In August 2022, New Economy Project filed a federal lawsuit against a notorious debt collection law firm, alleging that it engaged in predatory and unlawful practices that harm low-income New Yorkers.
A year earlier, Jose Crespo, a Bronx resident, discovered that a debt collection law firm, Gutman, Mintz, Baker & Sonnenfeldt, LLP (GMBS), had frozen his bank account, which contained only his unemployment benefits. At the time, he was out of work, homeless, and suffering from multiple health issues and financial hardship amid the COVID-19 pandemic. He desperately needed access to his unemployment benefits so he could pay his phone, storage unit, and other bills.
State and federal laws prohibit debt collectors from seizing people’s government benefits, such as unemployment benefits, to collect on alleged debts. As Mr. Crespo alleges in the lawsuit, he told GMBS that his bank account contained only exempt funds and should be released, but GMBS falsely told him that he had to pay them $1,200 out of his exempt funds to get his account released. According to the lawsuit, Mr. Crespo then went to court to assert his legal rights and get his bank account released, but GMBS deliberately delayed both the court process and the ultimate release of his account.
The lawsuit alleges that GMBS violated federal fair debt collection law by engaging in deliberate misrepresentation, falsehoods, deception, and fraud to unlawfully seize Mr. Crespo’s legally protected unemployment benefits.
As Mr. Crespo alleges, GMBS seized his bank account using an all-too-familiar scheme that debt collectors employ to extract funds from low-income New Yorkers. When GMBS first sued Mr. Crespo on an alleged rental debt, GMBS failed to notify him of the lawsuit and then filed papers with the court falsely claiming that it had given him proper notice, a fraudulent practice known as “sewer service.” Though Mr. Crespo has never lived at the address where GMBS claimed to have served him with the lawsuit, GMBS then obtained an automatic “default” judgment against him. Mr. Crespo did not learn about the lawsuit until more than a decade later, when GMBS used the fraudulently obtained default judgment to garnish his wages and later freeze his bank account, leaving him without access to his legally protected unemployment benefits.
In 2015, New Economy Project sued GMBS on behalf of another low-income New Yorker, Franklin Arias, for engaging in predatory practices similar to those alleged by Mr. Crespo. That lawsuit alleged that GMBS violated federal debt collection and state consumer protection laws by refusing to release Mr. Arias’s bank account containing only legally protected Social Security benefits, in order to pressure him into settling an alleged debt.
Mr. Crespo’s lawsuit, which New Economy Project filed with co-counsel, The Law Office of Ahmad Keshavarz, is pending in the Southern District of New York.
Read more:
- New Economy Project, Economic Justice Group Files Federal Lawsuit Against Debt Collection Law Firm Notorious for Predatory Practices
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