FTC Seeks Civil Contempt Liability for Defendants' Violations of Court Order - Richard Murkey and Keith Gill

The Federal Trade Commission today announced that a federal district court has ordered Richard Murkey and Keith Gill to show cause why they should not be held in civil contempt for violating the court's November 1999 final order, in which a federal district court found that the defendants had illegally sold credit repair services. In addition to the order to show cause, the court issued an asset freeze against Murkey, as well as his company, Credit Restoration Corporation of America, Inc. (CRCA), and appointed a temporary receiver over CRCA. Richard Murkey is an ex-attorney who resigned his bar membership in 1990. Keith Gill is currently a practicing attorney.

In March 1998, the FTC charged Keith H. Gill, doing business as the Law Offices of Keith Gill, and Richard Murkey of Woodland Hills, California, with misrepresenting their credit repair services in violation of the FTC Act, and with collecting payment up-front for credit repair services before such services were fully performed, in violation of the Credit Repair Organization Act--the first federal law specifically targeting credit repair scams.

In November 1999, the court issued an order granting the FTC's motion for summary judgment against Murkey and Gill, finding Murkey individually liable as a participant and the primary violator and Gill liable as the owner of the business. The order permanently bans Murkey and Gill from the credit repair business; prohibits Murkey and Gill and persons under their control from making any misrepresentations of any material fact concerning credit repair and their ability to improve consumers' credit profiles; and prohibits the defendants from demanding payment from consumers who purchased credit repair services from them prior to March 4, 1998. In addition, the order requires the defendants affirmatively to notify these consumers that payments are no longer due and that their contracts are rescinded.

In its motion for civil contempt sanctions, the FTC alleges that Richard Murkey continues to sell purported credit repair service to consumers through CRCA, which he had begun operating prior to the November 1999 final order. According to the FTC, Murkey advertises his services through infomercials on a cable television audio channel, in newspaper advertisements, and until earlier this year, on a website. Through CRCA, Murkey continues to represent that he can substantially improve consumers' credit reports by legally and permanently removing accurate negative information; continues to demand payments from pre-March 1998 clients; and has failed to notify those clients that their contracts are rescinded.

In addition, the motion for sanctions asks the court to hold Keith Gill liable for violating the November 1999 order by failing to provide any notice of recission to defrauded customers with balances still owing to the defendants. The FTC also has asked the court to hold CRCA liable for violating the terms of the 1999 order since CRCA is owned and controlled by Murkey and is the vehicle through which he conducts his purported credit repair business.

The court has scheduled a hearing for June 18 on the order to show cause. As ultimate relief, the FTC seeks restitution for all consumers who paid money to Murkey or CRCA for credit repair service after Murkey was served with the November 1999 final order. The FTC also seeks an order that would require the defendants to pay substantial fines in the event of future violations and require the receiver to wind down and terminate CRCA.

The Commission vote authorizing the staff to seek an order to show cause as to civil contempt was 5-0. The motion was filed in Los Angeles in the U.S. District Court for the Central District of California on May 14, 2001, and the court issued the order on June 5.

NOTE: The issuance of an order to show cause why a defendant should not be held in civil contempt does not constitute a finding or ruling that the defendant has actually violated the court's order. The determination of whether the defendants have in fact violated the order will be decided by the court after a hearing.

Copies of the order to show cause are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File Nos.012 3086; 982 3073; X980043)
(Civil Action No. 98-1436 LGB (MCx))