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Company for debt relief is closed

The Attorney General's Office alleges the New Port Richey company duped customers across the country with false promises of reducing debts.

By PHIL DAVIS
Published July 9, 2005

The Florida Attorney General's Office shut down a New Port Richey company that lured thousands of customers and took in millions of dollars in fees with promises to eliminate huge debts at pennies on the dollar.

An injunction issued Thursday prohibits New Leaf Associates from "marketing debt elimination services, disposing of business assets or destroying documents." The company also was ordered to take down Web sites advertising its services.

Investigators from the attorney general's Tampa economic crimes unit filed a civil lawsuit in Pasco-Pinellas Circuit Court against New Leaf; its marketing arm, Quantum Business Consultants LLC; seven associated businesses and 16 individuals.

The suit alleges the defendants marketed a "phony debt termination scheme" that took in more than 2,200 clients in the United States and Canada, and $8-million in fees nationwide since October 2003.

The customers paid fees ranging from $3,795 to $5,295 for a promise to relieve debts of $50,000 to $150,000.

Among the lawsuit's allegations:

The debt elimination process New Leaf marketed was "fictional" and the company had "no process for termination or elimination of debt."

New Leaf "has never eliminated a single debt through its so-called "administrative process,' and, upon information and belief, has never actually attempted to eliminate debt through such a process," the lawsuit said.

New Leaf and associated companies made bogus promises that their debt elimination system was tested and legal and had "no IRS consequences."

New Leaf owner James Patterson, who is named as a defendant in the suit, told the Times on Friday that he will pay back his clients and eliminate their debts.

"I am cooperating with them," Patterson said of the investigators. "We had already ceased taking in new business."

When asked whether he still had the $8-million in fees he and his associates collected, Patterson said: "I don't have that all in my possession. We've got mechanisms in place to take care of it."

Florida Attorney General Charlie Crist said he is willing to listen to any plan that allows consumers to recoup lost money.

"Settling is good, but only if it is to the benefit of the consumer," Crist said. "If all that is real, that's great. But it's trust and verify in my book."

Crist said the investigators will determine later whether criminal charges are warranted. He said he was "not at liberty to discuss" whether federal authorities such as the FBI and the Federal Trade Commission are involved in the New Leaf investigation.

Citrus County resident Tina Brooks said she reported New Leaf to the FBI, the Federal Trade Commission and the Florida Attorney General's Office after the company left her mired in debt last year. She also filed a civil suit against Patterson and his associates. She said Patterson recently signed a settlement in her civil suit with a promise to pay by Aug. 15.

"I'm glad the Attorney General's Office found enough information to file a lawsuit," Brooks said Friday. "The unfortunate part is that means it really is a scam. I'm glad they will be made to answer for what they've done. But the damage is done."

In addition to New Leaf and Quantum, the suit alleges the following companies participated in the scheme: Ameribiz Consulting Inc.; Manhattan Financial Group LLC; Legal Club Financial Corp.; RWS Consulting Inc.; B&B Enterprises International Inc.; Quantum Business Consultants of California Inc.; and WJC & Associates Inc.

Individuals named in the scam operated in Pasco, Pinellas, Hillsborough, Broward, Hernando, Sarasota, Polk, Leon and Escambia counties, and also in Louisiana and California.

Phil Davis can be reached in west Pasco at 869-6247 or toll-free at 1-800-333-7505, ext. 6247. His e-mail address is pdavis@sptimes.com

[Last modified July 9, 2005, 01:02:12]