Nexus and its owners ordered to pay $811 million in massive civil lawsuit
Note: After some initial confusion on the amount of the lawsuit when first published, District Court Judge Elizabeth K. Dillon on Tuesday filed an amended opinion clearly stating that each defendant (there are five) must pay $111,135,620 million, on top of the other findings, bringing the total lawsuit to just over $811 million.
HARRISONBURG — In a massive financial hit, Nexus Services Inc., once a high-flying local company, has been jolted by a federal judge following a $811 million ruling in a civil lawsuit against the company, its owners and a former owner.
The Consumer Financial Protection Bureau (CFPB) — along with the states of Virginia, Massachusetts and New York — filed the 17-count lawsuit in 2021 against Nexus, its subsidiary, Libre by Nexus, CEO and majority owner Mike Donovan, his spouse, Richard Moore, and Evan Ajin, a vice president at Nexus who also owns 10 percent of the company, which used to be located in Verona.
The lawsuit, filed in the United States District Court for the Western District of Virginia in Harrisonburg, accused the defendants of violating various state consumer protection laws and the Consumer Financial Protection Act of 2010.
Moore, a former owner at Nexus, is also facing 10 federal charges of employment tax fraud along with two charges of aiding and assisting in the preparation of a false tax return. He's accused of bilking the IRS out of an estimated $1.5 million while he worked at Nexus. Donovan and Moore also face theft allegations in Augusta County in a case where more than $400,000 was reportedly stolen.
Nexus, through Libre by Nexus, helps people secure their release from the custody of U.S. Immigration and Customs Enforcement (ICE), and operates a nationwide business aimed at immigrants held in federal detention.
"Neither Nexus nor Libre is a licensed bail-bond agent or a surety company certified by the U.S. Treasury," said an opinion filed Monday by U.S. District Judge Elizabeth K. Dillon. "Instead, Libre is a service provider that acts as an intermediary between immigration detainees and sureties and their bond agents."
The complaint said Nexus and the defendants engaged in a "slew of deceptive conduct."
To obtain Libre’s services, court records state the company required detainees to execute an agreement with certain obligations and, in exchange, Libre agreed to indemnify the sureties and their bond agents for any losses in connection with the immigration bonds.
The lawsuit said the claims made by Libre were false and misleading. The company once used a 21-page, written client agreement that was entirely in English except for one page in Spanish. The original contract required consumers to make upfront payments in the amount of 20% of the bond, a $420 advance payment, and an activation fee up to $460.
For awhile, clients also had to wear ankle bracelets. Around early 2018, Libre revised its written agreement to not include GPS monthly lease payments. Instead, it called for monthly “program fees" and required consumers to either pay the fees according to a schedule or to pay supplemental "bond collateralization" payments that added up to the full amount of the bond, court records state.
"Contrary to these claims, Libre did not pay the immigration bonds, and the monthly payments were in actuality 'rental fees' for the GPS devices," Dillon said in an opinion that was also filed Monday. In 2018, the average immigration bond was $7,500, the judge noted.
The company was accused of threatening clients with re-arrest or deportation; creating the impression it paid cash for the immigration bonds and that repayment from consumers was for the debt; using deceptive and abusive terms in its contracts; not providing refunds; and falsely claimed that the GPS devices were functional, according to the lawsuit.
Dillon ordered the five defendants to pay $230,996,970 in restitution to the CFPB, the same amount Nexus collected from consumers between December 2013 and June 2022, court records state. The judge also ordered that Nexus, Libre, Donovan, Moore and Ajin each pay $111,135,620 in civil penalties to the CFPB, as well as additional civil penalties of $7,100,000 to the Commonwealth of Virginia, $3,400,000 to the Commonwealth of Massachusetts, and $13,890,000 to New York. The judgement was for more than $811 million.
“This judgment is a victory for thousands of immigrant families who lost their life savings and were targeted and preyed on by Libre,” said New York Attorney General James. “Libre exploited vulnerable immigrants and their families to pad its pockets, and that is illegal and unconscionable. Anytime a company harms New Yorkers with abusive and deceptive tactics, my office will not hesitate to take action to protect the most vulnerable.”
Virginia Attorney General Jason S. Miyares and Commonwealth of Massachusetts Attorney General Andrea Campbell were also part of the lawsuit with James.
In May, Dillon found Donovan, Moore and Ajin in contempt for noncompliance in the lawsuit and ordered that default judgements be entered.
The defendants have 10 days to pay the civil penalties, Dillon said.
Court records show that Donovan owns 90% of Nexus and Ajin owns 10%. Up until February 2022, Moore had 39% ownership before transferring his interest to Donovan.
In an unrelated criminal case, on Wednesday in Augusta County Circuit Court, Moore has a sentencing hearing scheduled and could get jail time after botching a plea deal in a seemingly minor perjury case.
However, both Moore and Donovan are facing more serious charges.
In July, the couple will be tried in Augusta County on allegations they stole $426,000 from the brother of convicted Florida school shooter Nikolas Cruz. Timothy Shipe, a Nexus executive, is also charged in the case.
In December, Moore will be tried in federal court on the tax charges. He has pleaded not guilty.
Last summer, Nexus had its Verona campus sold off at a public auction for $3.4 million after the property went into foreclosure.
On Monday, Libre released a statement that said it was appropriate for the court to decide the lawsuit on April Fool's Day, adding the company "remains committed to upholding the highest standards of compliance and providing essential services to immigrant communities across the United States."
Donovan said there will be an appeal, and a motion will be filed seeking a stay on the judgement.
“This decision by Judge Dillion does not come as a surprise to Libre or our team of dedicated associates. Our system of government is built on due process and Libre and our clients were denied that by this court when it failed to allow us to present evidence regarding the allegations at a trial, and even a damages hearing in this case, and further failed to disclose a conflict between a court clerk in the case and a disgruntled former employee and CFPB whistleblower," Donovan said in an email to The News Leader. "While I am confident the Fourth Circuit Court of Appeals will reverse this offensive judgement, I am also confident the Supreme Court will rule in favor of the Fifth Circuit's interpretation of the constitutionality of the CFPB, likely mooting this judgement entered against us today. We continue to remain committed to serving our clients — people who suffer and sacrifice for a better life, and who do not deserve to be political pawns in an American legislature or an American courtroom.”
Dillon noted in her opinion that the defendants "largely failed to produce documents and electronically stored information responsive to plaintiffs’ discovery requests throughout this litigation."
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Brad Zinn is the cops, courts and breaking news reporter at The News Leader. Have a news tip? Or something that needs investigating? You can email reporter Brad Zinn (he/him) at bzinn@newsleader.com. You can also follow him on X (formerly Twitter).
This article originally appeared on Staunton News Leader: Nexus and its owners ordered to pay $811 million in massive lawsuit
