Posted by tom321 on page 17 of this thread (reposted by Ric)
State investigates debt payment company
PRATTVILLE -- The Alabama Securities Commission and the attorney general's office are investigating a debt payment company based in Prattville for alleged deceptive trade practices and operating without the proper license.
A civil complaint against Allegro Law LLC, Allegro Financial Services LLC and owner Keith Anderson Nelms was filed in Autauga County Circuit Court last week. Nelms is an attorney who has a law office in Prattville. He faces no criminal charges.
Circuit Judge Ben Fuller froze the as sets of the companies and Nelms' personal bank accounts last week, on the request of the state agencies.
Fuller heard more than five hours of testimony in a hearing Thursday afternoon and likely will decide today if all the assets will remain frozen.
The Securities Commission asserts that Nelms has to be licensed under that agency to handle debt payment activities in the state. Nelms' position is that the Alabama State Bar is the only agency that has the jurisdiction to license attorneys in the state, and the Securities Commission's license isn't necessary.
Nelms is dissolving Allegro Law LLC and attempting to form Allegro Financial LLC, another debt payment company, as its replacement, said his wife, Jennifer Jordan, who is also an attorney and is representing her husband in the matter.
"We applied for a license from the Securities Commission for Allegro Financial, but the process has been halted because of this complaint filed against us," she said. Nelms operated Allegro Law LLC out of his Cobbs Ford Road office in Prattville, the complaint states.
The Securities Commission and the attorney general's office say Allegro Law's clients include more than 15,000 people nationwide and "at least 175 Alabama citizens."
Nelms ran afoul of the Deceptive Trade Practices Act in dealing with his clients, the complaint alleges.
Customers of the business "do not understand how much they are charged in fees by Allegro and do not realize that no payments will be made to the creditors by Allegro until those fees are paid in full," the complaint reads. The complaint continues with "Allegro customers do not understand that they will pay a $25 non-legal set-up fee, a $59 monthly fee and a fee of 16 percent of their total debt enrolled in the program up front, before any payments are made to the creditors by Allegro Law." (THIS BUSINESS MODEL IS JUST INSANE)
According to Jordan, customers were informed of how the debt payment plan works through several sources, including phone calls, letters and a contract they are required to sign before entering the program.
Customers would pay Allegro Law a certain amount each month, and the company would negotiate with creditors on their debt. The money would go into an escrow account until enough funds were accumulated to pay the creditors.
"The attorney general's office is basically saying that Allegro Law isn't a viable business," Nelms said after the hearing. "We performed valuable services for our customers. Many of their accounts were settled for half to 30 percent of what their original debt load was. I say that's a very valuable service for our customers."
In a matter unrelated to the civil complaint, Nelms has agreed to a three-year suspension of his license to practice law in the wake of a complaint filed against him by Chase Financial in New York, based on the activities of Allegro Law. He entered the conditional guilty plea before the Alabama State Bar's disciplinary board June 29, records at the bar show. The board is responsible for regulating actions of attorneys licensed to practice in the state. The Alabama Supreme Court accepted the plea Thursday morning, court documents show.
The suspension goes into effect after the high court's acceptance of the plea, said Jeremy McIntire, assistant general counsel of the Alabama State Bar.
The plea states that Nelms represented himself as an attorney to customers in the debt payment business but is only licensed to practice law in the state of Alabama. The plea also states that Nelms took the 16 percent fee up front, before doing any work on behalf of his customers. Lawyers in Alabama can't accept fees unless they do something to earn them, McIntire said.
Nelms also owns two Steak-Out restaurant franchises in the tri-county area. He was an unsuccessful candidate for the District 7 Montgomery City Council seat in 2003.
The accounts for the restaurants and his law firm also have been frozen. Fuller said he wants to release those accounts as soon as possible, if it is proved that there is no co-mingling of money with the debt payment company accounts. Fuller appointed a receiver to handle the frozen accounts.
"The restaurants and law office have employees who rely on those businesses for a paycheck so they can pay their bills and feed their families," Fuller said at the end of the hearing Thursday. "My position is we need to get the auditing of those accounts completed as quickly as possible, so we can have an absolute minimum impact on the folks who rely on these businesses for their livelihood."
This is all I could find on this. I looked yesterday for Keith Anderson Nelms name in the Alabama Bar association site. His name was there. TODAY it is not there anymore.
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