Feds shut down Calif. debt collectors

WASHINGTON (AP) -- A group of California debt collectors have been shut down after being accused of extortion; humiliating debtors by calling their friends, employers and families; and making false threats of lawsuits, the Federal Trade Commission said Thursday.

A temporary restraining order was used to halt four people accused of operating an elaborate debt collection scheme under seven different company names from boiler room locations in Orange and Riverside counties, the agency said.

In a complaint that alleges false and misleading claims, Thai Han, Jim Tran Phelps, Keith Hua and James Novella are accused of frequently changing company names to avoid law enforcement. Some of the names include Western Capital Group, Credit MP and Crown Funding Co.

The four are accused of posing as process servers or law office employees seeking to deliver legal papers for a lawsuit when they contact debtors.

The debtor or a family member would often be told that if they don't return a call within two or three hours, they will be served to appear in court.

In reality, the debt collectors were just that — not process servers or legal workers — and there was no lawsuit at play.

The third-party debt collectors would purchase portfolios of past-due consumer debt and collect payment on their own behalf from consumers all over the country, through phone calls, mail and email, the FTC said.

In some cases, they threatened arrest, property seizure or wage garnishment if they didn't get the debt payments they sought, the agency said.

Using a court order, the FTC has frozen their assets and has appointed a temporary receiver to handle the defendants' business while they proceed with the case.

It wasn't immediately known if the accused have legal representation.