CHARLESTON – As part of its ongoing "Debt Deception" investigative series, the Center for Public Integrity is telling the story of a Lincoln County woman who was the victim of a debt settlement scam carried out by Morgan Drexen, a Nevada company based in Los Angeles.
Attorney General Darrell McGraw sued the company in May in response to complaints filed by Mary Linville, a retired school teacher, and other West Virginia consumers who paid exorbitant up-front fees for debt settlement and did not receive the promised services, or in several cases were forced to declare bankruptcy.
Linville's story was part of a series to mark the July 21 launch of the new federal Consumer Financial Protection Bureau.
Linville, who is from Alkol, was scammed out of thousands of dollars that she paid to Morgan Drexen. The company promised to cut her $72,000 debt in half and pay off her creditors.
Instead, the company took approximately $7,000 from her checking account for itself, while providing no relief from the creditors.
Linville was not aware there was a problem until she was served with a summons for her credit card debt by a county sheriff's deputy, who was a friend of her son's. A few months later, she was forced to file for bankruptcy.
McGraw's May 19 suit against Morgan Drexen was filed in Kanawha Circuit Court and seeks to ban the company from doing business in West Virginia. The suit maintained that the company attempted to avoid state debt collection laws and charge higher fees than allowed by linking its operations to licensed attorneys, who supposedly attempt to get creditors to accept less than what is owed on outstanding debts.
McGraw claims the enrollment lawyers do no substantive work and are merely renting out their licenses to Morgan Drexen. A hearing to enjoin Morgan Drexen from engaging in its debt settlement activities is scheduled for July 29.
"I must again caution consumers, especially those who, like Mrs. Linville, are already facing dire financial circumstances, that paying excessive fees for supposed debt relief services may in fact leave them in worse financial shape," McGraw said.
More than 500,000 Americans with about $15 billion of debt are currently enrolled in debt settlement programs.