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emuel Apelar and John Mitchell, the remaining defendants in the case against Jubilee Financial Services and its related debt negotiation companies, are banned from advertising, marketing, or providing debt negotiation services, as part of a Federal Trade Commission settlement entered by the U.S. District Court for the Central District of California. Apelar also turned over his personal residence in partial satisfaction of a suspended judgment of $2,628,535. The court-appointed receiver for Jubilee has sold the residence, and the proceeds will be used for consumer restitution. The FTC filed the original complaint on August 19, 2002, as part of “Operation No Credit,” a law enforcement sweep targeting a wide range of credit-related frauds.

The FTC’s original complaint alleged that Jubilee Financial Services, Inc., related company Jabez Financial Group, Inc., and others lured consumers with false promises that consumers who enrolled in their debt negotiation program would be able to pay their debts at a substantially reduced rate and that consumers would stop receiving collection calls from creditors. The complaint also alleged that these defendants misled consumers about the effects of the Jubilee program on their credit report and failed to tell consumers that, as a result of using the defendants’ services, negative information would appear on consumers’ credit reports and stay there for seven years. The FTC later amended the complaint to add an allegation that the defendants falsely told consumers that money sent to the Jubilee companies would be held in a trust account to be used by defendants to pay off consumers’ debts at a reduced rate.

According to the FTC, consumers who enrolled in the defendants’ program and paid substantial fees continued to receive phone calls and collection letters from creditors because the defendants did not negotiate substantial debt reductions for consumers. In addition, the FTC alleged that when consumers followed the defendants’ directions to cease making payments on their debts, many consumers were sued by the creditors. Consumers allegedly lost money deposited into Jubilee’s so-called trust account because the corporate defendants were regularly withdrawing money from the trust account to pay their operating expenses. Instead of finding themselves out of debt, the FTC alleged, many consumers found that their credit was ruined and they were left with little alternative but to file for bankruptcy.

The FTC amended its complaint to add the allegation regarding Jubilee’s trust account after determining that more than $2 million supposedly held in trust for consumers was missing from Jubilee. The amended complaint also added two more related corporations as defendants, Gustavsen Learning Centers, Inc. (GLC), and Debt Relief Counselors of America, P.C. (DRCOA), as well as the two individual defendants who are parties to the settlements announced today. Jemuel Apelar was Jubilee’s vice president and the office manager of DRCOA. John Mitchell was DRCOA’s titular president.

Under the terms of both final orders, Apelar and Mitchell are permanently banned from participating in debt negotiation services and are prohibited from misrepresenting any material fact in connection with the sale of any good or service. Both settlements contain a $2,628,535 suspended judgment, the approximate amount of consumer injury stemming from Jubilee’s activities. The proceeds from the sale of Apelar’s house partially satisfies the monetary judgment against him. The remainder of Apelar’s judgment and all of Mitchell’s judgment were suspended based on the defendants’ financial inability to redress consumer losses. If either Apelar or Mitchell is found to have materially misrepresented his financial condition, the full suspended judgment will be entered against him.

Jubilee’s president, defendant John Gustavsen, entered into a stipulated final judgment and order with the FTC in August 2003. Gustavsen’s settlement also required him to turn over his personal residence to the court-appointed receiver to be sold for use as consumer redress. The Commission obtained default judgments against corporate defendants Jubilee, Jabez, GLC, and DRCOA on October 4, 2004. The proceeds from the judgments against Apelar and Gustavsen will be combined with the companies’ remaining funds by the receiver and returned to consumers.

The Commission vote to authorize staff to file the proposed stipulated final judgments and orders was 5-0. The judgments and orders were entered by the U.S. District Court, Central District of California, Western Division, on December 22, 2004.

NOTE: These stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by any defendant of a law violation.

Copies of the stipulated final judgments and orders are available from the FTCs 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 (Jubilee Financial3–01/26/05) 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 Matter No.: X020105)
(Civil Action No. 02-6488 ABC (Ex))

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