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The former general counsel of Capital City Mortgage Corporation, a Washington, DC-area mortgage lender and servicer whose deceptive lending practices the Federal Trade Commission is challenging in federal court, has settled FTC charges that his actions violated federal law. The consent decree against Eric J. Sanne permanently bars him from participating in any debt-collection business and orders him to pay $20,000.

In January 1998, the FTC filed a complaint against Capital City and its president, Thomas K. Nash, alleging that the defendants deceived consumers about various loan terms leading to inflated monthly balances, overdue balances, service fees, and pay-off amounts. The FTC’s complaint stated that these practices led to default and foreclosure in many instances. Further, the FTC alleged that the defendants withheld some loan proceeds while forcing borrowers to make monthly payments for the entire loan amount, foreclosed on borrowers who were in compliance with their loan terms, and failed to release liens on title to borrowers’ homes even after the loans were paid off. The FTC later amended the complaint to add Sanne, and more recently amended the complaint a second time, after Nash died, to substitute Nash’s probate estate as a defendant and to add relief defendants.

The FTC alleges that in his position as general counsel, Sanne violated the Fair Debt Collection Practices Act (FDCPA) and the FTC Act by engaging in unfair and deceptive debt- collection practices, including sending letters to borrowers that falsely claimed he was from a third party collecting a debt, rather than a Capital City employee, and by seeking to collect money not owed.

The terms of the order against Sanne bar him from engaging in any “debt collection” business. Additionally, Sanne is required to pay $20,000 and must pay an additional $50,000, if he is found to have materially misrepresented his financial condition. The order also contains standard recordkeeping provisions to assist the FTC in monitoring the defendant’s compliance.

The Commission vote to authorize the staff to file the consent decree and order was 5-0. The consent decree and order for permanent injunction were entered by the U.S. District Court for the District of Columbia on May 6, 2004. The FTC claims against Capital City, the Estate of Thomas K. Nash, and two relief defendants is scheduled for trial on June 6, 2005.

In a separate statement, Commissioner Mozelle Thompson said that even though he voted to accept the consent decree settling the FTC’s allegations against Eric Sanne, he did so with reservation. “In light of the alleged conduct at issue, I would have supported stronger relief,” he said.

Thompson noted that as Capital City’s in-house general counsel, Mr. Sanne allegedly played an important role in the illegal debt collection practices engaged in by Capital City. According to the FTC’s complaint, Capital City, a subprime market lender that extends credit to consumers, small businesses and churches in the Washington Metropolitan area, deceived borrowers, many of whom were minority and/or elderly persons living on fixed or low incomes, about the terms and payments of their loans. “These practices caused many borrowers to default on their loans and caused some of them to lose their homes,” and “[g]iven Mr. Sanne’s status, as well as the vulnerabilities of many of the consumers harmed in this matter, Thompson said, “the alleged conduct is particularly reprehensible.”

NOTE: This consent decree and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the consent decree and order are available from the FTC’s Web site at 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 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 No. X980026)
(Civ. No. 98-cv-237 (GK/AK)

Contact Information

Media Contact:
Jen Schwartzman,
Office of Public Affairs
Staff Contact:
Darren Bowie,
Bureau of Consumer Protection