CFPB secures $172.8M judgment against debt-relief company Morgan Drexen

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has obtained a final judgment in federal district court against Morgan Drexen, Inc., in connection with the bureau's claim that the debt-relief company deceived consumers and charged unlawful up-front fees. The final judgment, recently entered by the U.S. District Court for the Central District of California, includes approximately $132.8 million as restitution to affected consumers, a $40 million civil penalty, and the incorporation of a permanent injunction imposed against the debt-relief company in June 2015. Morgan Drexen went out of business in June 2015 after filing for bankruptcy.

This final judgment against Morgan Drexen follows an October 2015 stipulated final judgment--approved by the court--against the company's president and CEO, Walter Ledda. Not only was Ledda banned from providing debt-relief services, he also was required to personally pay restitution and a civil penalty. Moreover, the court issued an order holding certain attorneys and their law firms associated with Morgan Drexen in contempt of court at that time. The attorneys have appealed the court's contempt order.

As part of its documentation for the March 16, 2016, final judgment against Morgan Drexen, the court also issued a "Civil Minutes" order granting the CFPB's motion to enter final judgment.