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Biden acts to protect military servicemembers from predatory lending scheme

Date Posted: Tuesday, July 29th, 2014
Categories:  Consumer Protection Department of Justice DOJ Press Releases Fraud

Wilmington – Delaware Attorney General Beau Biden has joined the Consumer Financial Protection Bureau and 12 other states in a settlement with a consumer lender commonly known as Rome Finance Company that resolves allegations the lender, which specialized in providing consumer financing to military servicemembers, engaged in predatory lending practices that cost servicemembers tens of millions of dollars.  As a result of the settlement, 31 Delaware victims will receive $172,000 in relief; in total, the nationwide settlement impacts more than 17,800 servicemembers who will receive $92 million in debt relief.

“It’s unconscionable to target men and women in uniform who are dedicating their lives to protecting us,” Biden said.  “This resolution provides thousands of military members who fell victim to this predatory lending scheme with the financial relief they are owed and allows them to refocus on their families and their mission.”

Rome Finance, which also conducted business as Colfax Capital Corporation and Culver Capital, LLC, financed consumer debts, primarily to military servicemembers, typically for computers, gaming systems, and other goods and services purchased from online retailers or at shopping centers located near military bases.  Some of the agencies who joined the settlement have been investigating Rome Finance for years.  Those investigations revealed that goods often were purchased by Rome Finance cohorts at popular department stores and then resold to servicemembers with the promise of “guaranteed financing for active duty military with no money down.”  The states and federal government allege that servicemembers were induced to purchase goods in financing agreements that hid or insufficiently disclosed extremely high rates of interest and that as a result of these financing agreements, servicemembers ultimately paid Rome multiple times the retail price for the products they purchased.  In addition, the fraud perpetrated by Rome on servicemembers is alleged to have included the improper creation of “dummy” bank accounts in a servicemember’s name in order to secure automatic payment from servicemembers’ military pay in violation of restrictions on the military Defense Finance and Accounting Services (“DFAS”) system.

Under the terms of the settlement, approved earlier this month by the U.S. Bankruptcy Court for the Northern District of California, servicemembers will keep all merchandise financed through Rome Finance, and all outstanding debts owed to the company have been erased and marked “paid in full” with consumer finance reporting agencies.  In addition, today’s resolution bans new business by the company, which is no longer in operation, and its principals.

As he announced today’s settlement, Biden also reminded Delawareans that his office is sponsoring a Delaware Military and Veterans Resource Fair this Wednesday, July 30 from 10 a.m. to 2 p.m. at Delaware State University in Dover.  This free event, open to active and reserve members of the United States military and Delaware National Guard, veterans, and their families, brings together government agencies, non-profits, and other organizations that provide programs and other services to military families.  It will feature remarks by Holly Petraeus, Director of the Office of Servicemember Affairs for the Federal Consumer Financial Protection Bureau, presentations by staff from the Attorney General’s office, the Delaware State Housing Authority, and others that highlight the many state and federal benefits and resources available to members of the armed forces.  In addition, informational tables from a wide variety of organizations will connect attendees on-site to a wide range of state resources available through these and other agencies.  Learn more about the event by visiting http://attorneygeneral.delaware.gov/ or call 1-800-220-5424.

The Rome Financing matter was handled for Delaware by Jeffrey Drobish and Jillian Remming of the Attorney General’s Consumer Protection Unit.

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