Debt Relief Scam Defrauds Clients with Huge Fees and No Debt Relief

Jeremy Nelson and His Debt-Relief Scam

Office Raid, Man in Handcuffs
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When money is tight, many of us might be tempted to trust in solutions that we normally wouldn't. After all, the last thing that anyone needs who is struggling financially is to be ripped off by a company that promises to help. But that is exactly what is happening all over the country by some questionable debt-relief companies.

Hopefully this time the offenders will get what they deserve (a long prison sentence) but unfortunately what often happens with this type of crime is that a portion of the money gets hidden, there is a settlement, the criminal gives up whatever money is left and promises never (never, ever, ever) to do it again, goes and gets the hidden money and invests in a new scam.

In the meantime, the victims, now out the money that was stolen, still have to pay the debt. But, who knows, maybe this case will be different.

Jeremy Nelson and His Debt-Relief Scam

On February 1, 2016, Jeremy Nelson pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud. He faces up to 20 years in prison. A sentencing date was not immediately scheduled.

For close to two years, 30-year-old Jeremy Nelson (a.k.a. Jeremy Jackson) of Orange County, California was running fraudulent debt-relief companies that promised unsuspecting victims a way to settle their unsecured debts for less money than they owed. He charged victims an undisclosed up-front fee, but never intended to assist them in debt relief.

According to the Justice Department, Nelson scammed victims from February 2010 to September 2012 through his companies called Nelson Gamble & Associates (Nelson Gamble) and Jackson Hunter Morris & Knight LLP (Jackson Hunter).

How the Scam Worked

Consumers either called the company based on information on one of the company websites, or contacted through prerecorded telemarketing calls, were baited with the promise that they could reduce their debt by 50 percent or more.

One of Nelson's websites tried to lure in victims by advertising the following:

"Our team of Attorney’s, Certified Debt Specialists, and Negotiators are dedicated to helping you settle your outstanding debt by helping you make informed choices...With our attorney's at your side, our years of experience and our proven negotiating tactics; You're sure to come out on Top!...Our programs are absent of upfront fees and provide for one low monthly payment."

On the F.A.Q. page of the site, it stated that there were no upfront fees and, "Nelson Gamble provides a MONEY BACK SETTLEMENT GUARANTEE. Any creditor accepted into the program where a settlement cannot be reached will trigger the money back settlement guarantee. We will refund the service fee for that account."

If a person responded to the website or robotic call, Nelson and his employees would tell them that they were from Gamble & Associates (Nelson Gamble) which was a law firm that could legally negotiate favorable settlements between creditors and those who owed money.

If the person said they were not interested, or wanted to think about it, they would be hounded with calls from the companies, even when asked to stop. For those who agreed to the service, they would be set up with a monthly payment schedule, believing that the payments were going toward paying off the balance that they owed to their creditor.

However, Nelson's companies took the first six months of payments as an undisclosed up-front fee and at least 15 percent of the total debt as a company fee.

The Old 'Name Change' Trick

In 2011 Nelson changed the name of the company from Nelson Gamble to Jackson Hunter. Nelson and the same co-conspirators, now representing Jackson Hunter, contacted the victims that were signed up with Nelson Gamble and told them that the company had gone bankrupt. They would go on to explain that the company Jackson Hunter, had no affiliation with Nelson Gamble, other than taking over some of the accounts. Victims who asked for refunds for the money that they had paid to Nelson Gamble were denied. Some, but not all victims, filed complaints against Jackson Hunter.

FTC Complaint

On September 18, 2012, the Federal Trade Commission requested a federal court halt the operations run by Nelson and four companies he controlled-- Nelson Gamble & Associates LLP, Jackson Hunter Morris & Knight LLC, BlackRock Professional Corporation, and Mekhia Capital LLC and put a freeze on any assets.

The FTC complaint detailed that Nelson and others involved were not lawyers as they claimed. There were few, if any at all, debts that were actually settled for those who used their services. The FTC also stated that some people who had been in contact with the companies discovered that money had been debited from their bank accounts without their authorization and without ordering the company services, which is in violation of the Electronic Fund Transfer Act.

The FTC charged Nelson and co-conspirators with violating Telemarketing Sales Rule (TSR) by:

  • Making false and deceptive claims.
  • Causing consumers' bank accounts to be debited without their express, informed consent.
  • Charging advance fees for debt relief services.
  • Calling phone numbers listed on the national Do Not Call registry,
  • Calling consumers who had told them not to call.
  • Delivering prerecorded messages without consumers' prior written consent.
  • Repeatedly calling consumers to annoy them, even after being asked to stop.
  • Delivering prerecorded messages that failed to identify the seller, the call's purpose, and the product or service.

FTC Settlement

On August 1, 2013, the FTC settled a civil case against Nelson, with an imposed judgment of $4.6 million against him, which would be suspended, based on his inability to pay, after he surrendered to the FTC bank accounts from each of the four companies and investment assets frozen by the court.  

Co-Conspirators Plead Guilty

On December 14, 2014, Nelson, Elias Ponce, 27, and John Vartanian, 55, all of Orange County, California, were charged with conspiracy, mail fraud, and wire fraud in connection with the case.

One of Nelson’s co-defendants, Elias Ponce, pleaded guilty in October 2015. In a related case, two other defendants, Athena Maldonado and Christopher Harati, pleaded guilty in June 2015.

Maldonado admitted that she acted as the "legal department" for two of the companies. She said that she created different aliases when answering complaints sent by the State Attorney General’s Office, the Better Business Bureau, and private attorneys.

She also admitted that after the company changed names from Nelson Gamble to Jackson Hunter, she would tell customers that the companies were not associated and refused to refund clients' money that had been paid to the fictitiously defunct Nelson Gamble company.

Harati admitted he acted as the client "relations manager" and that he handled complaint calls from clients. He admitted to lying to customers that Nelson Gamble and Jackson Hunter had no association with one another. He also described Jackson Hunter as a nationwide law firm with years of experience, as well as other lies, as a way to convince clients to stay with Jackson Hunter.

The trial against the remaining defendant charged in the scheme, John Vartanian, is set for September 13, 2016, in Los Angeles. Vartanian is presumed innocent until a court of law decides otherwise.