Attorney General Wins Judgment Against Debt Counseling Law Firm

"More than 600 North Carolinians turned to the Law Centers for help with financial woes but only ended up deeper in debt," Cooper said. "The Law Centers deceived consumers and broke the law, and now they'll pay the price."

In a judgment approved May 17, Judge Leon Stanback Jr. found that Daly and Sinnott Law Centers of Bennington, Vermont had violated the Debt Adjusting Act, practiced law in North Carolina without a license, and used unfair and deceptive trade practices to defraud consumers. This ruling makes permanent a temporary restraining order issued at Cooper's request on November 7, 2001 to stop the law firm from doing business in North Carolina.

More than 600 North Carolinians hired the firm, which claimed that it could reduce consumers' credit card debt by 50 percent or more. Under terms of the judgment, the firm is prohibited from advertising, soliciting customers, or offering its services in North Carolina. The judgment also requires the Law Centers to pay refunds to consumers less any money the firm used to pay consumers' creditors.

"People who are in debt need help to turn their economic lives around, and sometimes they are desperate for a way out,"Cooper said. "There are legitimate debt counseling services for consumers who are in need, but this firm is not one of them."

The Attorney General argued that the Law Centers charged consumers a fee to negotiate or pay off consuemrs' debts with creditors. That practice, known as debt adjusting, is illegal in North Carolina. The complaint, brought jointly with the North Carolina State Bar, also charged that the Daly firm had offered legal services in the state without a license.

Cooper also contended that the firm misrepresented its services and that most consumers did not get any debt relief. At court proceeding, Cooper's office submitted 12 witness statements from the firm's clients. None of these consumers had been able to talk to an attorney with the Law Canters. Some of these consumers got sued by their creditors but still could not get legal help from the firm.