More Court Cases:

Fifth Third Bank v. Jones-Williams Identified as a debt elimination scam. "

{¶ 6} Appellee filed a “Sur-Reply” in support of its motion for summary judgment on February 19, 2004. Therein, appellee argued appellants misapplied the law to the facts of the instant matter. In support of its Sur-Reply, appellee attached a notice from the Board of Governors of the Federal Reserve System regarding debt elimination scams.{¶ 7} On March 16, 2004, appellants propounded their requests for production of documents and interrogatories on appellee. On April 5, 2004, pursuant to Civ.R. 26(C), appellee moved the court for a protective order with respect to appellants' requested discovery. Appellee argued that completing the requested discovery would be unduly burdensome. Appellants subsequently filed a motion to compel discovery, arguing appellee failed to show good cause why the court should grant the motion for a protective order. The court granted appellee's motion for a protective order and denied appellants' motion to compel. Relying on Civ.R. 26(C), the court found that requiring appellee to answer the requested discovery would be “annoying” and “unduly burdensome” because it was “clear” from the interrogatories that appellants either did not understand the law or accounting, or were attempting to deflect attention from the underlying debt."


Pierce v. Ocwen Loan Servicing
Slip Copy, 2006 WL 1994571
M.D.N.C.,2006.

Indeed, the court agrees with Defendant that the drafts submitted by Plaintiff appear to be products of a fraudulent, debt-elimination scheme. ( See Def.'s Exs. I, J; Pierce Aff., Ex. A) Under this type of scheme, debtors submit authentic-looking, but fake, documents to lenders and loan servicers such as Defendant in an attempt to avoid legitimate debt. ( See Def.'s Ex. I, OCC Alert 2003-12, October 1, 2003 (posting a warning about and describing the debt-elimination schemes)) Under such a “debt-elimination scheme,” an internet site or other advertisement offers to sell a document to a purchaser to “legally” eliminate an outstanding credit card balance or other debt. Often these programs will make false claims about the Federal Reserve System, U.S. currency, or other federal or state government programs as legal justification for the debt-elimination program. ( See Def.'s Ex. I, FDIC Consumer News Mem., Winter 2003/2004) (warning consumers about bogus debt-elimination scams)) Thus, in return for a significant fee on the total debt owed, debtors “receive an official-looking, but worthless, piece of paper purporting to be a ‘certified draft,’ drawn on a fictitious financial institution, with a face value equal to the debt owed.” United States v. Jacobs, 117 F.3d 82, 85 (2nd Cir.1997); see also United States v. Adamson, Nos. 94-30195, 94-30196, 1995 WL 353816, at *1 (9th Cir. June 12, 1995) (unpublished). The debtor then submits the drafts to the creditor and requests return of any collateral or evidence of indebtedness. Jacobs, 117 F.3d at 85. The creditor accepts the drafts but, according to sound banking practices, declines to release the collateral until the draft clears, which never happens. Id. Thus, the creditor loses the expense of attempting to collect on the draft, and the debtor loses the fee he paid for the worthless document. Id.

The second count of Plaintiff's amended complaint re-alleges much of what is alleged in Count One, but with a bit of a twist. In support of this claim, Plaintiff alleges that he entered into a written contract with Defendants in which he “sold” Defendant a “deposit” in the amount of $185,600. (Am. Compl. at 3, ¶ 3) Plaintiff further alleges that Defendant is in breach of contract for accepting Plaintiff's “payment” and then later refusing it and charging interest on the monthly payments. (Am. Compl. at 4, ¶¶ 5, 6) This claim is baseless

The third count alleges that Defendant violated the Truth In Lending Act (“TILA”), 15 U.S.C. § 1601 et seq. In support of this claim, Plaintiff alleges that “Defendants prepared the note and mortgage agreements in writing, but failed to disclose a material fact in either instrument. The material fact was the Plaintiff was the depositor and that the Defendants neither risked any of its assets in this exchange, nor any assets of other depositors.” (Am. Compl. at 4, ¶ 5) The court finds that these allegations do not state a claim against Defendant for a violation of TILA.

Pierce v. Ocwen Loan Servicing
Slip Copy, 2006 WL 1994571
M.D.N.C.,2006.
Deals with "generally accepted accounting principles" and attempt to pay a debt by issuing a new note.