ignorance and "bona fide error", and the case could turn swiftly from a battle roar to a whimper.

The presence of UCB and LVNV tells us that the account was sold at least twice. LVNV equals Sherman and Resurgent, and its favorite game is to pass the same "hot potato" among its dozens of collector pals until one of them hits paydirt. This is a pattern begging for regulatory study. Hanna is an industry cancer, but his involvement "buries the lead". A smart move would be to hammer LVNV hardest if its game of orchestration is evident.

A seven figure damage target is good for headlines but probably the plaintiff's counsel knows it may be unrealistic. As in any horse trade you have to start high so you have somewhere to go.

I have, by the way, a problem with blogs which fail to cite their sources, in this case a "weekly legal journal" serving a couple of Illinois counties.
http://www.madisonrecord.com/news/239926-chas ... t.-clair-county

Wow, glad to see this.  And, this is all the more reason not to bother trying to work out an arrangement with a 3rd party collector.  This strengthens my argument that it's always better to work with the original creditor and that the practice of passing debts off to 3rd party collections should be ended.

Consumer - What you are missing is the fact that the plaintiff made the settlement arrangement with Chase Bank (Original Creditor), not a collection agency.

I fear he will lose this case unless he has something in writing from Chase that states the settlement is considered "paid in full" and the clause that no outstanding balance is to be sold or transferred.

Look at it this way: If he owed $1000 and settled with Chase for $500 as consideration in full, there is still an outstanding balance of $500. Without that clause in the settlement, that no outstanding monies can be transferred or sold, Chase is going to sell to JDB (Junk Debt Buyer) for pennies on the dollar. Chase gets a little additional money and they don't care if the consumer is hounded to hell and back for that $500 plus whatever the JDB tries to add on for interest (per the original agreement when the consumer got the card) and any additional bogus fees the JDB may try and tack on, whether legal or not.

A verbal agreement is hard to prove ... written agreements are not.

Just my $.02

" What you are missing is the fact that the plaintiff made the settlement arrangement with Chase Bank (Original Creditor), not a collection agency."

Robin, my point was that it was a bad idea to make a deal with a collection agency in the first place.  The point of my post was to point out that it is better, if possible, to deal with the original creditor, that 'deals,' written, verbal or otherwise, with a 3rd party collector typically end up badly for the consumer.  What you missed was this:  my point had nothing to do with whether this was a written or verbal agreement.  My point was that the consumer attempted an agreement at all with a debt collector.

But the plaintiff Benson did not try negotiating with any third party agency. At least that's what the news article says, and there have been no updates. He merely kept requesting validation .... no mention of whether he used Cert Mail. Robin was correct both in pointing out that Benson may not have made a clean exit from Chase, and also that once a debt account gets traded around by the JDBs the original creditor doesn't want your money anymore. In fact, Chase may have tossed Benson's account records by now.

No doubt the defendants deserve all the bad publicity, but just on the surface reading of this, Benson could just be another hothead with money to burn on lawyers. If all he has is "I got dunning letters and nobody validated", he's not seeing seven dollars in damages, never mind seven figures.


In somewhat related news, here's today's item from the same legal journal, about the same plaintiff and law firm, trying to crack a different nut:

Chunk in Skippy peanut butter causes tooth to split, suit says
http://www.madisonrecord.com/news/240521-chun ... split-suit-says

Same guy in March 2011 goes after Cavalry Portfolio. He's got them on continued collection activity while ignoring a DV request.
http://www.madisonrecord.com/mobile/story.asp?c=234814

If he's holding the mint green USPS card, it's a solid FDCPA count. However, he also "accuses the defendants of consumer fraud for allegedly not validating the debt owed." Failing to validate is not "fraud". Charging the wrong amount or fooling with the date of default, *that* would be fraudulent behavior.

August 2010 - Benson paints a target on Midland and Encore, with charges very similar to the current case.
http://www.madisonrecord.com/news/228563-swansea-man-sues-debt-collectors

The Midland account he says was either nonexistent or past SoL. Well, which is it? Someone willing to fight in court should already have such a fundamental defense in stone. The Encore account he says was "settled" for twenty bucks sent to the bank. Again this sounds highly dubious, like one of those foolish "accepted for value" settlement deals. Cashing a money order is not the same as making a detailed and legally sound written agreement.

Back on Midland, the article explains, "In responding to the letters and in filing suit, Benson claims he incurred more than $30,000 in attorneys' fees and has experienced emotional distress."

Really? Thirty grand to write a DV letter and draft a summons? He's got either the wrong lawyer or no case. But it gets better. The complaint says Benson was first dunned on 08 January, and Midland sent a few more letters. Benson waited until 19 February to send a DV letter. Did everyone catch that? Benson let *forty days* pass before disputing. The statutory shot clock ends at thirty days past the receipt of a dunning notice. A debt collector is by then under NO OBLIGATION to ever validate! Yet his entire complaint is that he got no response. Benson is damned lucky sue-happy Midland didn't serve him first! How much did Benson pay his law firm again?

Next, the Encore account was basically bounced among a few collectors and allegedly none of them replied to Benson's dispute letters, neither with validation nor collection activity. To most people this would be a perfectly acceptable outcome. The FTC would see nothing the least illegal about collectors going away quietly. Not to this guy ....

"He says all the defending collection agencies and law firms violated the Fair Debt Collection Practices Act by failing to provide validation or verification of the debt .... and by failing to respond to his letter."

That's it?! No threats of jail time, no rude names, no breaking a cease-comm order? He's actually *upset* that multiple agencies were too lazy to continue collection activity? I'm just about to smack my forehead in disbelief but freeze when I see this:

"In pursuing his second lawsuit, Benson claims he incurred more than $25,000 in attorney's fees. In addition, he says he deserves $1,000 for each of Encore's violations of the Fair Debt Collection Practices Act."

Good gravy .... No honest comsumer lawyer is going to try flying that wet paper airplane. FDCPA is capped at $1K *per action*, no buts, no double dips. But Benson is already tapped out for the cost of a luxury car, and almost has no choice but to go for broke on a flimsy claim.

Maybe what we have is that deadly combo of a mercenary law firm and a half-[***] litigant with more money than brains. Benson could very well be the sort of unhinged debtor who gets ripped apart with ridicule on the Inside ARM forums. Such faulty application of law make it that much harder for anyone trying to beat a summary judgment with a sensible FDCPA counterclaim to gain traction with the average local judge, who considers any resistance from alleged debtors to be merely a cheap stall tactic and a sign of "irresponsible" behavior.

Things in Atlanta must not be going well for Fred Hanna & Associates.

Based on recent emails received Hanna is now scrapping the bottom of the junk debt dumpster for money based on assertions he is collectiong for Portfolio Recovery Associates (PRA).

Life must be good for "Superman Fred" and Lynn Hanna.

"Superman Fred" and wife Lynn Hanna have most of their assets tied up in THE 'TRUE VINE' EXPERIENCE FOUNDATION, INC., where Lynn is CEO.

According to Cobb County GA tax records they reside:
Address 3660 LOWER ROSWELL RD
Acres 3.30
Original Gross Value $842,570.00
Original Gross Assessment $337,028.00

This is where CEO Lynn operates her "non-profit"
Take a look at their home/corporate headquarters:
http://www.cobbasses...x=1&LMparent=20

Fred & Lynn may need a lot of money to maintain "Fort Hanna" where it is rumored that alligators swim in the moat.

This may be one reason why Fred has stooped to working with PRA.

PRA is one of the absolute worst junk debt bottom feeders in America, based on their long and sordid track record for not being able to prove the garbage suits they file.

PRA junk debt suits are considered some of the worst ever filed, they are based on hearsay and manufactured documents.

Hanna & PRA working together is like having all the rats feeding out of the same dumpster.

It can't get much worse than a marriage between "Superman Fred" and the slime of PRA.

They may be the reason you are being forced to pay higher interest rates-unable to obtain loans -or possibly caused that job offer to slip by.

http://www.collectorsexposed.com/forum/index.php/topic/4065-is-fred-hanna-associates-in-trouble/

Thursday, September 01, 2011
Case against debt collector nets $120K
Plaintiffs’ attorney calls Hanna firm’s practices ‘abusive’; Hanna says debt was valid
By Katheryn Hayes Tucker, Staff Reporter

A long-running legal battle between personal injury attorney R. Keegan Federal Jr. and lawyer and bill collector Frederick J. Hanna settled with the writing of a six-figure check, but it does not appear to be over. Federal said he is now searching for new ways to challenge the practices of debt collection law firm Frederick J. Hanna & Associates. “I’m concerned now that I know how aggressively this Hanna firm goes after people,” Federal said.

Federal sued Hanna for violation of the Fair Debt Collection Practices Act, plus emotional distress, on behalf of a former college professor who suffered a traumatic brain injury and was adjudicated incompetent, but still managed to get approval for a credit card and run up an unpaid balance. “To pursue the collection of money from an incompetent person to me is unconscionable,” Federal said. “We filed suit against the law firm frankly to try to get them to realize they need to clean up their own act and stop doing this to incompetent people and to get the word out to the brain-injured community that they don’t have to put up with this.”

Federal’s law practice evolved to focus on brain injury victims after his daughter suffered a traumatic brain injury from a car wreck in 1989, he said. About half his practice is now devoted to those clients.

The Hanna firm has been the subject of complaints to the Governor’s Office of Consumer Protection, but the Supreme Court of Georgia ruled in 2010 that only the State Bar has the authority to investigate a lawyer for unfair debt collection practices. Critics complain that although Hanna and a handful of others at the agency are lawyers, Hanna employs hundreds of non-lawyer bill collectors. Hanna has argued that his firm files more lawsuits in Georgia than any other law firm and that he’s in a tough business that naturally generates complaints. He said he sees a “lot of fraud” and it’s difficult to know “where to draw the line.”

Federal has posted on his blog, Federal’s Law (http://keeganfederal.blogspot.com), a picture of a Bank of America cashier’s check for $120,000 signed by Hanna to settle the professor’s case, with a caption that reads, “For once, it was the debt collector who had to pay up!”

The blog lead is, “After winning a significant settlement against one of the largest debt collection firms in the nation, our law firm is actively looking into further possible instances of abuse by Frederick J. Hanna and Associates.”

“I don’t know whether Keegan Federal is trying to advertise and toot his own horn,” Hanna said. “It was a valid debt. There was nothing wrong with it.”

Asked why he would write a six-figure check for trying to collect a valid debt, Hanna said he just wanted the matter to be “over and done with.”

Hanna was represented in the matter by Paul J. Morochnik of Weissmann Zucker Euster Morochnik. He could not be reached for comment.

Federal filed the case in 2005 in Cobb County Superior Court against Hanna on behalf of former University of Georgia history professor Jonathan Y. Houghton, who suffered a traumatic brain injury in 1996.

The story reconstructed from court records begins with the accident, which occurred when Houghton was hit by a truck while he was rollerblading in Atlanta. Houghton nearly died. For six weeks, he was in a coma. He was left severely physically disabled, unable to walk. He also had speaking difficulties and permanent brain damage. It soon became clear he had difficulty managing his finances. His wife divorced him and took custody of their child, and his family took over his financial affairs. In 2000, the Fulton County Probate Court issued an order adjudicating him to be incompetent as a result of his brain injury and appointing as his guardian his brother, William H. Houghton III, according to court records.

That same year, Jonathan Houghton applied for a Bank of America Visa card, saying on the application that he was disabled. He began using the card without his family’s knowledge and built a balance. Soon he exceeded his credit limit. The bank raised it.

It wasn’t until May of 2003 that Jonathan’s brother, nicknamed “Chip,” found the credit card statement. The balance was more than $1,000. Chip called Bank of America to inform them of the guardianship. He was told to fax the guardianship papers to the bank, which he did. He requested that the card be canceled.

The bank didn’t cancel the card, but instead raised the credit limit again.

By July, 2003, the balance was up to nearly $4,000, with the limit raised to $5,100. In December of that year, Jonathan told Chip that the bank was harassing him with collection calls and had sent a collection demand. Chip called the bank again, and again faxed the guardianship documents. By January, 2004, the account still wasn’t closed and the balance was up to $5,465, including late fees, over limit fees and interest raised from 10 percent to 24 percent.

In 2004, the bank turned the collection over to Hanna’s firm. Jonathan contacted Federal’s firm. Federal informed Hanna’s firm of the disability and the guardianship and Hanna’s firm sued Houghton anyway.

In April 2004, an attorney from Federal’s firm wrote to Hanna’s firm notifying them that Jonathan had been adjudicated incompetent, sending them copies of the court documents, informing them that under Georgia law, “debts incurred by a person adjudicated to be incompetent are not enforceable,” and demanding that the lawsuit be withdrawn.

Hanna’s firm did eventually withdraw that lawsuit. But then Hanna sued Houghton again later the same year for the same debt.

In 2005, Federal’s firm filed a lawsuit against Hanna’s firm citing a series of letters, calls and collection attempts in violation of the Fair Debt Collection Practices Act and seeking to recover costs, attorney fees and punitive damages.

An attorney from Hanna’s firm wrote a letter to Federal’s firm accusing the Houghton family of “faking Jonathan’s brain injury to evade the credit card debt of less than $6,000,” according to the plaintiffs’ portion of the pretrial order. In another letter, the Hanna lawyer accused the Houghton family of fraud. The Hanna lawyer also suggested that Houghton might secure another loan to “pay us.”

Federal also released a copy of a 2006 letter written to him and signed by Hanna. The letter belittles Federal personally, questions his sincerity in his efforts to help brain injury victims and takes a shot at a 40-year legal career that includes two terms as a Fulton County Superior Court judge and leadership positions in bar associations, civic groups and even the Carter Center.

“You appear to have gotten your panties in a wad over the fact that we did not jump when you spoke,” Hanna’s letter states. “What I am confused about is in the brochures in your office about how you have bonded with other families regarding brain injuries to your families. To do this I would think it takes some sort of compassion.”

The letter withdraws an offer from Hanna to settle Federal’s lawsuit for $12,000—an offer Federal said he had already rejected. Federal said Hanna’s first offer was $2,000.

“Your refusal to settle this matter because of your own pride and arrogance does not reflect the person that I always heard about,” Hanna’s letter states. “We will now move for summary judgment.”

Hanna’s motion was rejected by Cobb County Superior Court Judge C. LaTain Kell Sr.

Federal gives credit to his partner, Keith S. Hasson, for negotiating the settlement with Hanna on the eve of the trial. “I was in Washington, D.C., when it settled,” Federal said. “I said no to $50,000, $60,000 and $70,000. I said, ‘Tell him more.’”

Federal said he also rejected Hanna’s request to keep the settlement confidential.

When the offer rose to $120,000, the client wanted to accept it.

“I wish the client had allowed us to take the case to trial,” said Federal. “I think a jury would have been outraged.”

The case is Houghton v. Hanna, No. 05-1-1115-28.

http://www.fairusenotabuse.com/tag/frederick-j-hanna/

This is a great story which illuminates several problems in the credit and debt industries. I maintain that Hanna's stupendous arrogance is not the leading element of the Benson story from the OP, but the slapping like a hockey puck of the same debt account among seemingly different players who are on the same team.

This was the game played by the "Corona Cabal" of dirty debt collectors using the same ruthless tactics under a seemingly endless number of corporate names, going so far as to slap up cookie-cut websites for each one to promote an illusion of entity separation. This Autumn a federal judge has finally begun to peel down the fraud layers.

COURT: Feds claim Corona-based debt collectors illegal
http://www.pe.com/local-news/riverside-county ... ors-illegal.ece

CORONA: Judge puts preliminary injunction on debt collectors
http://www.pe.com/local-news/riverside-county ... -collectors.ece

If you have a couple hours to follow the threads, "TJ" on ComplaintWire has arguably laid more ink to the Corona collector scam than anyone. With LVNV Funding the tactics differ but it's the same issue. The consumer who knows enough to dispute is pursued for years by different junk debt collectors over a single account. Rather then slaying a single dragon, each victory merely deflects a head on the same hydra. Legal, yes .... ethical, not so much. The same blogger Alfalfa found has a pretty good article from last month on this issue:

Complicated Family Web: LVNV Funding, LLC Sherman Financial and Resurgent
http://www.fairusenotabuse.com/2011/11/12/lvnv-funding-sherman-resurgent/

Why the funhouse mirror routine of LLC formations? When the junk debt buyer's mission is to rape assets and never mind what the law says, it's better not to remain a single broad target of complaints and lawsuits. Diffuse the activity among many ultimately disposable business names and a few losses in court here and a soiled reputation there won't do nearly as much damage to the mother ship.

Here's the part of the Houghton case I find even more telling than the absurdly illegal hostility of the collectors:

"... Bank of America Visa card .... Soon he exceeded his credit limit. The bank raised it."

Three years into the account, the balance busted $1K. The card holder's legal guardian caught all this and "requested that the card be canceled. The bank didn’t cancel the card, but instead raised the credit limit again." In fact, BoA just kept raising the ceiling over the protests of the guardian, who followed *the lender's own instructions* to stop the swelling, until the bill was five times larger.

This is not an "oopsie" billing error, not a computer glitch, and not a freak incident. THIS IS THE BUSINESS MODEL of our name-brand too-big-to-bail-again banks! Fatten an overfed cow for a few years, then slaughter that sorry thing in place when it can no longer stand on its feet. The debtor is systematically *rewarded* for bad business decisions and *punished* for trying to be "responsible" and reduce the debt load!

Any hour now, "Hallelujah To the Troll" or some other crank will come crashing in here with that same accusing finger and demanding the severed heads of alleged debtors for being the sole cancer on our economy. Financial ailments don't begin in a vacuum. They are cultured and incubated, their outbreaks managed by the parasitic entities which have the most to gain from the weakness of victims.

Well said, Resident. The banks know bloody well what they are doing--and want more. I'm just sorry that Elizabeth Warren was not appointed to head the CPFB. She was their worst enemy and they made certain she didn't interfere with their continued r*pe and pillage of consumers.

What I find odd is that BofA didn't comply with the legal guardian's instruction to cancel the card, but rather continued to provide credit to a person they  now knew was incompetent.    That would seem actionable against BofA right there.

Im glad to hear this has happened to somebody prior. I was just summoned to appear after being served at my parents house(an hour from where I now live). Not only have my parents been harrassed by calls everyday(they ask for me then hang up when they say I dont live there), but now being served in the middle of celebrating my Dads birthday is disturbing, also by the same company chase but with a different attorney. Now, I have a very similar case. This was paid off as a settlement 2 years ago and was paid, if so am I going to have a hard time proving this? I feel like Ive been Misled. An oral contract over the phone of making a settlement should be enough. The main evidence I do have is my credit report that says paid with the date and I owe $0. Now, obviously they had to of looked at my credit report. Is this gonna be enough evidence for me to prove my case?

Hey,

  Sorry to hear you are going through such issues. I do have a question. Maybe I am misinterpreting what you said, but if your debt was paid as a "settlement," it has been my experience that your credit report would not show a zero balance. The trade line would show a remaining balance that was waved by the bank. The second thing it would state is that the account was "settled in full."

 Did you settle the debt with Fred Hanna's office?