CHARLESTON, W.Va. -- West Virginia Attorney General Patrick Morrisey's office has filed suit against a Nevada debt settlement company, after a two-year investigation started under former Attorney General Darrell McGraw.
The lawsuit alleges that the company, Legal Helpers Debt Resolution, collected advance fees from 250 customers in West Virginia to help resolve their debt problems but never settled those debts. The customers paid more than $198,000 in fees, primarily to settle credit card debts, according to the lawsuit filed in Kanawha Circuit Court on Dec. 20.
"We believe ... that the defendants provided no legal services or any discernible value to their customers in the state even though they collected fees from them," Morrisey said in a news release Thursday.
McGraw's office initiated the investigation and subpoenaed the company for documents in November 2011. Morrisey defeated McGraw in the 2012 general election. Morrisey's office declined to say Thursday why it took more than two years to file the lawsuit.
Attorneys general in Indiana, Illinois, Rhode Island and Oregon previously filed lawsuits against Legal Helpers. In Illinois, the company agreed to stop doing business in that state, and paid fines and restitution. The other cases remain pending.
The West Virginia lawsuit alleges that Legal Helpers suggested its debt settlement lawyers could work in West Virginia. But the attorneys weren't licensed to practice in the state, according to the lawsuit filed in Kanawha Circuit Court.
"Debt settlement is one form of debt relief that may work for some people," Morrisey said. "But when lawyers claim they are going to provide services, they ought to handle licensing issues properly."
Legal Helpers told its West Virginia customers to stop paying creditors, and instead make debt payments to an account operated by a third-party vendor, according to the lawsuit. The customers did so.
Legal Helpers failed to "clearly and conspicuously disclose" that it would not settle customers' debts -- or even start negotiating debt settlement agreements with creditors -- until its customers paid all fees in advance, Morrisey said.
The lawsuit asks a judge to block Legal Helpers from doing business in West Virginia. The suit also requests that Legal Helpers refund fees to customers who signed up for debt relief services.
The lawsuit also names Legal Helpers' owners as defendants: Thomas Macey and Jeffrey Aleman, both of Illinois; Jason Searns, of Colorado; and former partner, Jeffrey Hyslip, who's licensed to practice law in Ohio.
Kanawha Circuit Judge Carrie Webster has been assigned the case. Doug Davis, a consumer protection lawyer in the Attorney General Office's Consumer Protection Division, is handling the lawsuit.
Reach Eric Eyre at erice...@wvgazette.com or 304-348-4869.