LOS ANGELES (CN) — DirecTV defrauds small businesses by selling them residential, rather than business, satellite TV, then threatening to prosecute them for theft of service, to extort an unconscionable “settlement” from them, a beauty salon owner says in a RICO class action.
Doneyda Perez, owner of Oneida’s Beauty and Barber Salon in Garden Grove, claims DirecTV conspired with New York attorney Julie Cohen Lonstein and her Lonstein Law Office “to extort an unreasonable and unconscionable ‘settlement’ … for the purported theft of the satellite cable television services.”
A nearly identical RICO class action was filed against DirecTV and Cohen Lonstein in Middlesex, N.J., Superior Court on Oct. 16, 2015, and removed to Federal Court on Nov. 20. That lead plaintiff, Angela Joaquin, like Perez, is a Latina who runs a beauty salon. Both Joaquin and Perez say DirecTV target minority-owned businesses.
Perez says the defendants “do not confine themselves to minority small business owners, however they target minority small business owners with the belief that such owners are less likely to dispute or challenge the allegations.” Virtually all of Perez’s claims track the allegations in Joaquin’s lawsuit.
“Defendants do not provide the owners with any written contracts, agreements, notices or other documents regarding the satellite cable television services which they have purchased,” Perez says.
“The business owners do not solicit, request or direct that the satellite cable television services which they have purchased be provided under a residential account,” Perez says. In her case, a DirecTV salesman entered her salon, unsolicited, in 2014 and offered her “a promotional deal” of satellite TV for $27.50 a month for two years.
Perez says she agreed to the deal, but DirecTV never told her the account would be processed as a residential account rather than a business account, nor did she ask for a residential account.
“Without the business owners being made aware, defendants designate the accounts as ‘residential,’ despite the fact that defendants solicited Ms. Perez and those similarly situated because they were small business owners,” she says in the complaint.
After service is installed, the defendants “send ‘independent’ auditors to the businesses where they clandestinely obtain photographs and/or video recordings which purport to show that the businesses are using the satellite cable television services in an unauthorized manner as those services are provided under a residential, rather than commercial, account,” Perez says.
“Using the results of these audits, defendants then send legal correspondence to the business owners alleging that they have ‘pirated’ or stolen satellite cable television services, and threaten legal action unless the owners agree to pay thousands of dollars and/or become business subscribers.'”
Perez says the defendants have made thousands of dollars like this from “the small business owners who have been their victims.”
Perez says she received a letter from the Lonstein law firm dated June 26, 2015, “with an attached proposed settlement agreement,” accusing her of receiving unauthorized DirecTV programming and threatening to prosecute or sue unless she paid a $5,000 settlement.
Perez says she was “misled and fraudulently induced” into settling and began paying $500 per month.
Perez claims Lonstein is not licensed to practice law in California, and her law firm and DirecTV “willfully and unlawfully conducted or participated, directly or indirectly, in a pattern of racketeering activity.”
The proposed class is small business owners in the United States who DirecTV solicited for satellite television services in the past four years and who later were threatened with criminal prosecution or a civil lawsuit for theft of services.
Perez seeks class certification, disgorgement of unjust profits plus interest, an accounting and treble damages for RICO violations and unfair competition.
She is represented by Kevin Mahoney of Long Beach, who could not be reached for comment over the weekend. Nor could Lonstein and her law office or DirecTV.
In the New Jersey case, lead plaintiff Joaquin is represented by Andrew Li with The Wolf Law Firm in North Brunswick, N.J. She also alleged consumer fraud and common law fraud and also sued Verizon, which she said offered her bundled services with DirecTV. Joaquin also sued “Installation Company 1-10” and “Auditing Company 1-10.”
Newspapers across the country have reported complaints from small business owners who feel they were preyed upon by DirecTV.
The Dallas Morning News, for example, reported such complaints from Texas, California, Maine, North Carolina and Pennsylvania, in November 2013. That article refers to the Lonstein Law Office, of Ellenville, N.Y., as DirecTV’s “collections law firm.”
DirecTV uses third-party installers, the Morning News reported, and “In 2010, DirecTV signed an agreement with the Texas attorney general that the company would closely monitor its third-party installers to make sure they engage in truthful business practices.”
The Ogden, Utah Standard Examiner last year published a similar report, with complaints against DirecTV and the Lonstein Law Office from small business owners in the same states, plus Utah and Ohio.
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