Morrison & Foerster Brings Suit Alleging Debt Consolidation Service

As the credit consolidation industry has taken off, so have opportunities for fraud. Law firm Morrison & Foerster LLP has brought suit in California State Superior Court against a pair of individuals operating various businesses that have allegedly siphoned thousands of dollars from a Northern California couple over the last several years, under the guise of paying off the couple’s credit card debt.

Morrison & Foerster attorney Natalie Thingelstad believes other Californians might have been victimized by the scheme, which attracted unsuspecting ‘clients’ through a series of radio interviews by one of the defendants, and used front companies to lend the operation a pretense of sophistication.

The complaint, filed in Contra Costa County, names two defendants, Raul Vicente, of Concord, California, and Kenneth Dresser, of San Diego, as well as business entities called Unicredit Financial Group, Vento America, and Boyington Kirby & Associates, all of which are located in or around San Diego. The complaint maintains that the three businesses are connected to Mr. Dresser, and that Messrs. Vicente and Dresser acted in concert.

The plaintiffs, Hermes Tovar and Genoveva Ruiz, a married couple originally from El Salvador, met with Mr. Vicente after hearing him interviewed on the radio. According to Mr. Tovar, Mr. Vicente ‘talked fast, like a machine, distracting you, trying to get you to sign without reading.’

The couple signed a contract that the complaint alleges violated numerous state statutes regarding debt consolidation agreements. They were required to pay a hefty up-front fee a violation of state law and steep monthly fees to the various companies from 2002 to 2007, with the understanding that the couple’s debt would be managed and eventually eliminated.

The complaint indicates that there is no evidence that any of their money was used to pay down debt; indeed, after years of selling off possessions in order to make payments including tools Mr. Tovar needed for his work and recently experiencing temporary homelessness, Mr. Tovar and Ms. Ruiz are deeper in debt than ever, and face at least one default judgment from a credit card company that the defendants claimed they would manage.

According to the complaint, both plaintiffs have credit ratings that are so dismal they cannot find reasonable and safe places to live. Moreover, their personal lives have been all but destroyed by the stress of dealing with mounting debt and their misplaced faith in the defendants.

Debt consolidation is a legitimate industry for financially strapped individuals who need help working out a schedule for repayment of personal debt, said Morrison & Foerster’s Ms. Thingelstad, but it is susceptible to predatory practices such as those illustrated in this case.

We contend that the defendants had no intention of helping Mr. Tovar and Ms. Ruiz, but signed them on to divert payments into their own pockets, Ms. Thingelstad continued. Wrongdoers such as these will soak up payments for years, allowing their victims debts to mount as interest piles on, and the victims only discover years later that the companies have still done nothing to help them.

It’s important to shine a light on this behavior now, she said, because with the fallout in the subprime mortgage marketplace a lot of homeowners are facing extreme debt distress, and people could be misled into contracting with disreputable outfits such as those described in this case.

Ms. Thingelstad added that while there are laws on the books in California to protect the public from scams such as these, unfortunately, wrongdoers know that their victims usually cannot afford attorneys and are often unaware of the laws in our state that exist to protect them.

The complaint lists eight causes of action, including misrepresentation, negligence, false promise, breach of fiduciary duty, and violations of the California Business and Professional Code and of the Civil Code as it relates to operating legal credit service organizations. The plaintiffs are seeking damages, as well as restoration, attorney’s fees, and interest.

In addition to Ms. Thingelstad, Morrison & Foerster is represented on the case by partner William Stern and associate Nathaniel Sabri, both of the San Francisco office. The firm is working on the case pro bono.

About Morrison & Foerster

With more than one thousand lawyers in eighteen offices around the world, Morrison & Foerster offers clients comprehensive, global legal services in business and litigation. The firm is distinguished by its unsurpassed expertise in finance, life sciences, and technology, its legendary litigation skills, and an unrivaled reach across the Pacific Rim, particularly in Japan and China. For more information, visit

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