Temporary court order halts debt collector the FTC says posed as a law firm to collect over $20 million

A federal court has temporarily shut down a debt collection operation that, according to the Federal Trade Commission, posed as a law firm and threatened people with lawsuits, wage garnishment and liens to make them pay debts they often did not owe. The FTC announced on November 9 that the court had frozen the defendants' assets and put the business under a court-appointed receiver while the case continues.

Judge Mónica Ramírez Almadani of the U.S. District Court for the Central District of California signed the temporary restraining order on November 5. The case targets McDonnell & Associates LLC, a company based in Orange, California, which the FTC says also did business as First Capital Group, Maxwell & Bryant Group and Lewis, McDonnell & Associates, and its two owners, Oscar Gerardo Gonzalez Martin and Oscar Ruiz Canela. The FTC filed its complaint under seal on November 2.

What the FTC alleges

The agency calls the practice phantom debt collection. According to the complaint, the scheme has run since at least March 2021 and followed a pattern of escalating pressure, starting with voicemails left under the legal-sounding name "Maxwell & Bryant Group" that asked people to call back about an "urgent" matter; in at least one message, the caller said they were phoning "from the legal department." The complaint says the company also threatened to send documents to people's workplaces and contacted their parents, siblings and spouses, claiming it needed to find them to serve legal papers.

When people called back, the FTC says, they were told they owed a debt, that a lawsuit had been or would soon be filed, and that their wages would be garnished and liens placed on their homes unless they paid. The alleged debts ranged from hundreds to thousands of dollars. According to the complaint, the company is not a law firm and is not affiliated with one, filed no such lawsuits and had no power to garnish wages or place liens. Often, it says, consumers did not owe the amounts, or the company had no authority to collect them.

The FTC also says the callers skipped disclosures that federal debt collection rules require, such as saying that they were debt collectors and that any information would be used to collect a debt, and did not send validation notices listing the amount of the debt and the creditor. It accuses the defendants of violating the FTC Act, the Fair Debt Collection Practices Act and its Regulation F, and the Gramm-Leach-Bliley Act. Consumers have paid the defendants more than $20 million, and thousands have complained to the FTC, the complaint says.

Pretending to be a law firm or affiliated with attorneys and threatening to contact consumers’ employers and family members to induce consumers to pay debts they do not owe is illegal.

What the court ordered

The order freezes the defendants' assets, gives the temporary receiver full control of the business, and lets the FTC and the receiver enter its premises and take expedited discovery. It also limits collections: without the court's approval, the receiver may not try to collect from any consumer whose debt the receiver believes resulted from the deceptive practices or other violations alleged in the complaint.

The court granted the order on the FTC's ex parte application, without first hearing from the defendants. It expires 14 days after entry unless it is extended under the federal rules of civil procedure. The defendants are due in court in Santa Ana on November 16 at 10 a.m. to show why the judge should not issue a preliminary injunction that would last until a final ruling on the complaint.

What happens next

The complaint is the FTC's account, and the court has not ruled on the merits. "The case will be decided by the court," the agency notes. The commission voted 2-0 to file the case. It is asking for a permanent injunction and monetary relief, and the complaint says the FTC wants to secure redress for the consumers it says were harmed. The court documents the FTC has published include no response from the defendants.

In its announcement, the FTC says it "will never demand money, make threats, tell you to transfer money, or promise you a prize." It points consumers to consumer.ftc.gov for guidance on consumer topics and takes reports of fraud, scams and bad business practices at ReportFraud.ftc.gov.