New York Attorney General Files Complaint Against Louis Morris
The latest lawsuit against Harris Jewelry Company centers on their “zero percent sale” policy. This policy is said to violate the federal Fair Debt Collection Practices Act (FDCPA). According to the complaint, Harris regularly places ads for “zero percent sales” and compensates jewelers for marking up their products to an inflated amount. Furthermore, the company does not provide any type of refunds or compensatory damages in instances where they receive complaints.
The Harris Jewelry lawsuit states that Harris Marketer pays interest to third-party funding companies, disguising these interests with “advance fees, guarantees, warranties, and other special and supplemental offers.”
In addition, the complaint further claims that in reality, no legitimate wholesalers offer advance fees and such coverage by law. Furthermore, the complaint claims that in this case, the bank financing contract between the bank and the jeweler gives rise to a legally binding agreement that will damage the company’s ability to defend itself should it be sued. Additionally, the complaint notes that in cases when the bank fails to deliver on such promises, the lender’s policy kicks in and makes it difficult for the Jeweler to collect any monies. Finally, the complaint notes that in many of these situations, the policies have resulted in the granting of loans to persons who did not meet all of the necessary credit requirements. As a result of such actions, the company has suffered financial harm as well as damage to its reputation.
The complaint further claims that in light of this, the NY Attorney General has advised the State Attorneys’ Association, “Neither parties will consent to modify the existing financing contracts with substantial effect on the present strength of the defenses.”
In a letter sent to the Attorney General, the NY Attorney General advised that “the conduct described above constitutes fraud, whether it is an attempt to defraud the lender, a misrepresentation of facts in connection with a loan, or an error in judgment.” Specifically, the AG stated that the complaint “puts forward a claim for fraud that can only be brought against defendant-borrower New York City Department of Banking, which was a co-borrower in the underlying loans with respect to this transaction.”
On the second day of the litigation, the complaint was filed in the courts by plaintiffs’ attorney, and on motion, a Status Conference was held.
At that point, it was determined that the Complaint is facile and that service members could raise issues at a trial. Accordingly, on a motion to dismiss for want of service, the case was set for trial. At that point, the parties were informed that they had a choice, whether or not to settle the entire matter out of court or go forward to trial. The plaintiffs’ attorney then indicated that there may be a need for a settlement.
Accordingly, on the third day of the lawsuit, the complaint was filed by defendants-defendants-who-pleaded “not guilty” to the complaint.
The New York Attorney General subsequently filed its answer in support of defendants, and on the same day, the defendants-who-again-pleaded “not guilty” denied the allegations. On the third day of the lawsuit, defendants-again-admitted liability, admitted that they had placed financing in the hands of another party, that the loans were returned and that they had done so negligently. (The defendants failed to admit any wrongdoing at any step of the process, including their failure to provide the New York Attorney General with any written notice of their default of servicing the loans.)
Pursuant to the terms of the plea bargain, defendants agreed to a two-year suspension of their liability.
Also, they agreed to submit to a three-year audit by an independent Certified Fraud Examiner. According to the complaint, the investigation uncovered numerous instances where the defendants had directly or indirectly caused or contributed to the resulting loan default or fraud. This includes but is not limited to, violations of anti-business rules, fiduciary responsibilities, misrepresentation of material facts, errors in billing and servicing, as well as violations of housing and employment regulations. In addition, the investigation revealed that defendant’s accounting records were inadequate to justify the conclusions reached in their financial reporting.
