CorrectiveSolutions' Checkmate

Prosecutors nationwide team up with the San Clemente debt collector to terrorize consumers in ways both highly profitable and usually sketchy

"While the rest of us are playing by the rules, they aren't," Schiffman says.

Consumer advocates and legal experts were naturally horrified. "You don't hand out guns and badges to just anyone," says Adam Levin, former consumer-affairs commissioner of New Jersey. "And this is effectively creating a gun-and-badge situation for people who frankly not only don't deserve it, but also have a long history of abusing it."

Paul Arons, a Washington state consumer-rights lawyer, agrees. What's startling, he says, isn't the shady tactics of companies such as CorrectiveSolutions; it's the fact that district attorneys, charged with protecting the public good, are abetting the deception. "Check collectors have a long history of running scams such as pretending they'll have people arrested or that they are with government agencies," he says. "I was shocked to find out that prosecutors were actually authorizing check collectors to do this in district attorneys' names."

Congress did include a small caveat in the 2006 bill that was supposed to protect citizens. "The prosecutor must determine that probable cause exists to charge a person with a crime before the program sends the letter," Levin says. Unfortunately, they're universally blowing this off.

Take the Riverside County DA's office. Chief Deputy Vicki Hightower says her program is meant to target bad-check writers who intend to defraud victims, not well-meaning people who accidentally bounce a check. "We understand the concerns people have," Hightower says. "That's why we review the checks before they go to CorrectiveSolutions. And while the correspondence that goes out has our logo, it does say that the program is administered by a third-party vendor."

Yet her words don't appear to match the facts on the ground. In order to open a bad-check case in Riverside County, merchants only need to provide the check writer's information, along with the assurance they tried contacting them at least once. But its own records show it is routinely threatening jail time for people who've done nothing criminal. During the first 10 months of 2012, CorrectiveSolutions sent out 8,973 letters on the county's behalf. Just 23 of those cases were deemed worthy of prosecution.

Florida's Miami-Dade County is even more lax. There, merchants' complaints go directly to CorrectiveSolutions, which then decides which ones merit prosecution. "Our office has set the intake criteria for checks to be accepted into the program," says Assistant State Attorney Marie Jo Toussaint. "This criteria insures that only checks that have violated our Florida statutes are eligible for this pre-arrest diversion program."

Again, the records say otherwise. Of the 1,863 cases opened by CorrectiveSolutions, only 106 were actually filed in criminal court.

"There is no question that defrauding someone is a crime," says Kara Dansky, an ACLU lawyer. "But in these circumstances, there is no evidence that's what happened. People could have written a check on accident, with no intent to defraud. But the DA isn't investigating that. . . . Instead, debt-collection companies are using the auspices of the DA's office to threaten someone with jail when there is no investigation."

*     *     *

CorrectiveSolutions had good reason to buy immunity from Congress. At the time, the industry was losing one class-action lawsuit after another.

In 2004, Kristy Schwarm was a stay-at-home mother of five, with another child on the way. Over the course of one week, the Ukiah mom wrote a check to Walmart for $69.26 and one to FoodMaxx for $83.41, as well as made an ATM withdrawal, according to court records. Unfortunately, the ATM withdrawal overdrew her account, racking up seven rejected checks and 21 overdraft fees totaling $560.

"It had a snowball effect, leaving the account continually overdrawn, even though I made several deposits," Schwarm says in court documents. Her bank erased most of the fees.

But a few months later, Schwarm received a letter from the Mendocino County district attorney. She had been accused of fraud and was ordered to repay the checks, along with penalties and a "diversion fee."

"I was in a panic," Schwarm said in court documents. "I had never been in trouble with the law before. . . . I assumed that I must be in a lot of trouble if I was getting a letter from the district attorney that I could be arrested."

Schwarm called the number on the letter, assuming she was speaking with someone from the DA's office. She promised to pay as soon as she could. But with her husband out of work and eight mouths to feed, she just kept falling further behind. A year later, she still hadn't paid her debts. The letters and phone calls kept coming.

Then she was pulled over in a traffic stop with her six kids in the car. Schwarm was sure it had to do with the letters. "I was terrified. I thought . . . my children were going to see me get handcuffed and taken away," she said. "I was giving my children instructions on calling their father to come pick them up when I found out I was just being warned for not coming to a complete stop at an intersection."

By that point, she was so deep in debt that she filed for bankruptcy. Only after she consulted an attorney did she discover it wasn't the DA sending her all those letters. It was an Arkansas company called District Attorney Technical Services. "The real district attorney had not investigated me or considered filing charges against me," she said.

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12 comments
goodearth1
goodearth1

Now this gives more insight as to how thousands of responsible people are becoming homeless. Citizens who've bounced a check are given a choice...jail time or homelessness. Very sad.

goodearth1
goodearth1

I need to clarify that the missed child support payment was not because I was absent-minded, it was because I had been laid off by a real-estate agency, backed by banks which filed bankrupcties that were financed by the U.S. Gov't. So, ultimately, I immediately owed $3,500 for a levy and threatened with jail time that was financed by the U.S. Executive Office.

goodearth1
goodearth1

Please believe her. Stores will not contact you first. And, it's not just happening with stores. It happened to me when I had missed one child support payment. The County levied every penny out of my checking ($700) and savings ($60) accounts, which produced over 21 checks bouncing. I had never bounced a check in my life. Almost immediately, with fees and fines, I owed more than $3,500 for "bounced" checks caused by a levy by the D.A. Then, I was threatened with jail time. The justice system is in the business of framing citizens.

rozier.karen
rozier.karen

Congress created a loophole in 2006, granting what amounts to immunity from deception charges for collection agencies working on behalf of law enforcement.

rozier.karen
rozier.karen like.author.displayName 1 Like

Consider it the privatizing of justice. Instead of investigating bad-check complaints, prosecutors simply pass them along to CorrectiveSolutions. The company then uses official DA letterhead to threaten jail time if consumers don't pay up. CorrectiveSolutions also runs the "voluntary" financial-accountability classes, and prosecutors get a cut of the profits while barely lifting a finger. The entire system runs on a one-size-fits-all presumption of guilt. No one's bothering to investigate whether the check writer was working a scam or merely suffering from a momentary lapse of mathematics.

rozier.karen
rozier.karen

More assaults against poor people -- In 2011, my attorney wrote a bad check for $1500 to me after the Judge ordered him to repay me. I filed a formal complaint to The State Bar of California.  They refused to do anything about it because he eventually made good on the check. He was not required to attend any diversion program.

I say fight it and sue.

mbw2
mbw2

From the story "A few days later, while reviewing her bank account, she noticed the check had bounced. Orr headed back to Albertsons to make good on her payment. But she was told the store had already placed her in collections."

While Albertson's certainly has the right to do this, it isn't my idea of good business practice. Why not at least make one attempt to contact the check writer? Have you contacted Albertson's and asked them why they are so quick to refer bad checks for collection?

gottaknow247
gottaknow247

I noticed that two.  The article also states that in order to open a case in Riverside County, Albertson's had to make at least one attempt to contact the check writer.  Either this lady isn't telling the whole truth or Albertson's didn't follow protocol. 

rozier.karen
rozier.karen like.author.displayName 1 Like

@gottaknow247"That's when I asked if I was actually talking to someone in the DA's office," she says. "And they said no, that they were a company being paid to represent the DA."

DA sold his letterhead to the highest bidder.

rozier.karen
rozier.karen

@gottaknow247 The issue is that creditors are turning to prosecutors to collect their debts in order to avoid having to go through the Fair Debt Collection Practices Act. Clearly the woman was at fault for writing a bad check. If Alberston's believed she committed a crime, they should have charged her with a crime. Instead, they used the long-arm-of-the-law to intimidate her into making good on her debt. That's skirting the intent of the Fair Debt Collection Practices Act. (I am not a lawyer so don't quote me on it.)

gottaknow247
gottaknow247

The issue I raise isn't the debt collection practices, but whether or not we are hearing the whole truth in the way Denise Grollmus tells us.  Did Albertson's try to contact Ms. Orr prior to Ms. Orr reviewing her bank statements or not?  Seems a little extreme on Albertson's part to send a $91 bad check writer to collections.  If Albertson's did try to contact Ms. Orr and those messages were ignored, then I don't see any problem with Albertson's actions.  I didn't read in the story if Ms. Grollmus tried to contact Albertson's for their side of the story.  I think it would be unfair to slander Albertson's based to the testimony of Ms. Orr alone.

 
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