Minnesota AG Scorches Florida Debt Collector

MINNEAPOLIS (CN) - Minnesota's attorney general sued a Florida collections company, claiming it cuts and pastes banks officials' signatures onto false affidavits and sells the phony documents to third parties using a fake employee name.

Minnesota sued United Credit Recovery LLC, in Hennepin County Court.

United Credit Recovery purchases overdraft debt, such as charged-off fees that customers owe on overdrawn accounts, from large banks at pennies on the dollar.

"UCR buys from the banks electronic portfolios with limited account information about tens of thousands of individuals and small businesses that allegedly owe these charged-off fees and balances," Attorney General Lori Swanson says in the lawsuit.

The attorney general says UCR paid U.S. Bank $31 million from 2007 to 2011, for overdraft debt with a face value of more than $820 million, and paid Wells Fargo $19 million from 2010 to 2012 for overdraft debt worth more than $700 million.

United Credit Recovery is the only defendant.

While UCR could purchase individual account documents to substantiate that an overdraft debt is owed by a particular customer, "UCR's owner, Mr. Portillo, has testified that it would be too costly for UCR to purchase this information on a regular basis. Instead, UCR purchases electronic portfolios with limited information, such as the names and balances of people who allegedly owe money to the bank for overdrafts," the complaint states.

Then, the attorney general says: "On a mass scale, UCR created computer-generated 'cut and pasted' affidavits bearing the logos of different banks and the purported notarized signature of a bank official - to supposedly substantiate that particular individual customers owe a particular amount of money."

UCR made these false affidavits with a boilerplate template, into which UCR cut and pasted bank officials' signatures and a notary's signature, Swanson claims.

"In some cases, UCR used the 'cut and pasted' affidavits to collect money from, and to get courts to award judgments against, individual consumers. More frequently, UCR transferred the false affidavits to other debt buyers to which it resold the portfolios, which also used the false affidavits to collect money from consumers, both directly and through court judgments. The State of Minnesota, by its Attorney General, brings this government enforcement action to remedy this abuse of legal process and to hold UCR accountable for its deceptive conduct."

A supposed UCR employee, Edward Thompson, signed some of UCR's debt resale agreements, but UCR CEO Leonard Portillo testified that the name was a pseudonym for himself, and not a real person, according to the complaint.

Both U.S. Bank and Wells Fargo stopped selling overdraft debt in 2012 due to compliance concerns surrounding these sales, the attorney general says.

Swanson seeks an injunction against UCR and its officers, and a civil penalty of $25,000 for each violation of the Uniform Deceptive Trade Practices Act.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit