1. Thou shall be ethical in your judgment enforcement activities.
2. Thou shall be selective in your judgment cases.
3. Thou shall not chase the ‘honest but unfortunate judgment debtor.’
4. Thou shall know the difference between the ‘honest but unfortunate judgment debtor’ and one who pretends to be.
5. Thou shall realize that knowledge allows thou to work intelligently and to be effective.
6. Thou shall become an expert in locating judgment debtors’ assets … without breaking the law.
7. Thou shall have an iron stomach and a will to match. Thou will never succeed as a judgment recovery specialist unless thou does.
8. Thou shall not be intimidated by bankruptcy because thou selects judgments which will survive bankruptcy.
9. Thou shall realize that all judgment debtors claim to be a victim.
10. Thou shall spare no expense. This is war. The one with the best weapons wins.
JUDGMENT COLLECTION
©2007 Ramona Featherby
Monday, October 22, 2007
Wednesday, September 12, 2007
A fall from grace: a cautionary lesson to judgment collectors
Since when has pretexting become such a hot topic? It appears to have gotten a giant kickstart last year from a most unlikely candidate, Hewlett-Packard’s (HP) Chairwoman Patricia Dunn. Fed up with leaks to the media from HP’s Board of Directors, Dunn covertly acquired the phone records from its board members to obtain a pattern of contacts and calling. Although eavesdropping was not involved, the unauthorized access of records touched off a public relations disaster for HP. Not only did Dunn become Newsweek’s cover girl, a warrant was triggered for her arrest. It was a sad chapter in the brilliant career of a cancer survivor with humble beginnings in Las Vegas. In addition to fines, the four counts in the felony complaint carried prison sentences of up to three years.
But does the punishment fit the crime? Pretexting is defined as, “the use of false pretenses, including false statements and impersonation, to obtain consumers’ personal or financial information”. Dunn did something stupid and unquestionably wrong. But was the crime so egregious in nature -- or had the world’s largest technology company -- with 150,000 employees and one billion customers in 170 countries -- become an irresistible target? This question may have been answered on December 7, 2006 when Attorney General Bill Lockyer announced that HP entered into a $14.5 million settlement to settle his civil suit and that HP will “finance a new law enforcement fund to fight violations of privacy and intellectual property rights.” With state funds drying up, a review of the past year reveals that the attorney general has indeed been scoring legal touchdowns while finding alternative ways to secure new funding.
The HP scandal pointed out the need to tighten up privacy laws, as pretexting is expressly prohibited to obtain financial information but phone records fall into a gray area. “Stealing someone’s private phone records is a criminal act, but it can’t be prosecuted,” Senator Charles Schumer has remarked. “Phone information and call logs should be protected with the same safeguards as financial data or medical records. With pretexting companies popping up across the country, law enforcement needs the tools to track down these criminals down and put this industry out of business.”
On December 11, 2006 Schumer’s TRAPP bill passed Congress. The TRAPP Act would have made it a federal offense, punishable as a felony, to obtain customer information from a telephone service provider by false pretenses or access a customer account on the Internet to obtain billing information without authorization.
But in a surprise turn, a few days earlier, Senator Debra Bowen’s SB 1666, California’s tough anti-pretexting bill, went down in flames after sailing through the Senate. The demise was due in large part to the effective lobbying by the Motion Picture Association of America. The MPAA was able to convince legislators that pretexting was necessary to discover the source of illegal downloading. It was a disappointment for the ambitious Bowen, a consumer rights advocate, who today is California’s Secretary of State.
There is a lesson here for judgment collectors. If you are purchasing data, just how clean is it? Dunn maintained that she was assured that ‘only legal means’ would be used to obtain records. Plausible deniability didn’t work. There can be little sympathy for those data companies who brazenly offered records for sale on the Internet and are now the subject of a criminal investigation. In California there is no legal way to purchase phone records from data brokers. Furthermore, there never has been.
Unlike HP’s chairwoman, judgment creditors have the legal right to personal information if properly obtained. Not only must your judgment debtor deliver phone records, you can compel the delivery of far more sensitive and revealing documents. But pretexting to get those very same records remains illegal - even when you have ‘permissible purpose’.
JUDGMENT COLLECTION
©2007 Ramona Featherby
But does the punishment fit the crime? Pretexting is defined as, “the use of false pretenses, including false statements and impersonation, to obtain consumers’ personal or financial information”. Dunn did something stupid and unquestionably wrong. But was the crime so egregious in nature -- or had the world’s largest technology company -- with 150,000 employees and one billion customers in 170 countries -- become an irresistible target? This question may have been answered on December 7, 2006 when Attorney General Bill Lockyer announced that HP entered into a $14.5 million settlement to settle his civil suit and that HP will “finance a new law enforcement fund to fight violations of privacy and intellectual property rights.” With state funds drying up, a review of the past year reveals that the attorney general has indeed been scoring legal touchdowns while finding alternative ways to secure new funding.
The HP scandal pointed out the need to tighten up privacy laws, as pretexting is expressly prohibited to obtain financial information but phone records fall into a gray area. “Stealing someone’s private phone records is a criminal act, but it can’t be prosecuted,” Senator Charles Schumer has remarked. “Phone information and call logs should be protected with the same safeguards as financial data or medical records. With pretexting companies popping up across the country, law enforcement needs the tools to track down these criminals down and put this industry out of business.”
On December 11, 2006 Schumer’s TRAPP bill passed Congress. The TRAPP Act would have made it a federal offense, punishable as a felony, to obtain customer information from a telephone service provider by false pretenses or access a customer account on the Internet to obtain billing information without authorization.
But in a surprise turn, a few days earlier, Senator Debra Bowen’s SB 1666, California’s tough anti-pretexting bill, went down in flames after sailing through the Senate. The demise was due in large part to the effective lobbying by the Motion Picture Association of America. The MPAA was able to convince legislators that pretexting was necessary to discover the source of illegal downloading. It was a disappointment for the ambitious Bowen, a consumer rights advocate, who today is California’s Secretary of State.
There is a lesson here for judgment collectors. If you are purchasing data, just how clean is it? Dunn maintained that she was assured that ‘only legal means’ would be used to obtain records. Plausible deniability didn’t work. There can be little sympathy for those data companies who brazenly offered records for sale on the Internet and are now the subject of a criminal investigation. In California there is no legal way to purchase phone records from data brokers. Furthermore, there never has been.
Unlike HP’s chairwoman, judgment creditors have the legal right to personal information if properly obtained. Not only must your judgment debtor deliver phone records, you can compel the delivery of far more sensitive and revealing documents. But pretexting to get those very same records remains illegal - even when you have ‘permissible purpose’.
JUDGMENT COLLECTION
©2007 Ramona Featherby
Sunday, September 2, 2007
A judgment debtor's worse nightmare: When a dischargeable judgment becomes non-dischargeable.
Seven years ago I was assigned a judgment against what appeared to be a defunct corporation. Upon investigation it was discovered that the debtor corporation was not properly incorporated. Pursuant to motion, I successfully amended the judgment to include the true name of the company as well as its owner.
Mr. Debtor was now on the hook personally. Unsurprisingly, he tried to vacate the default but failed. My judgment was nominal and could have been dispensed with easily. But the debtor decided to take a more convoluted course of action, evading payment, creating sham companies, filing false claims of exemptions, creating multiple identities and fraudulently transferring assets. When these strategies failed to discourage me, he then pulled out the ‘wild card’ by filing for Chapter 7.
The cause of action for my judgment was a straight breach of contract. Mr. Debtor could easily have discharged my debt had he played his cards right. But he made a fatal mistake. While in bankruptcy, he hid income, shifted assets and made material misrepresentations on his petition and in a 341 proceeding. After gathering evidence of these bankruptcy crimes, I filed an “Objection to Discharge” under §727, alleging material misdeeds which made the debtor ineligible for a discharge. I had done my homework and had more than enough evidence to bury my debtor.
The denial was granted by the bankruptcy court. My dischargeable debt was ordered non-dischargeable. But it doesn’t stop there. Because the debtor’s discharge was denied, all debts listed on the bankruptcy petition became automatically non-dischargeable too. Thus the debtor, who could easily have paid my claim, was now strapped with over a million dollars of additional debts which are forever non-dischargeable... and gaining interest every day.
Many debtors believe that bankruptcy is the end to their problems. In some cases, it is just the beginning.
JUDGMENT COLLECTION
©2007 Ramona Featherby
Mr. Debtor was now on the hook personally. Unsurprisingly, he tried to vacate the default but failed. My judgment was nominal and could have been dispensed with easily. But the debtor decided to take a more convoluted course of action, evading payment, creating sham companies, filing false claims of exemptions, creating multiple identities and fraudulently transferring assets. When these strategies failed to discourage me, he then pulled out the ‘wild card’ by filing for Chapter 7.
The cause of action for my judgment was a straight breach of contract. Mr. Debtor could easily have discharged my debt had he played his cards right. But he made a fatal mistake. While in bankruptcy, he hid income, shifted assets and made material misrepresentations on his petition and in a 341 proceeding. After gathering evidence of these bankruptcy crimes, I filed an “Objection to Discharge” under §727, alleging material misdeeds which made the debtor ineligible for a discharge. I had done my homework and had more than enough evidence to bury my debtor.
The denial was granted by the bankruptcy court. My dischargeable debt was ordered non-dischargeable. But it doesn’t stop there. Because the debtor’s discharge was denied, all debts listed on the bankruptcy petition became automatically non-dischargeable too. Thus the debtor, who could easily have paid my claim, was now strapped with over a million dollars of additional debts which are forever non-dischargeable... and gaining interest every day.
Many debtors believe that bankruptcy is the end to their problems. In some cases, it is just the beginning.
JUDGMENT COLLECTION
©2007 Ramona Featherby
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