Deadbeat debt collectors to pay $1.1 million in settlement

A Southern California debt collection firm that threatened debtors with killing their pets and digging up their dead relatives has agreed to pay $1.1 million to settle Federal Trade Commission allegations about abusive practices.

The FTC announced Thursday that a settlement deal had been reached. It permanently bans company owner David M. Hynes II and principals Lorena Quiroz-Hynes, James S. Hynes and Heather True from the debt collection business.

David Hynes and Quiroz-Hynes agreed to a $33.8 million judgment that they are unable to pay, and it will be suspended after they pay $700,000. James Hynes and True agreed to lesser judgments that also were suspended because they don’t have the money to cover them. Additionally, three companies controlled by David Hynes that did not participate in the wrongdoing but profited from it agreed to pay $403,487 to the FTC.

The FTC halted the defendants’ operations and froze their assets in October 2011 when they were operating in Van Nuys and doing business nationwide.

Before the FTC stepped in, The Star spent three years reporting the harassment accusations as complaints mounted at the Better Business Bureau for Santa Barbara, San Luis Obispo and Ventura counties.

The defendants’ businesses operated under a variety of names including Rumson, Bolling & Associates and Forensic Case Management Services Inc. In Ventura, they operated as Joseph, Steven & Associates and Specialized Debt Recovery.

The FTC said the defendants berated consumers with obscene language, threatened them with physical harm and improperly disclosed consumers’ debts to their employers, co-workers, neighbors and others. The FTC also alleged that the defendants deceived their small-business clients, collecting money for them but then keeping all or more than they should have.

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