WASHINGTON—The U.S. District Court for the Central District of California has ruled in favor of the Federal Trade Commission in a case against the operators of a student loan debt relief scheme.
The defendants are banned from telemarketing or providing debt relief services, the FTC said.
The court found the operators, doing business as Federal Direct Group, Mission Hills Federal, The Student Loan Group, and National Secure Processing, falsely claimed consumers’ loans would be forgiven or their payments reduced to a specific amount, and that defendants would take over servicing of consumers’ loans and apply most or all of consumers’ monthly payments to pay down their student loans. The defendants then charged consumers hundreds to thousands of dollars in illegal upfront fees. The defendants also obtained consumers’ student loan credentials to log in and change consumers’ contact information, effectively hindering or entirely preventing consumers’ loan servicers from communicating with consumers, the FTC said.
The case was originally filed by the FTC in 2019, and the court issued a temporary restraining order against the company at the time.
Violation of Telemarketing Sales Rule
In granting the FTC’s motion for summary judgment, the court found that the defendants’ practices violated the FTC Act and the Telemarketing Sales Rule.
Under the terms of the newly issued final order, the defendants will be permanently banned from the telemarketing and debt relief businesses. The ruling also imposes a $27.6 million judgment against the defendants, the FTC said.
The defendants subject to the order are Elegant Solutions, Inc. (also doing business as Federal Direct Group); Trend Capital Ltd. (also doing business as Mission Hills Federal); Dark Island Industries, Inc. (also doing business as Federal Direct Group and formerly known as Cosmopolitan Funding, Inc.); Heritage Asset Management, Inc. (also doing business as National Secure Processing); Tribune Management, Inc. (also doing business as The Student Loan Group); and four individual defendants, Mazen Radwan, Rima Radwan, Dean Robbins, and Labiba Velazquez (nee Radwan).