LITIGATION Debt termination through Fla. company prompts suit
It is alleged that several Youngstown school teachers lost money in the venture.
By SEAN BARRON
VINDICATOR STAFF WRITER
A Florida company that visited the Youngstown City School District to market services promising to eliminate personal debt is being sued in Florida after being accused of marketing a "phony debt-termination" scheme.
New Leaf Associates of New Port Richey, Fla., was named in a civil lawsuit filed July 7 in Pinellas County Circuit Court.
The suit alleges the company promoted itself as an alternative to filing bankruptcy, according to an article in the Tallahassee Democrat. New Leaf is thought to have made more than $8 million since 2003 by claiming it could wipe out student-loan and credit-card debt without harming credit scores, according to the lawsuit filed by Florida Attorney General Charlie Crist. So far this year, more than 185 complaints have been filed in Florida against New Leaf for deceptive practices, the newspaper said.
The company's dealings also have local ramifications.
Jeff Villanueva of Niles said he was initially skeptical of the company's claims that it could make debt disappear. Villanueva, a hairstylist at Salon DiBella in Warren, said that some of his clients who are Youngstown teachers told him about New Leaf's presentations in the district.
Because the district let New Leaf talk to employees, he said, Villanueva felt safe giving about $5,300 of his money to New Leaf in November. Before he did, a lawyer looked at the contract and money-back guarantee and concluded both were legitimate, he noted.
Villanueva said he was told he could consolidate car payments, home repair costs and other secured debt by placing those on his credit cards. Eventually, the government would allow him to write off such debt, the company claimed.
Instead, Villanueva has around $78,000 in unsecured debt on five credit cards and "nothing to show for it," he added. That figure doesn't include his monthly house payment and other living expenses, he pointed out.
One of the credit card companies worked with Villanueva to lower the interest rate he was paying. A condition of the lower rate, however, was that he pay $1,700 a month over five years, Villanueva said.
Villanueva said New Leaf told him he would get his money back if he gave them the money up front before March 1. He became suspicious when April came and he still had not received any money, Villanueva explained.
"They told me some complications had come up since it's [a] popular [program] and that they're tied up," he recalled. "In all actuality, that wasn't so."
Villanueva said he called the FBI, which suggested he contact the Better Business Bureau and the Ohio Attorney General's office. The FBI informed him of the company's being under investigation in Florida.
Villanueva said that since his financial losses, he has had difficulty getting loans because he's considered a high risk. Villanueva estimated he is paying a total of $900 in finance charges each month on the five credit cards.
Villanueva said he knows four to six teachers in the district who have lost money, some by investing several thousand dollars with the company.
Superintendent Wendy Webb is on vacation and could not be reached for comment. Youngstown schools treasurer Carolyn Funk confirmed that Webb had allowed a representative from New Leaf into the district. While here, the company dealt with personal financial matters, and the district's payroll was not involved, Funk said.
No one answered the phone at New Leaf's Florida headquarters and the voice mailbox was full, so no message could be left.
Since April 14, nine complaints and inquiries about New Leaf have been filed with the Ohio Attorney General's office, according to its Web site. Consumers who wish to file a complaint can go to www.ag.state.oh.us.
Villanueva said that since clients who work for the district told him about New Leaf, he believed it had the backing of the school system and thought it was a safe move.
Villanueva said he wanted to share his story "to put the word out so no one else gets scammed." He also said he wanted companies such as New Leaf to know they can't get away with cheating people.