NEWARK (CN) – A married couple says Freedom Debt Solutions took $9,500 from them to help settle their debts, but kept more than two-thirds of it before paying creditors a penny. Now their credit card account is delinquent and JPMorgan Chase is suing them, the couple says in a RICO claims in Federal Court.
Perry and Lori Mugno say they called Freedom Debt after they saw an “infomercial” on television that claimed the company helps consumers “eliminate their debt in one to three years.” Freedom Debt is based in Roanoke, Texas.
The Mugnos say the defendant’s customer service representative James Perkins told them that Freedom Debt could reduce their credit card debt by at least 50 percent if they stop paying their credit card company and pay Freedom Debt instead.
The Mugnos say another Freedom Debt agent, David Doyle, promised that they would maintain their good credit rating through the program and if they ever got sued by a creditor, Freedom Debt “would send a representative to court with them to explain the program.”
The Mugnos say Freedom Debt took three monthly payments of $1,373.58 apiece and took all of it, except for a $15 monthly maintenance fee which went to Rocky Mountain Bank and Global Client Solutions for processing the payments. They say Freedom Debt took three more monthly payments of the same amount and kept $561.86 from each one.
“Defendants Freedom Debt, Global and Rocky Mountain Bank charged Perry and Lori Mugno $6,322.58 before any services were provided,” according to the complaint. The Mugnos say they “began receiving harassing telephone calls from their credit card companies” as soon as they missed their first payment, and that in late July, “after making $9,510.06 to settle their debts,” they were sued by JPMorgan Chase.
Due to Freedom Debt’s scam, the Mugnos say, “virtually all of their unsecured debts are in collection” and they are facing bankruptcy.
Named as defendants are Freedom Debt Solutions LLC, Global Client Solutions LLC, Rocky Mountain Bank & Trust, James Perkins, David Doyle, Colby Gaskey, Douglas McClure and Michael Hendrix.
The Mugnos say Rocky Mountain is not a member of the FDIC and that none of the defendants are licensed as debt adjustors in New Jersey.
The Mugnos seek treble and punitive damages for fraud and RICO violations, illegal contract, illusory contract, unconscionability and other charges. They are represented by Trisha Connors with Zisa & Hitscherich of Hackensack.