The Consumer Financial Protection Bureau has sued Frederick J. Hanna & Associates and its partners for operating what it called a "debt collection lawsuit mill" that used illegal tactics to collect debt many consumers did not owe.
The Hanna law firm has been the focus of a 6-month CBS46 investigation. In June, it was revealed that the State Bar of Georgia opened an investigation into firm founder and managing partner Frederick Hanna for violations of professional rules of conduct.
According to the lawsuit filed in U.S. District Court, the Cobb County-based firm sued more than 350,000 Georgians from 2009 through 2013 to obtain judgments on debts that often were invalid or inflated.
"This is a good thing for consumers in Georgia," said attorney Steve Koval, who has handled multiple lawsuits against Hanna and isn't surprised by the allegations in the lawsuit filed by the CFPB.
The lawsuit seeks civil fines and compensation for victims who paid debt they didn't owe.
The CFPB alleged that the Hanna firm often didn't have documents to prove the debts were owed, used non-attorney support staff to prepare cases and counted on consumers' lack of legal knowledge to win court judgments against them.
In 2009 and 2010, one attorney at the firm signed 138,000 lawsuits which constituted 85 percent of all suits filed, according to the suit. The lawsuit alleged that attorney did not exercise independent professional judgment in determining whether to file the suits.
Ashley Ford said Hanna's firm threatened and sued her for thousands of dollars she didn't owe. The statute of limitations on the debt had passed and yet she said the firm tried to collect, damaging her credit.
"It affects your entire life. It was very stressful. I had to pay a lot of money. I had to hire an attorney," said Ford.
Filing a high number of lawsuits a week has been a very effective method of business for Hanna, said Koval, who hopes the lawsuit will convince judges to scrutinize Hanna's filing more closely.
Joseph Cooling, Hanna's managing partner, denied the firm has done anything improper. In a statement Cooling wrote, "[o]ur law firm has completely cooperated with the Consumer Financial Protection Bureau for the last year in reviewing our law practice and we are obviously disappointed by today's events. We strongly deny the allegations of the complaint and, moreover, the overall characterization of our law firm."
"Our law firm takes great pride in its commitment to compliance with all consumer protection laws and state civil procedure and evidentiary laws. At all times, our firm has faithfully followed the long established legal rules and guidelines set forth under Georgia civil procedure and as established by federal judicial precedent with regard to the Fair Debt Collection Practices Act."
"We believe the law and evidence will show that, and we look forward to presenting our side of the case to the court at the appropriate time."
Copyright 2014 WGCL-TV (Meredith Corporation). All rights reserved.