State and Local Law Enforcement and Consumer Education Initiatives

California Attorney General’s Office “Alternative” High School Scam

In August 2004, California Attorney General Bill Lockyer sued the deceptively-named “California Alternative High School” (CAHS) and a number of individuals connected with it. The Los Angeles County-based defendants pitched their school to adult Latino immigrants, claiming that CAHS was fulfilling a divine mission to help them escape poverty by earning a high school diploma. Charging up to $1,450 for a 10-week, 30-hour course, the defendants represented that consumers completing the program would receive a high school diploma, when, in fact, the state and federal government did not recognize CAHS as an institution authorized to confer high school diplomas. CAHS also claimed graduates could get into accredited colleges; the CAHS program, however, does not meet those schools’ requirements, including the University of California. In addition, the defendants falsely claimed that a CAHS diploma would help students get state and federal financial aid for college. At the end of the course, consumers were left with a useless certificate and less money to spend on legitimate high school or vocational programs.

On September 20, the court issued a preliminary injunction. The receiver has closed the schools throughout the country. The complaint seeks a permanent injunction to stop the defendants’ illegal activities, restitution for consumers who paid defendants’ fees, and civil penalties of at least $4 million.

(More information about the case can be found at www.ag.ca.gov then search for news and alert.)

Contacts:

Herschel Elkins
213-897-2630

Deputy Attorney General Michele Van Gelderen
michele@vangelderen@doj.ca.gov
213-897-6027

Illinois Attorney General’s Office

Credit Card/Check Processing Services

The Illinois Attorney General’s Office sued America Merchant for automatically debiting businesses’ checking accounts without authorization for amounts substantially in excess of regular service fees. The defendants sold credit card/check processing services to small, predominantly Hispanic businesses. At least 16 businesses had accounts debited by the defendants in amounts ranging from $1,125 to $66,337. The company has failed to refund approximately $158,000 in total unauthorized debits. An Order for Default was entered September 17, the case scheduled for another hearing on November 30. People v. United America Merchant, 03 CH 9466.

Immigration Consulting Fraud

The Illinois Attorney General’s Office sued Lucy Rios for falsely representing to consumers that she worked for the INS and by providing legal advice concerning the type of immigration petition or form consumers should file with the U.S. Bureau of Citizenship and Immigration Services to obtain a particular immigration benefit. The defendant violated the Immigration Services Rules by: 1) failing to register as an immigration service provider; 2) falsely promising a consumer that she would receive her U.S. employment authorization or “work permit” within three months; and 3) failing to post signs in her business stating that she is not an attorney and is not authorized to provide legal advice, as required under the Consumer Fraud Act. A Final Judgment was entered on May 20, permanently enjoining the defendant from engaging in Immigration Assistant Services in Illinois. People v. Lucy Rios, 03 CH 1812.

Contact:

Illinois Attorney General’s Office
Consumer Fraud Bureau
217-782-9021

New York State Attorney General’s Office

Legal Cash Advance Firm Settlement

In June 2004, the New York State Attorney General’s Office entered into an assurance of discontinuance with Cambridge Management Group, LLC, a New Jersey finance company that provides cash advances ranging from $1,000 to $7,000 to consumers with pending personal injury lawsuits, in exchange for the right to receive a part of the proceeds of any judgment or settlement obtained by the consumer. These cash advances are not considered “loans” under New York State law because the consumer is not obligated to repay the advance.

Cambridge’s contract provided that if a consumer received no recovery on his claim, he did not owe any money to the company making the cash advance. Many consumers did not understand the terms of the financial agreement, because the contracts were not clearly written, and did not fully disclose all the terms. In addition, the contracts were only written in English, even when the consumer was not fluent in English and the underlying transaction was conducted in another language. Cambridge had entered into over 500 transactions with New York consumers, and often received proceeds significantly in excess of its advances.

Cambridge agreed to several reforms, including clear and conspicuous disclosure of the cash advance amount and contracts in Spanish if the negotiations were conducted in Spanish, or a translation of the “principal terms” into the consumer’s native language for consumers whose primary language is neither Spanish nor English. Cambridge also agreed to reform its contracts to comply with NY’s “Plain Language Law” and to discontinue requiring mandatory arbitrations for all disputes. Cambridge paid $20,000 in costs.

Immigration Services Fraud

In July 2004, the New York State Attorney General’s Office sued an unaccredited immigration consultant who falsely claimed in a weekly radio show and advertisements in a Spanish newspaper that he was an attorney, and that for a $1,500 fee could obtain residency for immigrants under a new law passed in November, 2003 - the Development, Relief & Education for Alien Minors Act of 2003 (Dream Act), which although reintroduced in Congress last year, has not yet passed.

New York State Attorney General Eliot Spitzer issued recommendations for consumers seeking immigration assistance:

• Check with the NYS Office of Court Administration Attorney Registration Unit at (212) 428-2800 to verify if someone claiming to be an attorney licensed in New York is in fact admitted to practice in NY and registered with NY’s Unified Court System.
  
  
• Make sure any representation agreement is made in writing and that you understand all the terms before signing. The agreement should list all fees and the scope of the representation.
  
  
• Do not give the consultant any original documents. Make sure you are given a copy of any agreement and ask that it be translated if the negotiation was in another language.
  
  
• Keep detailed records of any payments which should be made by check or credit card if possible, and ask for a signed receipt.
  
  
• Be wary of individuals offering inside connections with immigration authorities, or who otherwise suggest that they are able to guarantee results.
  
  
• Beware of notario fraud. Notaries public may take advantage of the literal Spanish translation of their title, notario público, a title describing an attorney in many Latin American countries. By taking advantage of the confusion, immigration consultants fraudulently claim expertise or promise results that they simply cannot deliver.

Contact:

Maritere Arce
New York State Attorney General’s Office
212-416-8060
Texas Attorney General’s Office

Immigration Consultant Scams

• On September 9, 2004, the Texas Attorney General’s Office obtained a jury award totaling over $1 million against Ruth and John Thomas d/b/a Trámites Migratorios, South Texas-based defendants who had been sued for violating the Texas Deceptive Trade Practices Act (DTPA) by engaging in misrepresentations and unlawfully providing immigration consulting services without authorization and without a license to practice law. The verdict included over $900,000 in restitution to consumers, in addition to civil penalties and attorney’s fees.
  
  
• On September 8, 2004, the Office sued Marcelino and Hilda Armendaríz d/b/a Aplicacion de Oro, seeking an injunction and an asset freeze alleging that the Midland-based defendants were involved in a scheme that provided unauthorized legal services to at least 200 consumers. The suit alleged that some consumers paid the defendants up to thousands of dollars each to handle their immigration cases, although the defendants are not authorized to provide legal or immigration consulting services.
  
  
• On July 6, 2004, Maria Elena Garza was sentenced to 97 months in federal prison for perpetrating a long-running scheme defrauding hundreds of immigrant families in and around the city of Seven Points, located near Dallas. The office worked with the U.S. Attorney’s office and local law enforcement to investigate and bring charges against Garza and her accomplices. In February 2004, the Attorney General obtained a $1.4 million dollar judgment against Garza as a result of a DTPA suit filed against her for posing as an immigration officer; using money consumers paid her for INS fees for her own benefit; falsifying immigration credentials and providing them to consumers and their employers; and selling international driver’s licenses.
  
  
• In June 2004, the office proceeded to trial before the court and obtained a judgment of approximately $ 200,000 against Martha B. Uresti d/b/a Uresti Immigration/Notary Services, a South Texas-based notary public who had unlawfully represented herself as a lawyer who could help consumers process immigration cases before federal authorities. Uresti sometimes charged in excess of $3,000 to individual families, promising that she would obtain immigration benefits for them, including work permits and permanent residency. Often, she did little or no work on the consumer’s case. Criminal charges remain pending against Uresti.
  
  
• Gilberto V. Martinez, an Austin-based immigration consultant, entered into an Assurance of Voluntary Compliance pursuant to the DTPA in which Martinez agreed to cease providing immigration consulting services.
  
  
• Lorraine Rodriguez, an El Paso-based notary public, entered into an Assurance of Voluntary Compliance pursuant to DTPA agreeing to refrain from future violations.
  
  
• Mary Hernandez Conlon, an Austin-area notary public, entered into an Assurance of Voluntary Compliance pursuant to the DTPA agreeing to refrain from preparation of INS immigration documents on behalf of immigrants.

Contact:

Paco Felici
Texas Attorney General’s Office
512-463-4501

Montgomery County, Maryland Division of Consumer Affairs

Consumer Protection Symposium/Coupon

Montgomery County’s Division of Consumer Affairs and AARP are conducting a consumer protection symposium on October 28 to help identify and prevent consumer scams in the Hispanic community. Elected officials, community leaders, agency staff, and media representatives will focus on law enforcement initiatives, identity theft and credit counseling, challenges in consumer education, and the role of the Spanish speaking media.

The Hispanic community survey/coupon reflects one of the Montgomery County’s Division of Consumer Affairs and AARP’s “outreach” efforts to determine the types of consumer protection problems currently being experienced by Spanish speaking consumers. They are requesting that members of the Hispanic community tell them what kinds of consumer problems the consumers have experienced so that state officials will be able to appropriately focus their services and education programs. The agencies plan to report on the results of this survey at or shortly after the symposium. The agencies also have offered the potential for a small award to encourage consumers to respond.

(More information about the symposium and outreach efforts can be obtained at www.montgomerycountymd.gov/dhca)

Contact:

Eric Friedman
240-777-3719

Myriam Torrico
Hispanic Coordinator
240-777-3627

New York State Consumer Protection Board

Outreach and Education/Seminar

Outreach and education efforts by the New York State Consumer Protection Board (CPB) were bolstered by the CPB’s participation in the FTC’s May 12-13 Hispanic Outreach Forum and Law Enforcement Workshop. CPB Chairperson and Executive Director Teresa A. Santiago was a panelist. The CPB will be hosting a seminar on October 20 at Hostos Community College in Manhattan. The seminar will be co-hosted by the Hispanic Federation of New York and Governor George E. Pataki's Office of Citizenship Services.

“Immigration fraud will be the primary topic of the evening,” said Chairperson Santiago. “It will be our first opportunity to explain a new law, recently signed by Governor Pataki, to combat fraud involving ‘so-called immigration consultants’.”

(More information about the new fraud law and the October 20 seminar can be obtained at www.nysconsumer.gov)

Contact:

Jon Sorensen
New York State Consumer Protection Board
518-473-9472

News Release: FTC Continues Crackdown on Scams Aimed at Hispanic Consumers