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As requested by the Federal Trade Commission, a federal judge has issued a temporary restraining order against a nationwide operation that claimed it could reduce consumers’ debt by up to 60 percent, leading many people into financial ruin and bankruptcy. The FTC charged five companies, including Homeland Financial Services, National Support Services and Prosper Financial Solutions, and their principals with deceptive and unfair practices in violation of Section 5 of the FTC Act.

“These defendants are charged with targeting consumers who were knee deep in debt and luring them with false promises,” said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection. “Consumers should be leery of anyone who says they can eliminate your unsecured debt, or that you can pay it off for pennies on the dollar. Debt negotiation can be very risky.”

According to the FTC’s complaint, the defendants have falsely claimed that, for a non-refundable fee of up to 15 percent of a consumer’s unsecured debt, they could reduce all of their unsecured debts, including credit card balances and medical bills, by as much as 40 to 60 percent. To the extent that the defendants initiate negotiations with creditors, they typically have begun only after a consumer has paid 30 to 40 percent of the fee, which could be up to three months after a consumer has stopped making payments to creditors, as the defendants have advised them to do, the complaint stated. The defendants rarely have negotiated settlements with all of a consumer’s creditors, and even when they have successfully negotiated an account, in many cases, the settlement amount is significantly more than 60 percent of what they owe.

In many instances, the complaint stated, the defendants have not contacted a consumer’s creditors to offer a settlement, and consumers who have stopped making payments have been sued by creditors or debt collectors, resulting in garnishment of their wages, additional interest charged to their account, interest rate increases, and late fees. According to the complaint, many consumers who have enrolled in the defendants’ program have seen their credit rating worsen substantially, and typically within six months of enrolling, most consumers have left the program and have found that their debt has grown as a result of penalties, fees, interest, and other charges.

The FTC charged the defendants with misrepresenting how much they could reduce consumers’ debt; not adequately disclosing the likelihood that consumers would be sued if they took the defendants’ advice and stopped making payments to creditors; not disclosing that consumers’ account balances would grow from interest, interest rate increases, late fees, and other charges; and falsely advising consumers that negative information that appeared on their credit report as a result of participating in the defendants’ program would be removed upon completion of the program.

On August 9, 2006, the court issued an ex parte temporary restraining order against Homeland Financial Services, National Support Services LLC, United Debt Recovery LLC, Freedom First Financial LLC, and USA Debt Co, LLC, and their principals, Dennis Connelly, Richard Wade Torkelson, and Joanne Garneau (doing business as Prosper Financial Solutions). The order froze the assets of defendant Dennis Connelly and appointed a temporary receiver over the defendants' businesses. On August 11, 2006, the court extended the asset freeze to defendants Richard Wade Torkelson and Joanne Garneau. A hearing on the issuance of a preliminary injunction and the appointment of a permanent receiver is set for October 11, 2006.

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Central District of California.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the complaint are available from the FTC’s Web site at and 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 on 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 help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 052-3091)

Contact Information

Media Contact:

Mitch Katz,
Office of Public Affairs

Frank Dorman,
Office of Public Affairs

Staff Contact:
Jennifer Larabee or John Jacobs, Attorneys
FTCs Western Region - Los Angeles
310-824-4323 or 310-824-4360