United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT UNITED STATES DISTRICT JUDGE.
before the Court is Plaintiff United States of America's
Memorandum in Support of Civil Penalties against Defendant
Timothy Ford (“Plaintiff's Memo”) (Dkt.
#103). The Court, having considered Plaintiff's Memo,
finds Defendant Timothy Ford owes Plaintiff $2, 000, 000 as a
reasonable and appropriate civil penalty for his violations
of the Fair Debt Collection Practices Act.
case commenced in January 2015, and the Complaint named as
defendants Commercial Recovery Systems, Inc.
(“CRS”), its President, Timothy Ford, and its
former Vice President, David Devany. The Complaint alleges
that defendants violated Sections 807(2)-(5) of the Fair Debt
Collection Practices Act (“FDCPA”) and Section 5
of the Federal Trade Commission Act (“FTC Act”)
by impersonating attorneys, attorneys' staff and judicial
employees; falsely threatening litigation; falsely
threatening wage garnishment and asset seizure; and
misrepresenting the character or legal status of a debt. The
Complaint seeks civil penalties and a permanent injunction to
halt CRS, Ford, and Devany's unlawful practices.
April 7, 2016, the Court granted the government's motion
for summary judgment against Defendants CRS and Ford (Dkt.
#69). In its April 7, 2016 Opinion and Order, the Court
Defendant CRS is a Texas corporation that has been in
business since 1994. Until 2013, its main office was in
Dallas, with a secondary office in Plano, Texas. CRS is a
third-party debt collector that primarily collects consumer
debt that was ‘primarily for personal, family, or
household purposes, ' including auto loans and credit
card debts, on behalf of the original creditors, and conducts
business in numerous states. In November 2013, CRS sought
bankruptcy protection under Chapter 11. Defendant Tim Ford,
CRS's President, Director, and majority shareholder,
testified in CRS's bankruptcy proceedings that the
company's insolvency resulted, in large part, from a
number of Fair Debt Collection Practices Act
(‘FDCPA') lawsuits brought by private litigants.
As a third-party collector, CRS did not own the debts it
collected. The company was not a law firm and did not sue
debtors or garnish wages. CRS was a mid-size debt collection
company. Shortly before declaring bankruptcy, the company
employed approximately 300 employees, but downsized in 2013
to employing approximately 80 collectors
Id. at 1-2. Based on these findings, the Court held
Defendants Ford and CRS liable for injunctive relief, and
issued a permanent injunction against both defendants. The
Court also held Ford liable for civil penalties, reasoning:
The summary judgment record establishes that Ford was the
sole owner and President of CRS up until November 2013. He
received daily updates on the company and represented the
company in negotiations with government investigations. Ford
himself removed David Devany from his role as Vice President.
Thus, Ford had the authority to control the company's
collection practices. Therefore, Ford is liable for civil
penalties for FDCPA violations by CRS.
Id. at 14-15.
11, 2016, the Court entered an order setting a briefing
schedule to determine civil penalties. The Court ordered
Plaintiff to submit its brief by August 9, 2016, and Ford to
submit his response on September 9, 2016. On August 8, 2016,
Plaintiff filed its Memorandum in Support of Civil Penalties
against Defendant Timothy Ford (Dkt. #103). Ford did not file
Court determined in its April 7, 2016 Opinion and Order that
Defendant Ford is liable for civil penalties under the FDCPA
and FTC Act (Dkt. #69 at 14-15). Ford had actual knowledge
that his collectors were not complying with the FDCPA. The
issue before the Court is to determine the proper penalty for
Ford's violation of the FDCPA and FTC.
5(m) (1) (A) of the FTC Act authorizes a civil penalty of up
to $40, 000 for each instance of conduct that violates the
FDCPA with actual or implied knowledge of the FDCPA. A
separate violation of the FDCPA occurs each time a prohibited
threat or representation is made to a consumer in a
collection contact. United States v. ACB Sales &
Service, Inc., 683 F.Supp. 734, 741 (D. Ariz. 1987)
(FDCPA enforcement action); United States v. Central
Adjustment Bureau, Inc., 667 F.Supp. 370, 385 n.29 (N.D.
Tex. 1986) (each use of an improper dunning letter is a
separate and distinct violation). In determining the
appropriate civil penalty, the Court must take into account
the factors listed at 15 U.S.C. § 45(m)(1)(C), which
include the degree of culpability, history of prior such
conduct, ability to pay, effect on ability to continue to do
business, and such other matters as justice may require. The
“other matters” many courts consider include
injury to the public and the benefits derived from the
violations. See, e.g., United States v.
Nat'l Fin. Servs., 98 F.3d ...