Operators of a student loan debt relief program will pay at least $ 835,000 to resolve Federal Trade Commission allegations that they were charging illegal upfront fees and making false promises to consumers struggling with student debt.
The settlement resolves the FTC’s lawsuit against Carey G. Howe, Anna C. Howe, Shunmin Hsu, Ruddy Palacios and Oliver Pomazi, five people named as defendants in the agency’s lawsuit against Arete Financial Group and several related companies.
In the complaint filed in 2019, the FTC alleged that Arete and the other defendants claimed to be affiliated with the Department of Education and deceptively promised loan cancellation, consolidation and repayment programs to reduce or eliminate monthly payments and principal balances.
Litigation continues against other defendants in the case, Jay Singh and the two defendant companies he controls, as well as against seven defaulting defendant companies.
the order prohibits defendants from providing student loan debt relief services, prohibits them from violating the telemarketing sales rule, and includes a $ 43.3 million monetary judgment, which is partially suspended due to incapacity to pay. Defendants will have to hand over at least $ 835,000 and additional assets, which will be used for consumer recourse. The order also requires the full cooperation of the defendants in this ongoing case and any related investigation.
The Commission vote approving the stipulated final order was 3-0-2, with Commissioners Rebecca Kelly Slaughter and Christine S. Wilson recorded as not participating. The FTC has filed the draft order with the United States District Court for the Central District of California.
REMARK: The final stipulated orders have the force of law when approved and signed by the judge of the district court.
The Federal Trade Commission strives to promote competition and protect and educate consumers. You can learn more about consumer topics and drop a online consumer complaint or by calling 1-877-FTC-HELP (382-4357).