NY AG Cuomo Files Lawsuit to Shut Down Another Debt Collector

New York Attorney General Andrew M. Cuomo late Tuesday announced a lawsuit against debt collection agencies in Western New York that he said violated the law by harassing consumers through repeated threatening and obscene phone calls as well as making calls to the consumers’ employers and families. It’s the latest action in Cuomo’s ongoing probe of the ARM industry.

Cuomo’s lawsuit claims Frank Santiago, the owner and operator of Northern Asset Management, LLC and Eastern Asset Management, LLC, had employees use abusive measures and lies in the debt collection operation. The suit seeks to shut down the companies, bar Santiago from the collection business and require him to pay significant penalties, costs and fees to the state.

“There are clear laws that say how a debt collection company can do business, and we allege that this debt collector and his companies broke those laws,” said Attorney General Cuomo in a statement. “Threats, intimidation, obscene language and overt harassment are just some of the day-to-day business practices that were employed by this operation. Their actions must come to an end.”

An investigation by Coumo’s office determined that Santiago tried to avoid detection from authorities by changing the name of his companies after consumer complaints mounted. Santiago operated a company called Ethical Asset Management from late 2006 through mid 2007. After complaints, Santiago closed Ethical Asset and opened Eastern Asset Management. After being sued dozens of times, Santiago shut down Eastern Asset in December 2009 and immediately began operating as Northern Asset Management, which is still active.

The case is related to an earlier lawsuit Cuomo filed against an accounts receivable management attorney.

The New York AG in early May sued Western New York attorney John P. Nicolia after an investigation determined that he collected $141,000 in fees for allowing Santiago’s companies to threaten consumers across the country using Nicolia’s name ("New York AG Sues Buffalo Lawyer in Debt Collection Probe," May 7). In reality, Nicolia never provided any actual legal services for the debt collection companies.

Santiago’s collectors, after invoking Nicolia’s name, often falsely stated that the consumers had lawsuits filed against them, would have their driver’s licenses suspended, would be charged with a crime and/or would be imprisoned or lose their property if they didn’t pay.

Cuomo’s office said that the collectors also repeatedly harassed consumers and their relatives often at unconscionable times. One consumer claimed that he received calls as early as 6:50 in the morning from various phone numbers. Others claimed the company called 10-15 times a day to their home, cell phone, work and even to family members over an extended period of time. One consumer complained that the collectors called “constantly every 2 minutes, then when he couldn’t talk to me he called my 85-year-old neighbor and told her that this is a matter I can’t ignore and if I don’t contact them that they will be sending the police to my house.”

Additionally, Santiago’s company regularly engaged in third party disclosure, according to the attorney general’s press release. Collectors would call debtors’ workplaces and speak to others at their home number.

Cuomo’s lawsuit seeks to bar Santiago and his affiliated businesses from the debt collection industry in New York State and require him to pay significant penalties, costs and fees for the multiple violations of law.

Since commencing a statewide initiative in May 2009, Cuomo has shut down 14 debt collection and affiliated process serving companies and required others to reform their deceptive practices. His office has also garnered criminal convictions against 10 collectors who engaged in especially egregious and threatening actions against consumers. The investigation is ongoing and lawsuits against several other collection companies are pending.