UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NEW YORK
CONSUMER FINANCIAL PROTECTION
BUREAU, THE PEOPLE OF THE STATE OF
NEW YORK, BY LETITIA JAMES,
ATTORNEY GENERAL OF THE STATE OF
NEW YORK, STATE OF COLORADO, ex rel.
PHILIP J. WEISER, ATTORNEY GENERAL,
STATE OF DELAWARE ex rel. KATHLEEN
JENNINGS, ATTORNEY GENERAL,STATE
OF DELAWARE, THE PEOPLE OF THE
STATE OF ILLINOIS, through ATTORNEY
GENERAL KWAME RAOUL, THE STATE OF
MINNESOTA, by its ATTORNEY GENERAL,
KEITH ELLISON, THE STATE OF NORTH
CAROLINA , ex rel. Joshua H. Stein, Attorney
General, and THE STATE OF WISCONSIN,
Plaintiffs,
v.
STRATFS, LLC (f/k/a STRATEGIC
FINANCIAL SOLUTIONS, LLC), STRATEGIC
CLIENT SUPPORT, LLC (f/k/a PIONEER
CLIENT SERVICES, LLC), STRATEGIC CS,
LLC, STRATEGIC FS BUFFALO, LLC,
STRATEGIC NYC, LLC, BCF CAPITAL, LLC,
T FIN, LLC, STRATEGIC CONSULTING,
LLC, VERSARA LENDING, LLC, STRATEGIC
FAMILY, INC., ANCHOR CLIENT
SERVICES, LLC (NOW KNOWN AS CS 1
PAAS SERVICES, LLC), BEDROCK CLIENT
SERVICES, LLC, BOULDER CLIENT
SERVICES, LLC, CANYON CLIENT
SERVICES, LLC, CAROLINA CLIENT
SERVICES, LLC, GREAT LAKES CLIENT
SERVICES, LLC, GUIDESTONE CLIENT
SERVICES, LLC, HARBOR CLIENT
CASE NO. 24-cv-40-EAW-
MJR
FIRST AMENDED
COMPLAINT FOR
INJUNCTIVE RELIEF,
RESTITUTION, AND CIVIL
MONEY PENALTIES
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Introduction
1. The Consumer Financial Protection Bureau (Bureau) and the State of New
York, the State of Colorado, the State of Delaware, ex rel. Kathleen Jennings, Attorney
General, the People of the State of Illinois, the State of Minnesota, the State of North
Carolina, and the State of Wisconsin (collectively, the States) file this Complaint against
StratFS, LLC (f/k/a Strategic Financial Solutions, LLC), Strategic Client Support, LLC
(f/k/a Pioneer Client Support, LLC), Strategic CS, LLC, Strategic FS Buffalo, LLC,
Strategic NYC, LLC, BCF Capital, LLC, T Fin, LLC, Strategic Consulting, LLC, Versara
SERVICES, LLC, HEARTLAND CLIENT
SERVICES, LLC, MONARCH CLIENT
SERVICES, LLC (NOW KNOWN AS CS 2
PAAS SERVICES, LLC), NEWPORT CLIENT
SERVICES, LLC, NORTHSTAR CLIENT
SERVICES, LLC, OPTION 1 CLIENT
SERVICES, LLC, PIONEER CLIENT
SERVICING, LLC, ROCKWELL CLIENT
SERVICES, LLC, ROYAL CLIENT SERVICES,
LLC, STONEPOINT CLIENT SERVICES,
LLC, SUMMIT CLIENT SERVICES, LLC
(NOW KNOWN AS CS 3 PAAS SERVICES,
LLC), WHITESTONE CLIENT SERVICES,
LLC, RYAN SASSON, JASON BLUST,
DANIEL BLUMKIN, ALBERT IAN BEHAR,
TWIST FINANCIAL, LLC, DUKE
ENTERPRISES, LLC, BLAISE
INVESTMENTS, LLC and UNIDENTIFIED
JOHN DOES 1-50,
Defendants, and
STRATEGIC ESOP, STRATEGIC ESOT, THE
BLUST FAMILY IRREVOCABLE TRUST
THROUGH DONALD J. HOLMGREN,
TRUSTEE, JACLYN BLUST, LIT DEF
STRATEGIES, LLC, and RELIALIT, LLC,
Relief Defendants.
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Lending, LLC, Strategic Family, Inc. (collectively, SFS), Anchor Client Services, LLC
(now known as CS 1 PAAS Services, LLC), Bedrock Client Services, LLC, Boulder Client
Services, LLC, Canyon Client Services, LLC, Carolina Client Services, LLC, Great Lakes
Client Services, LLC, Guidestone Client Services, LLC, Harbor Client Services, LLC,
Heartland Client Services, LLC, Monarch Client Services, LLC (now known as CS 2
PAAS Services, LLC), Newport Client Services, LLC, Northstar Client Services, LLC,
Option 1 Client Services, LLC, Pioneer Client Servicing, LLC, Rockwell Client Services,
LLC, Royal Client Services, LLC, Stonepoint Client Services, LLC, Summit Client
Services, LLC (now known as CS 3 PAAS Services, LLC), Whitestone Client Services,
LLC (collectively, Client Services Subsidiaries), Ryan Sasson, Jason Blust, Daniel
Blumkin, Albert Ian Behar (collectively, Individual Defendants), Twist Financial, LLC,
Duke Enterprises, LLC, Blaise Investments, LLC (collectively, Holding Companies), and
Unidentified John Does 1-50, which are additional SFS companies and Client Services
Subsidiaries that are currently unknown.
2. The Bureau and the States (collectively Plaintiffs) file this Complaint
against Strategic ESOP, Strategic ESOT, the Blust Family Irrevocable Trust Through
Donald J. Holmgren, Trustee, Jaclyn Blust, Lit Def Strategies, LLC, and Relialit, LLC as
Relief Defendants.
3. The Bureau brings this action under the Telemarketing and Consumer
Fraud and Abuse Prevention Act (Telemarketing Act), 15 U.S.C. §§ 6102(c), 6105(d); the
Telemarketing Sales Rule (TSR), 16 C.F.R. pt. 310; and Sections 1031, 1036(a), 1054,
and 1055 of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§
5536(a), 5564, 5565, in connection with the marketing and sale of debt-relief services.
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4. The State of New York, by its Attorney General (NYAG), is authorized to
take action to enjoin repeated and persistent fraudulent and illegal conduct under New
York Executive Law § 63(12) and deceptive business acts and practices under New York
General Business Law (“GBL”) Article 22-A.
5. Pursuant to the Telemarketing Act, 15 U.S.C. §§ 6103(a) and (f)(2), the
NYAG is authorized to initiate federal district court proceedings to enjoin telemarketing
activities that violate the TSR, to enforce compliance with the TSR, and in each such
case, to obtain damages, restitution, and other compensation on behalf of New York
residents, or to obtain such further and other relief as the court may deem appropriate.
The NYAG is also authorized to enforce the CFPA. 12 U.S.C. § 5552(a).
6. Pursuant to the Telemarketing Act, 15 U.S.C. § 6103(a) and (f)(2), the
State of Colorado, by its Attorney General, is authorized to initiate federal district court
proceedings to enjoin telemarketing activities that violate the TSR, to enforce
compliance with the TSR, and in each such case, to obtain damages, restitution, and
other compensation on behalf of Colorado residents, or to obtain such further and other
relief as the court may deem appropriate. The State of Colorado is also authorized to
enforce the CFPA. 12 U.S.C. § 5552(a).
7. Pursuant to the Telemarketing Act, 15 U.S.C. § 6103(a) and (f)(2),
Kathleen Jennings, Attorney General of Delaware, is authorized to initiate federal
district court proceedings to enjoin telemarketing activities that violate the TSR, to
enforce compliance with the TSR, and in each such case, to obtain damages, restitution,
and other compensation on behalf of Delaware residents, or to obtain such further and
other relief as the court may deem appropriate. The State of Delaware is also authorized
to enforce the CFPA. 12 U.S.C. § 5552(a).
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8. Pursuant to the Telemarketing Act, 15 U.S.C. § 6103(a) and (f)(2), the
State of Illinois, by its Attorney General Kwame Raoul, is authorized to initiate federal
district court proceedings to enjoin telemarketing activities that violate the TSR, to
enforce compliance with the TSR, and in each such case, to obtain damages, restitution,
and other compensation on behalf of Illinois residents, or to obtain such further and
other relief as the court may deem appropriate. The State of Illinois is also authorized to
enforce the CFPA. 12 U.S.C. § 5552(a).
9. Pursuant to the Telemarketing Act, 15 U.S.C. § 6103(a) and (f)(2), the
State of Minnesota, by its Attorney General, is authorized to initiate federal district
court proceedings to enjoin telemarketing activities that violate the TSR, to enforce
compliance with the TSR, and in each such case, to obtain damages, restitution, and
other compensation on behalf of Minnesota residents, or to obtain such further and
other relief as the court may deem appropriate. The State of Minnesota is also
authorized to enforce the CFPA. 12 U.S.C. § 5552(a).
10. Pursuant to the Telemarketing Act, 15 U.S.C. § 6103(a) and (f)(2), the
State of North Carolina, by its Attorney General, is authorized to initiate federal district
court proceedings to enjoin telemarketing activities that violate the TSR, to enforce
compliance with the TSR, and in each such case, to obtain damages, restitution, and
other compensation on behalf of North Carolina residents, or to obtain such further and
other relief as the court may deem appropriate. The State of North Carolina is also
authorized to enforce the CFPA. 12 U.S.C. § 5552(a).
11. The State of Wisconsin, by its Attorney General and Department of Justice
(WIAG), is authorized under Wis. Stat. §§ 165.25(1m), 220.04(10), and 220.12 to take
action to enforce compliance with the State’s adjustment service company law, Wis.
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Stat. § 218.02, and the administrative rule promulgated thereunder, Wis. Admin. Code
§ DFI-Bkg. Ch. 73, and to seek a permanent or temporary injunction or restraining
order, appointment of a receiver, and order for recission of any acts determined to be
unlawful.
12. Pursuant to the Telemarketing Act, 15 U.S.C. § 6103(a) and (f)(2), the
WIAG is authorized to initiate federal district court proceedings to enjoin telemarketing
activities that violate the TSR, to enforce compliance with the TSR, and in each such
case, to obtain damages, restitution, and other compensation on behalf of Wisconsin
residents, or to obtain such further and other relief as the court may deem appropriate.
The WIAG is also authorized to enforce the CFPA. 12 U.S.C. § 5552(a).
Overview
13. Since at least January 2016, Defendants have operated a debt-relief
scheme that collects exorbitant, illegal advance fees from vulnerable consumers
suffering financial difficulties. SFS employs third parties to mail personalized letters to
debt-distressed consumers in the name of a rotating cast of companies (e.g., Lucky
Marketing, Patriot Funding and Pebblestone Financial). The letters claim the consumers
are “pre-approved” for a debt-consolidation loan at attractive rates, e.g., 3.11% APR. The
letters include a unique Offer Code or Personal Reservation Code (PRC). Consumers are
directed to call a phone number or submit a request to a designated website using the
unique PRC. Sometimes the packages sent to consumers also include fake checks
payable to the consumer.
14. SFS is the invisible orchestrator of the solicitations, and the rotating list of
companies used in the mailers exists only on the face of the letters; in reality, there is no
actual lender and no actual pre-approval.
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15. SFS often causes 2-3 million direct-mail solicitation letters to be sent to
consumers each week. SFS projects the mailers will generate between 12,000 and
16,000 leads per week.
16. When consumers respond to the pre-approval letters (by calling or by
visiting the website and entering the PRC), their information is captured by SFS’s
computer systems and is sent to SFS’s sales employees as “leads.”
17. SFS’s sales employees then contact the consumer and almost always advise
them that they do not qualify for the loan. Instead, they encourage the consumers to
enroll in SFS’s debt-relief service by promising that Defendants’ network of lawyers will
negotiate reduced payoff amounts with consumers’ creditors and defend consumers in
the event of a creditor lawsuit. This sales process is dictated by tightly choreographed
scripts that include rebuttal responses to every possible consumer push back.
18. At least one of the scripts used by SFS’s sales employees presumes that the
loan was not provided to the consumer and directs the SFS sales employee to say,
“although your file was not approved for a debt consolidation loan (due to your credit
score and/or debt to income ratio) . . . we have approved you for a great option which is
perfectly in line with the goals we previously discussed.”
19. Another SFS sales script includes the following scripted question and
answer:
Q. The flyer said I was already approved for a loan. Why do I have to submit
an application?
A: Many people take the term “pre-approved” to mean already approved and
I apologize for that confusion. It actually means you have been pre-approved
to go through our application process, but we do need some additional
information to complete your application.
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20. SFS sales employees routinely refer to the debt-relief service as the “0%
interest option.” SFS provides a script for its sales employees that describes the debt-
relief service as follows:
This program will still provide you the convenience factor of one single
lower monthly payment, it will allow you to get all of this debt taken care
of in an average of just 3-4 years, while saving you a significant amount of
money off of your principal balance, but most importantly this option will
be charging zero interest throughout the entire length and duration of
this option. (emphasis added).
21. Immediately after consumers enroll in the debt-relief service, Defendants
begin collecting substantial fees from them, despite admitting to consumers that any
settlements with creditors will take months to secure. Meanwhile, consumers’ debts
continue to accrue interest while they remain outstanding.
22. Defendants’ front-loaded fees leave the consumers with little money for
any such potential settlements. As a result, consumers regularly pay into the debt-relief
service for months before Defendants reach a settlement with even one creditor, and
Defendants collect a significant amount of fees in the interim. Some consumers exit the
program having paid substantial fees but with none of their debts settled or reduced.
Many consumers end up with more debt than they started with, see their credit scores
decrease substantially, and end up getting sued by creditors. Already-vulnerable
consumers often end up in a worse financial situation than before, while Defendants
profit. Since at least January 2016, Defendants have collected over $84,000,000 in
unlawful fees from consumers through these schemes.
23. The Individual Defendants conduct this operation using a web of
interrelated companies they have created. Individual Defendants Sasson, Blumkin, and
Behar founded SFS. Each of them created a single-member shell Holding Company
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(Duke Enterprises LLC (“Duke Enterprises”), Twist Financial LLC (“Twist Financial”),
and Blaise Investments LLC (“Blaise Investments”), respectively) that funneled money
from SFS’s businesses to Sasson, Behar, and Blumkin. Until 2017, each of these Holding
Companies owned a percentage of Strategic Financial Solutions, LLC. Collectively, their
ownership constituted a majority, which allowed them to control Strategic Financial
Solutions, LLC. Their ownership interests were converted to stock, and then the Holding
Companies sold their stock to the Strategic ESOT in 2017. Defendants Sasson, Blumkin,
and Behar currently serve as directors on Strategic Family’s Board of Directors.
24. Individual Defendant Sasson also created the Client Services Subsidiaries.
25. Individual Defendants Sasson and Blust created façade law firms (the
“Façade Firms”) that correspond to each Client Services Subsidiary. These law firms
serve as a façade for SFS’s debt-relief operation and perform little to no work on behalf
of consumers. In addition, the Individual Defendants created shell companies and
consulting firms that funnel money to the Individual Defendants.
Jurisdiction
26. This Court has subject-matter jurisdiction over this action because it is
brought under “Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a
federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28
U.S.C. § 1345.
27. This Court has supplemental jurisdiction over the States’ state law claims
because they are so related to the federal claims that they form part of the same case or
controversy. 28 U.S.C. § 1367(a).
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Venue
28. Venue is proper in this district because SFS is located, resides, and does
business here and because a substantial part of the events or omissions giving rise to the
claims occurred in this district. 12 U.S.C. § 5564(f); 28 U.S.C. § 1391(b)(2).
The Parties
29. The Bureau is an independent agency of the United States charged with
regulating the offering and provision of consumer financial products or services under
Federal consumer financial laws. 12 U.S.C. § 5491(a). The Bureau has independent
litigating authority, 12 U.S.C. § 5564(a)-(b), including the authority to enforce the TSR
as it applies to persons subject to the CFPA, 15 U.S.C. §§ 6102(c)(2), 6105(d).
30. Letitia James, Attorney General of New York, is authorized to bring this
action on behalf of the State of New York and its citizens to enforce New York Law, the
TSR, and the CFPA.
31. Philip J. Weiser, Attorney General for Colorado, is authorized to bring this
action on behalf of the State of Colorado and its citizens to enforce the TSR and CFPA.
32. Kathleen Jennings, Attorney General of Delaware, is authorized to bring
this action on behalf of the State of Delaware and its citizens to enforce the TSR and
CFPA.
33. Kwame Raoul, Illinois Attorney General is authorized to bring this action
on behalf of the People of the State of Illinois to enforce the TSR and CFPA.
34. Keith Ellison, Attorney General of Minnesota, is authorized to bring this
action on behalf of the State of Minnesota and its citizens to enforce the TSR and CFPA.
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35. Joshua H. Stein, Attorney General of the State of North Carolina, is
authorized to bring this action on behalf of the State of North Carolina and its citizens to
enforce the TSR, and the CFPA.
36. Joshua L. Kaul, Attorney General of Wisconsin, is authorized to bring this
action on behalf of the State of Wisconsin to enforce Wisconsin law, the TSR, and the
CFPA.
SFS
37. Strategic Family, Inc. is the parent company of other SFS defendants,
including StratFS, LLC (f/k/a Strategic Financial Solutions, LLC), Strategic Client
Support, LLC (f/k/a Pioneer Client Services, LLC), Strategic CS, LLC, Strategic FS
Buffalo, LLC, Strategic NYC, LLC, BCF Capital, LLC, T Fin, LLC, Versara Lending, LLC,
and Strategic Consulting, LLC (collectively, SFS, as defined above).
38. SFS maintains its principal place of business at 115 Lawrence Bell Drive,
Buffalo, NY 14221. SFS’s website (stratfs.com) says that its main office is located at this
address. SFS offers and provides “financial advisory services,” including debt-relief
services, to consumers owing unsecured debts to creditors. These services are offered to
consumers primarily for personal, family, or household purposes.
39. In connection with a campaign to induce consumers to purchase its
services, SFS initiates and receives interstate telephone calls to and from consumers.
During these calls, SFS offers to renegotiate, settle, or alter the terms of payment or
other terms of the debt between a person and one or more unsecured creditors or debt
collectors. Thus, SFS is a “telemarketer” offering “debt-relief services” under the TSR. 16
C.F.R. § 310.2(o), (ff).
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40. SFS provides, offers to provide, or arranges for others to provide debt-
relief services to consumers in exchange for consideration. Thus, SFS is also a “seller”
offering “debt-relief services” under the TSR. 16 C.F.R. § 310.2(o), (dd).
Non-Party Façade Firms
41. On paper, SFS partners with purported law firms around the country, and
the firms offer and promise to provide services, including debt-relief services, to
consumers owing unsecured debts to creditors. Each firm is paired with an SFS-owned
Client Services Subsidiary that usually has a name similar to the firm, and non-attorney
negotiators from SFS and its Client Services Subsidiaries are the ones tasked with
renegotiating a consumer’s debt – if such negotiations happen at all. Because most or all
of the services are carried out by non-attorneys who are not employees of the firm, the
firms are referred to herein as “Façade Firms” and are not named as defendants herein.
42. Many of the Façade Firms appear not to have physical offices, and instead
utilize virtual offices and mailboxes, like UPS Store-rented mailboxes. For at least some
of the Façade Firms, incoming mail is scanned by a third party and then uploaded not to
the law firm but rather to SFS.
43. The Façade Firms work on behalf of SFS to offer debt-relief services to
consumers owing unsecured debts to creditors. The Façade Firms are therefore “covered
persons” under the CFPA. 12 U.S.C. § 5481(6), (19).
44. In connection with SFS’s telemarketing transactions, the Façade Firms
offer to provide or arrange for others to provide debt-relief services to consumers in
exchange for consideration. Thus, the Façade Firms are “sellers” offering “debt-relief
services” under the TSR. 16 C.F.R. § 310.2(o), (dd).
45. The Façade Firms include but are not limited to:
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• A. Florio & Associates, PLLC d/b/a Bedrock Legal Group f/k/a Raggio &
Associates, PLLC;
• Anchor Law Firm, PLLC;
• Boulder Legal Group, LLC;
• The Brian A Moore Law Firm LLC d/b/a Guidestone Law Group;
• Burnette Legal Group, LLC d/b/a Monarch Legal Group;
• Daniel Rufty Legal PLLC d/b/a Carolina Legal Services;
• Donald Norris Associates PLLC d/b/a Stonepoint Legal Group;
• Gardner Legal LLC d/b/a Option 1 Legal;
• Great Lakes Law Firm, LLC;
• Greene Legal Services, LLC d/b/a Newport Legal Group;
• Harbor Legal Group, LLC;
• Henry Legal Group, PLLC d/b/a Heartland Legal Group;
• Hodyno & Associates, PLLC d/b/a Rockwell Legal Group;
• JMS Industries, LLC d/b/a Canyon Legal Group;
• Pioneer Law Firm, P.C., f/k/a John B. Dougherty P.C.;
• Northstar Legal Group, LLC;
• Royal Legal Group, LLC;
• The Sands Law Group, LLP d/b/a Whitestone Legal Group; and
• WyoLaw, LLC d/b/a Summit Law Firm.
Client Services Subsidiaries
46. The SFS-owned Client Services Subsidiaries perform services to facilitate
the scheme. Each SFS-owned Client Services Subsidiary corresponds to one or more
Façade Firms, and most of the Client Services Subsidiaries share a name with a Façade
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Firm. For example, Anchor Client Services, LLC corresponds to Anchor Law Firm,
PLLC. SFS uses the Client Services Subsidiaries to siphon money from consumers’
accounts and profits from the Façade Firms and to mask SFS’s involvement in the debt-
relief operation.
47. The Client Services Subsidiaries work on behalf of SFS and the Façade
Firms to offer debt-relief services to consumers who owe unsecured debts to creditors.
These services are offered to consumers primarily for personal, family, or household
purposes.
48. In connection with SFS’s telemarketing transactions, the Client Services
Subsidiaries offer to provide or arrange for others to provide debt-relief services to
consumers in exchange for consideration. Thus, the Client Services Subsidiaries are
“sellers” offering “debt-relief services” under the TSR. 16 C.F.R. § 310.2(o), (dd).
49. As discussed below, the Client Services Subsidiaries are in a common
enterprise with SFS. The Client Services Subsidiaries involved in the common enterprise
include:
• Anchor Client Services, LLC (now known as CS 1 PAAS Services, LLC);
• Bedrock Client Services, LLC;
• Boulder Client Services, LLC;
• Canyon Client Services, LLC;
• Carolina Client Services, LLC;
• Great Lakes Client Services, LLC;
• Guidestone Client Services, LLC;
• Harbor Client Services, LLC;
• Heartland Client Services, LLC;
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• Monarch Client Services, LLC (now known as CS 2 PAAS Services, LLC);
• Newport Client Services, LLC;
• Northstar Client Services, LLC;
• Option 1 Client Services, LLC;
• Pioneer Client Services, LLC;
• Rockwell Client Services, LLC;
• Royal Client Services, LLC;
• Stonepoint Client Services, LLC;
• Summit Client Services, LLC (now known as CS 3 PAAS Services, LLC);
and
• Whitestone Client Services, LLC.
Defendants, Ryan Sasson, Albert Ian Behar,
Daniel Blumkin, and the Holding Companies
50. Ryan Sasson is one of the founders and was the Chief Executive Officer of
SFS. According to Strategic Financial Solutions’ Second Amended and Restated
Operating Agreement, Sasson, along with Blumkin and Behar, was a manager of SFS,
and managers have authority to act on behalf of and bind the company. Sasson is
currently a director on Strategic Family’s Board of Directors.
51. Sasson is the sole owner and sole member of Duke Enterprises, LLC. Duke
Enterprises owned 25.69% of Strategic Financial Solutions, LLC. In 2017, those
ownership shares converted to an ownership stake in Strategic Family, Inc. Duke
Enterprises owned 25.22% of Strategic Family’s voting stock before the sale of the stock
to the Strategic ESOP in 2017. Defendants use this corporation to funnel consumer
funds from the Façade Firms, the Client Services Subsidiaries, and SFS to Ryan Sasson.
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52. Daniel Blumkin is one of the founders and was Chief Sales Officer of SFS
and head of sales at Strategic Consulting, LLC. According to Strategic Financial
Solutions’ Second Amended and Restated Operating Agreement, Blumkin, along with
Sasson and Behar, was a manager of SFS, and managers have authority to act on behalf
of and bind the company. From approximately 2008 until recently, Blumkin oversaw all
sales operations at Strategic Family, Inc. Blumkin is currently a director on Strategic
Family’s Board of Directors.
53. Blumkin is the sole owner and sole member of Twist Financial, LLC. Twist
Financial owned 17.85% of Strategic Financial Solutions, LLC. In 2017, those ownership
shares converted to an ownership stake in Strategic Family, Inc. Twist Financial owned
17.13% of Strategic Family’s voting stock before the sale of the stock to the Strategic
ESOT in 2017. Blumkin and Twist Financial share an address: 1 Greenwood Ln, Port
Washington, NY 11050. Twist Financial and SFS share an address: 711 3rd Avenue, 6th
Fl., New York, NY 10017. Defendants use Twist Financial to funnel consumer funds
from the Façade Firms, the Client Services Subsidiaries, and SFS to Daniel Blumkin.
Twist Financial was also a partial owner of Legal Helpers.
54. Albert Ian Behar is one of the founding members of SFS and is currently a
director on Strategic Family’s Board of Directors. According to Strategic Financial
Solutions’ Second Amended and Restated Operating Agreement, Behar, along with
Sasson and Blumkin, was a manager of SFS, and managers have authority to act on
behalf of and bind the company. Behar signed account agreements with large financial
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institutions on behalf of various SFS entities, including Strategic Financial Solutions and
Strategic, Family Inc.
55. Behar is the sole owner and sole member of Blaise Investments, LLC.
Blaise Investments owned 25.69% of Strategic Financial Solutions, LLC. In 2017, those
ownership shares converted to an ownership stake in Strategic Family, Inc. Blaise
Investments owned 25.22% of Strategic Family’s voting stock before the sale of the stock
to the Strategic ESOT in 2017. Defendants use this corporation to funnel consumer
funds from the Façade Firms, the Client Services Subsidiaries, and SFS to Albert Ian
Behar.
56. Through their combined voting stock ownership in Strategic Family, Inc.,
the Holding Companies were able to control Strategic Family, Inc. Through their
owners, Sasson, Behar, and Blumkin, the Holding Companies controlled Strategic
Family Inc.’s business.
Common Enterprise
57. SFS, its Client Services Subsidiaries, and the Holding Companies operate
as a common enterprise controlled by Sasson, Behar, and Blumkin.
58. SFS, Client Services Subsidiaries, and holding companies, Twist Financial
and Blaise Investments share addresses at 711 3rd Ave, 6th Floor, New York, NY 10017.
The Client Services Subsidiaries do not have distinct spaces within that address.
59. The same people control the bank accounts for SFS, its Client Services
Subsidiaries, and the Holding Companies. For example, account-opening documents
from Valley Bank show that Individual Defendant Sasson, SFS’s CEO, opened accounts
for Strategic Client Support, LLC, Atlas Client Services, LLC (related to a company that
may be another façade firm), Strategic Financial Solutions, LLC, Strategic LD, LLC
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(another company likely owned by SFS), Versara Lending, Strategic CS, LLC, Anchor
Client Services, LLC, and Duke Enterprises.
60. Behar opened a bank account for Blaise Investments, and Blumkin opened
a bank account for Twist Financial.
61. As of January 2024, Ryan Sasson and Albert Ian Behar were also signers
for the bank accounts of Strategic Family, Inc. and Versara Lending, LLC at CIBC Bank
USA, and Sasson was the only signer for the bank accounts of Strategic Financial
Solutions, LLC and Strategic NYC, LLC.
62. Similarly, Ryan Sasson was the signer for the bank accounts of nineteen
Defendants at Key Bank. Sasson was the signer for Strategic Financial Solutions, LLC,
Anchor Client Services, LLC, BCF Capital, LLC, Bedrock Client Services, LLC, Boulder
Client Services, LLC, Canyon Client Services, LLC, Carolina Client Services, LLC, Great
Lakes Client Services, LLC, Harbor Client Services, LLC, Pioneer Client Servicing, LLC,
Rockwell Client Services, LLC, Royal Client Services, LLC, Stonepoint Client Services,
LLC, Strategic Client Support, LLC, Strategic Consulting, LLC, Strategic CS, LLC,
Strategic FS Buffalo, LLC , Strategic NYC, LLC, and Summit Client Services, LLC.
63. SFS commingles funds with the Client Services Companies and the
Holding Companies.
64. For example, records for bank accounts held by three Client Services
Subsidiaries show that they each transferred millions of dollars to various companies in
the common enterprise, including Strategic Client Support, LLC, Strategic NYC, LLC,
Strategic CS, LLC, and Strategic Consulting, LLC. The following chart shows the
transfers into and out of an account held by Strategic NYC, LLC between October 2017
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and December 2020. This SFS entity received money from multiple Client Services
Subsidiaries and distributed that money throughout the common enterprise.
Account 7645 - STRATEGI C NYC, LLC
Account / Activity Account Name Incoming Outbound
3931 BEDROCK CLIENT SERVICES, LLC 20,961,075.22 -
7076 BOULDER CLIENT SERVICES LLC 17,787,737.97 -
WIRE IN 17,584,963.27 -
9379 ANCHOR CLIENT SERVICES LLC 13,353,426.79 -
2687 ROCKWELL CLIENT SERVICES, LLC 10,532,106.15 -
3847 TIMBERLINE FINANCIAL, LLC 8,711,564.85 -
5085 HARBOR CLIENT SERVICES, LLC 4,499,204.86 -
9557 PIONEER CLIENT SERVICING, LLC 3,114,446.29 -
5128 STONEPOINT CLIENT SERVICES, LLC 1,128,877.69 -
7649 CANYON CLIENT SERVICES, LLC 843,238.61 -
8385 ROYAL CLIENT SERVICES, LLC 786,341.94 -
1538 CELL GRAMERCY OF CONTEGO INSURANCE LLC 400,000.00 -
7514 BCF CAPITAL, LLC 39,402.70 -
3206 ATLAS DEBT RELIEF, LLC 4,378.34 -
3458 ATLAS CLIENT SERVICES LLC 4,300.00 -
1294 VERSARA LENDING LLC - 34,251,717.68
7922 STRATEGIC CS, LLC - 17,736,230.06
9204 STRATEGIC CONSULTING, LLC - 16,962,610.30
1894 STRATEGIC FINANCIAL SOLUTIONS, LLC - 13,010,883.31
1286 STRATEGIC CLIENT SUPPORT LLC - 12,978,297.03
5354 PEERFORM INC. - 2,398,698.15
9490 STRATEGIC FS BUFFALO, LLC - 952,219.15
3204 STRATEGIC LD, LLC - 723,384.53
WIRE OUT - 701,262.47
5847 F SOLUTIONS LLC - 24,257.72
5269 STRATEGIC FAMILY, INC. - 10,250.00
Grand Total 99,751,064.69 99,749,810.40
65. In addition, records from another bank show that Anchor Client Services,
LLC, Bedrock Client Services, LLC, Boulder Client Services, LLC, Canyon Client
Services, LLC, Carolina Client Services, LLC, Harbor Client Services, LLC, Heartland
Client Services, LLC, Monarch Client Services, LLC, Northstar Client Services, LLC,
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Option 1 Client Services, LLC, Pioneer Client Servicing, LLC, Rockwell Client Services,
LLC, Royal Client Services, LLC, Stonepoint Client Services, LLC, and Whitestone Client
Services, LLC, at least, sent millions of dollars to T Fin, LLC and Strategic NYC, LLC
between approximately 2018 and 2021.
66. Additionally, Strategic Financial Solutions, LLC transferred funds from its
account at Valley Bank to the Holding Companies from October 2016 through at least
September 2017. Strategic Family Inc. transferred funds from its account at KeyBank
from May 2018 through at least March 2020.
67. SFS and its Client Services Subsidiaries share a phone system. The phone
system has a common set of extensions across SFS and its Client Services Subsidiaries
such that employees of the common enterprise can call each other without dialing
outside of the system.
68. In December 2018, SFS contracted with a data analytics firm to analyze
the common enterprise’s phone calls for sales and retention purposes. As part of this
process, SFS sent recorded phone calls to the data analytics firm. The calls included
those from phone lines named Anchor Creditor Line, Bedrock Creditor Line, Boulder
Creditor Line, Canyon Creditor Line, Carolina Creditor Line, Great Lakes Creditor Line,
Harbor Creditor Line, Pioneer Creditor Line, Rockwell Creditor Line, Royal Creditor
Line, Stonepoint Creditor Line, and Summit Creditor Line. SFS also shared call
recordings from a phone line named “Generic CS Creditor Line,” which exemplifies the
internal interchangeability of the Client Services Subsidiaries.
69. SFS and its Client Services Subsidiaries also share employees. Although
individual employees’ salaries may be paid by SFS or a Client Services Subsidiary, such
employees perform work for all of the Client Services Subsidiaries. In some instances,
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the same employees answer phone lines associated with multiple Client Services
Subsidiaries. For example, one employee whose salary was paid by SFS answered
consumer calls to multiple phone lines associated with Client Services Subsidiaries,
including the Boulder Creditor Line, the Harbor Creditor Line, the Rockwell Creditor
Line, the Royal Creditor Line, and the Summit Creditor Line.
70. Similarly, when consumers enrolled in the debt-relief service try to call the
law firm they believe is representing them, the call is routed to SFS where SFS
employees answer the phone using the name of the Client Services Subsidiary or Façade
Firm associated with each consumer. The entity name under which an SFS employee
answers a consumer phone call can change with each call. Thus, a single SFS employee
will answer dozens of consumer calls in any given day, representing themselves as an
employee of numerous different Client Services Subsidiaries or Façade Firms. One
employee who answers calls from consumers holds himself out to be a representative of
at least six different Façade Firms, although his salary is paid by Strategic Client
Support, LLC.
71. SFS and the Holding Companies do not appear to share employees as the
Holding Companies have no employees. Sasson, Blumkin, and Behar are the sole
owner, member, and manager of their respective Holding Company.
72. SFS, its Client Services Subsidiaries, and Holding Companies also share
leadership. Consumers who attempt to call the Façade Firm they believe represents
them reach customer service representatives who are often paid by SFS. Ryan Sasson
has represented that these customer service representatives work for SFS’s Client
Services Subsidiaries. The customer service representatives report to the Senior Director
of Client Services and Senior Director of Customer Services. Both of these Senior
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Directors report to the Vice President of Client Service Operations who directly reports
to SFS CEO Ryan Sasson. Sasson, Blumkin, and Behar are each the sole owner, member,
and manager of their respective Holding Company and also serve as Directors on SFS’s
Board. Sasson and Blumkin have also served as officers of SFS.
73. Because the Client Services Subsidiaries and the Holding Companies are in
a common enterprise with SFS, they are liable for SFS’s actions under the TSR. See infra
¶¶ 57-72.
Individual Defendants
74. Ryan Sasson is one of the founders and was the Chief Executive Officer of
SFS. He is listed as an officer of SFS on corporate tax filings.
75. Sasson is a former employee of Legal Helpers Debt Resolution, LLC
(“Legal Helpers”), a debt-relief firm that was sued and eventually shut down as a result
of actions by the Attorneys General of Illinois, Wisconsin, North Carolina, and West
Virginia. The Attorneys General alleged that Legal Helpers charged unlawful up-front
fees, failed to reduce consumers’ debts as promised, and attempted to avoid advance-fee
bans by recruiting attorneys to act as fronts for the business. Compl., Illinois v. Legal
Helpers Debt Resol., LLC, No. 2011 CH 00286 (Sangamon Cty., Ill. Mar. 2, 2011);
Compl., Wisconsin v. Legal Helpers Debt Resol., LLC, No. 2013 CX 11 (Dane Cty., Wis.
June 12, 2013); Compl., North Carolina v. Legal Helpers Debt Resol., LLC, No.
14CV006409 (Wake Cty., N.C. May 15, 2014); Compl., West Virginia v. Legal Helpers
Debt Resol., LLC, No. 13-C-2330 (Kanawha Cty., W. Va. Dec. 20, 2013). The Illinois and
North Carolina Attorneys General actions resulted in consent judgments enjoining Legal
Helpers from engaging in debt relief in their respective states. Judgment, Illinois v.
Legal Helpers Debt Resol., LLC, No. 2011 CH 00286 (Sangamon Cty., Ill. July 2, 2012);
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Judgment, North Carolina v. Legal Helpers Debt Resol., LLC, No. 14CV006409 (Wake
Cty., N.C. Sept. 29, 2014). The North Carolina consent judgment also enjoined the
principals of the firm from engaging in debt relief and entered judgments in the
amounts of $1,533,000 and $122,000 against Legal Helpers and the individual
defendants, respectively. Id. The Wisconsin Attorney General’s action and the West
Virginia Attorney General’s action resulted in judgments for $12,272,000 and $135,000,
respectively, and settlement agreements enjoining Legal Helpers and the principals of
the firm from engaging in debt relief in Wisconsin and West Virginia. Judgment,
Wisconsin v. Legal Helpers Debt Resol., LLC, No. 2013 CX 11 (Dane Cty., Wis. Feb. 15,
2016); Settlement Agreement, Wisconsin v. Legal Helpers Debt Resol., LLC, No. 2013
CX 11 (Dane Cty., Wis. May 13, 2016); Judgment, West Virginia v. Legal Helpers Debt
Resol., LLC, No. 13-C-2330 (Kanawha Cty., W.Va. June 2, 2014). Sasson knows or
should know, based on these matters, that it is illegal to charge up-front fees for debt-
relief services and that using third parties to act as fronts for the entities benefitting
from the illegal fees does not relieve him from liability.
76. At all times material to this Complaint, acting alone or in concert with
others, Sasson has exercised substantial control over and involvement in the
establishment of business policies and practices described in this Complaint for SFS, the
Client Services Subsidiaries, and Duke Enterprises. At all times material to this
Complaint, Sasson has exercised managerial responsibility for these companies and has
materially participated in the conduct of their affairs.
77. Jason Blust created, maintains, and controls multiple Façade Firms
designed to conceal SFS’s involvement in the debt-relief service. He controls the Façade
Firms and directs consumer funds to himself through a series of consulting companies,
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including Relief Defendants Relialit and Lit Def Strategies. Jason Blust resides in Lake
Barrington, Illinois. He entered into a stipulated judgment with the United States
Bankruptcy Trustee for the District of Kansas regarding numerous violations of
bankruptcy law arising from the scheme alleged in this complaint. Judgment, U.S.
Trustee Lashinsky v. Blust, No. 18-06046, Doc #17 (Bankr. D. Kan. 2018). Jason Blust
knows or should know that the conduct alleged herein is illegal. He is also a former
attorney at Legal Helpers. Jason Blust knows or should know, based on the Legal
Helpers matters discussed in Paragraph 75, that it is illegal to charge up-front fees for
debt-relief services and that using third parties to act as fronts for the entities
benefitting from the illegal fees does not relieve him from liability.
78. At all times material to this Complaint, acting alone or in concert with
others, Jason Blust has exercised substantial control over and involvement in the
establishment of the Façade Firms’ business policies and practices described in this
Complaint. Jason Blust recruited attorneys to help run, or serve as figureheads for, the
Façade Firms, including at least one SFS employee who simultaneously serves as a
member of multiple Façade Firms while working for SFS. At all times material to this
Complaint, Jason Blust has exercised managerial responsibility for the Façade Firms
and has materially participated in the conduct of their affairs, in part through his
consulting firms Relialit and Lit Def Strategies. He also acts as a liaison between the
Façade Firms and SFS.
79. Daniel Blumkin is one of the founders and was Chief Sales Officer of SFS.
Blumkin and Sasson were the two initial members of Encore Capital USA, LLC in 2010;
in 2015, Sasson changed the name to Strategic Financial Solutions, LLC. Blumkin is
listed as an officer of SFS on corporate tax filings. Blumkin also served as President of
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Strategic Financial Solutions, LLC. A Credit Agreement with CIBC Bank lists Blumkin
and Sasson as “Key Men” to SFS. Blumkin resides in Port Washington, New York. He is
a former Vice President of Sales with Legal Helpers.
80. At all times material to this Complaint, acting alone or in concert with
others, Daniel Blumkin exercised substantial control over and involvement in the
business policies and practices described in this Complaint for SFS and Twist Financial.
At all times material to this Complaint, Blumkin has exercised managerial responsibility
for SFS and has materially participated in the conduct of its affairs.
81. Albert Ian Behar is one of the founding members of SFS. Behar resides in
Miami Beach, Florida and New York, New York.
82. At all times material to this Complaint, acting alone or in concert with
others, Albert Ian Behar exercised substantial control over the business policies and
practices described in this Complaint for SFS and Blaise Investments.
83. Sasson, Blumkin, and Behar were also “Common Managers” at Strategic
Client Support, LLC and Strategic Financial Solutions, LLC. Blumkin and Behar signed
their names as “Common Managers” on the Operating Agreement of Encore Capital
USA, LLC (“Encore”). The name of Encore Capital USA, LLC was changed to Strategic
Client Support, LLC in one corporate filing and was changed to Strategic Financial
Solutions, LLC in a separate corporate filing.
Relief Defendants
84. Relief Defendant Strategic Employee Stock Ownership Trust (Strategic
ESOT) holds all the shares of SFS stock. In May 2017, Strategic Financial Solutions, LLC
adopted the Strategic Employee Stock Ownership Plan (Strategic ESOP) and became the
ESOP’s sponsor. SFS companies reorganized in December 2017 and Strategic Family,
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Inc. became the parent company. In December 2017, the Strategic ESOP purchased all
the shares of Strategic Family, Inc.’s common stock funded by the Strategic ESOT, thus
becoming wholly employee owned. The Strategic ESOT may maintain funds held in
trust, while the ESOP determines how the ESOT is administered, who participates in it,
and who runs the day-to-day operations.
85. Relief Defendant the Blust Family Irrevocable Trust is controlled by
Donald J. Holmgren, Trustee. Jason Blust funnels consumer funds from the Façade
Firms, the Client Services Subsidiaries, and SFS into the Blust Family Irrevocable Trust
via Lit Def Strategies, LLC.
86. Jason Blust funnels consumer funds from the Façade Firms, the Client
Services Subsidiaries, and SFS to Relief Defendant Jaclyn Blust via Lit Def Strategies,
LLC and the Blust Family Irrevocable Trust.
87. Relief Defendants Lit Def Strategies, LLC and Relialit, LLC are
corporations controlled by Jason Blust. He uses these corporations to funnel consumer
funds from the Façade Firms, the Client Services Subsidiaries, and SFS to himself.
Overview of Defendants’ Debt-Relief Services Scheme
88. Since at least January 2016, SFS has marketed and sold debt-relief
services to consumers.
89. Through at least late 2022, SFS marketed its debt-relief services via the
U.S. Mail, the Internet, and outbound or inbound telephone calls to or from consumers,
including via interstate phone calls. One way that SFS attracted financially-distressed
consumers is through mail solicitations suggesting that the consumers have been pre-
approved for a debt-consolidation loan or may be eligible for such a loan. These
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solicitations encouraged the consumer to “apply” and provided a phone number to call
for more information.
90. When a consumer called the number provided on the solicitation, an SFS
sales employee who was not an attorney answered the phone and gathered additional
information from the consumer. In the end, the consumer who was trying to apply for a
loan was typically told that they did not qualify for the debt-consolidation loan, and an
SFS sales representative tried to convince the consumer to enroll in the debt-relief
service instead.
91. If the consumer agreed to enroll in the debt-relief service, then SFS
connected the consumer with a Façade Firm.
92. Generally, once a consumer agreed to sign up for the debt-relief service,
SFS or a Façade Firm arranged for the consumer to meet with a third-party notary, who
was not an employee of SFS, a Client Services Subsidiary, or a Façade Firm. The notary
has typically been paid a nominal fee simply to get the documents signed, has limited
knowledge about the contents of the documents being signed, and cannot answer any
questions about their content. Some notaries are paid more for the meeting if the
documents are fully signed.
93. Once a consumer signed the enrollment documents, an attorney from the
assigned Façade Firm contacted the consumer and read a short script welcoming the
consumer to the program. This rote “attorney welcome call” was often the only time the
consumer spoke to an attorney in connection with the SFS debt relief program.
94. Upon enrollment, SFS representatives instructed consumers to stop
paying debts they enrolled in the program. The SFS representatives also told some
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consumers that creditors were more likely to settle debts when their accounts were
delinquent.
95. SFS representatives also instructed consumers not to speak with their
creditors if the creditors contacted the consumers, and SFS sometimes gave consumers
a script to follow during calls with creditors.
96. Upon enrolling in the program, consumers were required to immediately
begin making monthly payments into an escrow account managed by either RAM or
Global, two payment processors with which SFS or the Façade Firms have contracted.
97. Representatives of SFS or the Client Services Subsidiaries told consumers
that once they have saved enough money in those escrow accounts, the money would be
used to settle the consumers’ debts for less than they owe.
98. Some consumers reported that when they started to complain about the
fact that their debts were not being settled or their creditors were not being paid, SFS or
the Client Services Subsidiaries instructed them that they could pay even more into their
escrow accounts so that the debts could be resolved.
99. When consumers tried to call their designated Façade Firm after they
enrolled in the program, their calls were typically routed to SFS representatives who
were not attorneys but who held themselves out as representatives of the Façade Firm
the consumer believed was representing them. In reality, these representatives were
employed by SFS-controlled entities, including the Client Services Subsidiaries. These
representatives are primarily located in a call center in Buffalo, NY or New York, NY.
100. During the enrollment process, SFS representatives often told consumers
that enrollment in the program included litigation defense services and that a lawyer
would represent them in any lawsuit related to non-payment of enrolled debts.
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Similarly, the retainer agreements consumers signed with Façade Firms promised that
the firm lawyers would provide litigation defense if the consumer was sued by creditors
while participating in the debt-relief service. But each contract also contained a loophole
provision allowing the Façade Firm to avoid participating in the litigation if the assigned
lawyer determined that the consumer is not likely to gain a favorable result. Indeed,
consumers reported that Façade Firm lawyers almost never represented them when they
were sued by creditors even after the consumers paid the retainer fee.
Notary Meetings as Part of the Enrollment Process
101. As noted in Paragraph 92 above, as part of the enrollment process the
Façade Firms contracted with third party notary-provision companies, including
Sunshine Signing Connection, Inc., NotaryGO, and National Paralegal & Notary
(collectively Notary Companies), to send independent contractor notaries to obtain
signatures on the enrollment paperwork and the retainer agreement.
102. The contracts required the notaries to schedule appointments with the
consumers and to oversee the execution of documents, including “getting all appropriate
signatures from the client.”
103. The notaries scheduled these meetings at locations convenient for the
consumer, including coffee shops and restaurants. The meetings did not all occur in
person, however. In particular, during the COVID-19 pandemic, many of these notary
meetings took place through Zoom or over the phone without any in-person meeting at
all.
104. The notary meetings were typically brief and non-substantive. For instance,
one consumer described the notary process as a “flyby presentation” and said that the
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notary, who made clear he could not explain things because he was just a notary and not
an employee, seemed “like a robot going through a script.”
105. SFS executives have acknowledged that the notary meetings are cursory
and non-substantive. According to a Senior Vice President of Sales at SFS:
[A]ll we do is just get these people to just kind of pencil whip and sign [the
contract] . . . . It doesn’t seem like it’s as meaty as we make it sound. . . I
didn’t realize we don’t give ‘em a copy of the contract when they sign.
In the same conversation, a Senior Director of Negotiations replied:
I agree with you, it’s almost like you’re pencil-whipped into signing that day
because since you already came all the way here, you know just let’s get
through this – and I think they just made it more fluffy you know as far as
the um presentation, if you will, and they sign the presentation – so I mean
it’s almost like a CYA on our end.
106. The contracts between the Façade Firms and the Notary Companies did
not require the individual notaries to have any substantive knowledge of the product or
the company or to be able to meaningfully interact with consumers on behalf of the
company about the product. While the contracts required the notaries to give an “in-
person presentation,” they did not require the notary to have any understanding of the
presentation or to even read it beforehand.
107. The contracts between Façade Firms and the Notary Companies also did
not require the individual notaries to answer consumers’ questions about the product or
the company. In practice, if a consumer had a question or concerns while signing the
contract, the Notary Companies or the individual notaries called SFS by phone so that
the consumer could direct their question or concerns to someone from SFS.
108. Consumers also reported that when they asked the notaries substantive
questions, the notaries often advised the consumer to direct their questions to the sales
representative (an employee of SFS or the Client Services Subsidiary) with whom the
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consumer previously spoke or referred the consumer to the documents they were
signing.
109. The meetings between these third-party contractors and consumers were
brief and perfunctory and did not provide the consumers with direct or substantive
interaction with the seller of the product the consumer was purchasing; the only direct
or substantive interaction consumers could have with anyone from SFS before they
signed the contract was by phone.
Fees Defendants Charge Consumers
110. Individual Defendants Sasson, Behar, and Blumkin controlled SFS and
oversaw development of the company’s model of taking advance fees prior to any
settlement, and each of these Individual Defendants was aware that SFS took these
advance fees.
111. A PowerPoint presentation submitted to CIBC bank in Q3 2017 seeking
financing for SFS identifies Sasson, Behar, and Blumkin as owners and founders of
Strategic Financial Solutions. The report states that Strategic Financial Solutions
“developed the sales and servicing process to offer a compliant advance fee product . . .
[t]he decision to operate sales and servicing functions in house allows the Company to
exercise complete control over the sales and servicing process.”
112. The documents that consumers signed often included information about
the fees the consumers would be charged and advised that such fees would begin at the
outset of the arrangement. For instance, one example provided by a consumer included
fees such as a “retainer fee,” “a service cost,” “a legal admin fee,” and “a banking fee.”
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113. Consistent with Defendants’ direction, RAM and Global: (i) withdrew
funds from a consumer’s bank account through ACH transfer and deposited them into
the consumer’s escrow account; and (ii) transmitted funds for processing and servicing
fees from the consumer’s escrow account to themselves, the Client Services Subsidiaries,
the Façade Firms, and sometimes SFS.
114. Immediately after a consumer enrolled in the programs, fees were
deducted from their escrow accounts with RAM or Global before SFS, Client Services
Subsidiaries, or Façade Firms settle any debts. These fees included retainer fees, service
fees, and legal administrative fees.
115. The fees Defendants charged consumers as part of this debt-relief service
were substantial. A sample of payment data from RAM for approximately 34,000
consumers enrolled in SFS’s program over an approximately five-year period shows that
these consumers collectively paid over $100,000,000 in fees to Defendants and the
Façade Firms (including retainer fees, legal admin fees, and service fees) before any
debt-relief payments were made to creditors. This figure does not include fees collected
from Global. As explained below, a large portion of the fees collected through RAM and
Global was ultimately funneled to SFS or the Individual Defendants.
116. During the period of time covered by the sample, no one working on behalf
of SFS (including representatives for the Client Services Subsidiaries and Façade Firms)
settled any debt for approximately one-third of consumers who paid into the program.
117. Furthermore, the service fee that Defendants charge for the program was
often based solely on a percentage of the consumer’s enrolled debt; the fee was not
based on the individual debt settlements that the program achieves. In particular, when
the consumer had multiple debts that were eventually settled one at a time, the service
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fee was not proportional to the amount of debt actually settled or based on a fixed
percentage of the amount saved. Likewise, the retainer fee, administrative fees, and
other fees were not based on individual debt amounts or the debt settlements that the
program achieved.
118. Charging consumers these high fees and withdrawing them from their
accounts on the front-end, before settling any of their debts, hindered Defendants’
ability to settle consumers’ debts at all. For instance, some consumer contracts advised
that individuals often needed to accumulate approximately 25% of the “then-current
balance of a debt” in their account (e.g., $2,500 for a $10,000 debt) before a good-faith
offer could be made to settle a debt with a creditor. But it was difficult for a consumer to
accumulate a balance that high in their escrow account when SFS, the Client Services
Subsidiaries, and the Façade Firms were withdrawing large fees from it each month,
leaving only a small amount to fund potential settlements.
119. According to account statements for one consumer who enrolled in the
debt-relief service, E.S., she paid approximately $2,114 into her account before the first
payment was made to a creditor. Prior to this payment being made, approximately 91%
of the funds the consumer paid into her account (roughly $1,900) were withdrawn as
fees. During the entire period this consumer was enrolled in the debt-relief service,
approximately 84% of the funds she paid into her account were deducted as fees and
only 16% of the funds were paid to creditors.
120. Similarly, another consumer, P.G., paid approximately $7,452 into her
account before the first payment was made to a creditor. Before that payment was made,
roughly 68% of the funds the consumer paid into her account had been deducted to
cover fees. During the entire period the consumer was enrolled in the debt-relief service,
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roughly 64% of the funds she paid into her account were deducted as fees and only 6.5%
of the funds were paid to creditors. The remainder was refunded after the attorney that
she believed had been representing her, Daniel Rufty, was suspended by the North
Carolina State Bar.
Allocation of Fees Among Defendants
121. Despite the labels associated with each fee charged to consumers enrolled
in the debt-relief service, the money was not always distributed consistent with its
described purpose. For example, records from RAM show that at times, the Client
Services Subsidiaries—which purportedly did not provide legal services—received legal
retainer fees, in addition to service fees and legal administrative fees.
122. Similarly, records from RAM show that the Façade Firms received not just
legal retainer fees, but also sometimes received service fees and legal administrative
fees.
123. The lack of concern about which entities received which fees demonstrates
the interrelatedness of SFS, the Client Services Subsidiaries, and the Façade Firms.
124. An analysis of bank records further demonstrated that SFS and its Client
Services Subsidiaries operated as a common enterprise.
125. Although the Façade Firms typically signed the contracts with RAM and
Global, RAM and Global directly paid the Client Services Subsidiaries substantial
amounts of money. For example, from September 2016 to July 2018, bank records
showed that Global paid Boulder Client Services approximately $46,000,000 and paid
Anchor Client Services approximately $21,000,000. Similarly, from February 2017 to
July 2018, RAM paid Bedrock Client Services approximately $30,000,000.
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126. Bank records show that shortly after receiving money from RAM and
Global, the Client Services Subsidiaries transferred nearly all of the money to SFS. For
example, between October 2016 and August 2018, Boulder Client Services transferred
approximately $46,000,000—the same amount it received from Global—to various SFS
accounts, including accounts held by Strategic Client Support, LLC, Strategic Financial
Solutions, LLC, Strategic NYC, Inc., Strategic CS, LLC, and Strategic Consulting, LLC.
Similarly, between November 2016 and August 2018, Anchor Client Services transferred
approximately $20,000,000—around 95% of what it received from Global— to various
SFS accounts, and between February 2017 and August 2018, Bedrock Client Services
transferred approximately $29,000,000—around 96% of what it received from RAM—
to various SFS accounts.
127. RAM records show that Defendant Versara Lending, LLC, ostensibly a
lender, received fees from debt-relief consumers. Records from Valley Bank show that,
from October 2016 through August 2022, Versara Lending, LLC received over $177
million in incoming wires and net transfers from various SFS entities. Records from
Valley Bank also show that Versara Lending, LLC wired over $85 million to Versara
DNLFA, LLC, which may be another name for Versara Lending, LLC.
128. Indeed, Defendants Blust and Sasson had an agreement that overall, SFS
would receive 80% of all client (or consumer) fees while the façade firms would receive
20%.
SFS’s Model Evolves Over Time
129. Consumer complaints, bank records, and website records suggest that SFS
currently operates through additional companies, many of which purport to be law
firms.
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130. Based on Defendants’ practice of regularly changing company names or
establishing new entities, Plaintiffs believe that there are additional Client Services
Subsidiaries and Façade Firms that Plaintiffs have yet to identify. For example, Sasson
was involved in the creation or maintenance of websites for Atlas Debt Relief LLC,
Hallock & Associates, Law Office of Melissa Michel LLC d/b/a Spring Legal, and Moore
Legal Group, LLC d/b/a Meadowbrook Legal Group, at least. And consumer complaints
suggest that Atlas Debt Relief LLC, Brandon Ellis Law Firm, Dakis Legal Group LLC
d/b/a/ Clear Creek Legal, Derek Williams Law Firm, LLC f/k/a Infinite Law Group,
Hallock & Associates, Law Office of Melissa Michel LLC d/b/a Spring Legal, Moore
Legal Group, LLC d/b/a Meadowbrook Legal Group, and Michel Law, LLC d/b/a Level
One Law are affiliated with SFS.
131. Bank records show that Blust is a member of Credit Advocates Law Firm,
and that company paid SFS and Lighthouse Tax & Financial LLC (owned by Blust).
132. Bank records also show that Law Offices of Amber Florio, LLC d/b/a The
Commonwealth Law Group, PLLC received money from the following Façade Firms:
Florio & Associates, PLLC, d/b/a Bedrock Legal Group, f/k/a Raggio &
Associates, PLLC;
Boulder Legal Group, LLC;
Greene Legal Services, LLC d/b/a Newport Legal Group;
Harbor Legal Group, LLC;
Hodyno & Associates, PLLC d/b/a Rockwell Legal Group;
JMS Industries, LLC d/b/a Canyon Legal Group;
Royal Legal Group, LLC;
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The Sands Law Group d/b/a Whitestone Legal Group; and
Wyolaw d/b/a Summit Law Firm.
133. In addition, the following companies are affiliated with Blust or made
payments to Relialit or Lit Def:
Chinn Legal Group d/b/a Slate Legal Group;
Colonial Law Group;
Crimson Legal Group, LLC d/b/a Fontana Law Group, LLC;
Dubin Legal Group d/b/a Ascend Legal Group;
Frontier Consumer Law Group a/k/a Leigh and Laruwe Law Firm;
The Law Office 554;
Law Office of Melissa Michel LLC d/b/a Spring Legal;
Law Offices of Arne Skatrud & Associates d/b/a Cornerstone Legal Group
LLC;
Law Offices of Brandon S Chabner d/b/a Golden Law LLP;
Lori Leigh & Associates d/b/a Phoenix Legal;
Strong Law Group PLLC;
Turnbull Law Group, LLC f/k/a Turnbull & Associates; and
Watson Law d/b/a Corporate Legal Network.
Consumer harm
134. Regardless of how SFS changes its corporate form, consumers continue to
be harmed. For example, consumer C.E. was still paying fees to the common enterprise
in September 2023. After being enrolled in the common enterprise’s debt relief program
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for nearly four years and paying around $26,000 in fees, he still owed approximately
$18,000 to four creditors that he had enrolled in the debt-relief program.
135. Many consumers enrolled in SFS’s debt-relief service received zero or little
benefit in the form of settled debts and, instead, ended up owing creditors more money
than when they started.
136. The data sample from RAM referenced above in Paragraph 115 indicates
that, on average, consumers participated in the program for eight months before
Defendants settled any of their debts. It also suggests that Defendants do not settle any
debts for many consumers enrolled in their program.
137. In addition, when consumers stopped paying their debts (as directed by
Defendants), creditors often added interest and fees to their accounts and were likely to,
and did in fact, sue them for nonpayment. If the creditors obtained judgments, they
could garnish consumers’ wages. Consumers’ credit scores often plummeted.
138. Many consumers were understandably concerned about the potential
adverse impact of stopping payment on their credit cards. When consumers asked direct
questions about these issues SFS’s salespersons routinely told consumers that they were
very unlikely to be sued and that their credit scores would only suffer a small reduction,
that the reduction would be temporary, and that their score would increase substantially
once their debts were settled through the program. These representations were
misleading and deceptive.
139. Defendants also routinely describe their programs as having a “zero
percent” interest rate, since the amount of their payments were fixed at the time of
enrollment. These representations were misleading and deceptive because Defendants
were not offering consumers enrolled in in their debt-relief program a loan and many
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creditors did in fact add interest and fees once consumers stopped paying. Many
consumers ended up exiting Defendants’ debt relief program owing creditors more than
when they began the program.
140. When attempting to enroll consumers in the SFS debt-relief program,
salespersons often made misleading, deceptive, and fraudulent statements to encourage
consumers to enroll. Defendants were aware of hardball sales tactics and encouraged
such behavior. SFS paid bonuses to sales representatives that successfully sold their
debt relief scheme, which resulted in substantial fees to Defendants, while promptly
terminating those that failed to do so.
141. Consumers often learned from creditors that neither Defendants nor the
Façade Firms ever contacted them. Unaware that this could occur, consumers often
stopped communicating with their creditors based on Defendants’ instruction. For
example, one consumer, K.L., enrolled in the debt-relief service in October 2019. After a
default judgment was entered against the consumer with regard to one debt in June
2021, the consumer reached out to two other creditors with whom Defendants were
supposed to be negotiating. The consumer learned from these creditors that nothing had
been paid on these debts since she enrolled in the debt-relief service twenty months
prior and no one from any of the Defendants or the Façade Firms had contacted the
creditors.
142. Consumers were led to believe that they had an attorney and law firm to
represent them should their creditors sue, but many consumers received no such
representation, despite having paid significant retainer and legal fees. These
representations by Defendants were misleading and deceptive.
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143. Even when consumers withdrew early from the program, the amount of
money in their escrow account had been substantially drained by fees, regardless of
whether any enrolled debts have been settled.
144. For example, one consumer, S.M., was in the program for approximately
four years, during which his Global account statements show he made net payments into
his escrow account of approximately $19,841 and only one debt was settled in the
amount of approximately $8,524. Yet when the consumer withdrew from SFS’s
program, his escrow account contained only $666. The remaining $10,651 had been
deducted from his account to cover fees.
145. A Senior Director of Client Services acknowledged this problem in a call
with a Senior Director of Customer Service:
I gave him [VP of Client Service Operations] the scenario I’ve given him
1200 times, which is[:] a client’s been in the program four months, wants to
cancel. Can’t save, [consumer]I want my money back. [SFS rep] Here’s your
$20. [consumer] Where is the other $900 I gave you? [SFS rep]Oh, sorry,
that was service fees.’ [consumer] Well I want it back. What do they [SFS
reps] do? What do they do? Do we give them the authority to refund the
$900 or is it going to Tier 2? So he’s like well no, I think it needs to go to
Tier 2.
The Senior Director of Client Services went on to explain that Tier 2 was not adequately
staffed to handle the volume of calls in which consumers request refunds: “[a]lmost
every single call, people want refunds.”
146. SFS designed its program to extract more fees from consumers early in the
debt-relief program. SFS worked to keep consumers in the program while SFS was
collecting fees, but, as fees declined later in the program, SFS often would not invest
resources in attempting to settle the consumers’ debts. A Vice President of Client Service
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Operations described the situation: “I know this sounds terrible, but if [a consumer] just
wants to pay us and then leave to save us money, then OK.”
147. Consumer complaints suggest that SFS, working through the Façade
Firms, continues to collect fees (a) before resolving any debt for consumers; (b) that do
not bear the same proportional relationship to the total fee as the individual debt
amount bears to the entire debt amount at the time of enrollment; and (c) that are not a
percentage of the amount saved as a result of the renegotiation, settlement, reduction,
or alteration. In 2023 alone, there are approximately 127 consumer complaints in the
FTC’s Sentinel database involving the Façade Firms. These consumers are being harmed
by Defendants’ ongoing unlawful conduct.
148. For example, one consumer, R.O., complained that he was charged nearly
$10,000 in advance fees between July 2020 and June 2023, and none of his debts were
settled. All of those fees were prohibited by the TSR.
149. Since January 2016, SFS and the Façade Firms have taken at least
$100,000,000 in fees from consumers before any of the consumers’ debts were
renegotiated, settled, reduced, or otherwise altered.
The Façade Firms Are Controlled by Ryan Sasson and Jason Blust and
Act as Cover for SFS
150. Individual Defendants Ryan Sasson and Jason Blust created the Façade
Firms to provide consumers with the sense that SFS’s debt-relief service is professional
and trustworthy, and to conceal the role of SFS from consumers and the public.
151. SFS and Sasson benefit from the concealment of SFS as the primary actor
in the debt-relief service. When consumers complain to regulators, prosecutors, or the
Better Business Bureau, they complain about the Façade Firm (whose name they have),
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not SFS (whose name they do not have). This shields SFS from scrutiny and could make
it more difficult for consumers to bring lawsuits against the SFS operation.
152. Despite Defendants’ efforts to present Façade Firms as separate from SFS,
Ryan Sasson and Jason Blust maintain and control the Façade Firms as part of their
debt-relief scheme.
Sasson’s Role in the Façade Firms
153. As the CEO of SFS, Ryan Sasson coordinates with Jason Blust and other
Façade Firm attorneys to conceal SFS’s role in providing debt-relief services. Sasson
created and controls the Client Services Subsidiaries that correspond to each Façade
Firm.
154. Sasson also created and owns Façade Firm websites, including websites for
Northstar Legal Group, Atlas Law Group, Anchor Law Firm, Harbor, Boulder, Bedrock,
Royal, Stonepoint, Rockwell, Canyon, Summit, Great Lakes, Heartland, Whitestone,
Monarch, Option 1, and WyoLaw. SFS pays the domain bills for these websites.
Jason Blust Controls the Façade Firms
155. Jason Blust coordinates the web of Façade Firms and exercises extensive
control over them. He also helped create several of the Façade Firms. For example,
Jason Blust orchestrated the creation of WyoLaw. He advised Traci Mears, a figurehead
attorney, on setting up bank accounts, Employer Identification Numbers and the firm’s
mailing address, among other decisions.
156. In 2021, the North Carolina State Bar Disciplinary Hearing Commission
held a hearing regarding the license of Daniel Rufty, an attorney at Carolina Legal
Services, which is one of the Façade Firms. The Commission issued a finding of fact that
Jason Blust “started or helped start various law firms . . . in multiple states with the goal
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of convincing debtors struggling to pay their bills to hire one of the [Façade Firms] to
negotiate reduced payoff amounts with the debtor’s creditors.”
157. In its ruling, the Commission referred to various Façade Firms as the
“Blust Law Firms.”
158. The Commission concluded that “[Jason] Blust was in charge of the
operations of [Carolina Legal Services] and regularly told [Rufty] what to do.”
159. In addition to his role in the creation of numerous Façade Firms, Jason
Blust plays a continuing role in the management and oversight of many of them.
160. Jason Blust directly manages some of the Façade Firms’ operations. For
example, he stated in 2020 in a sworn affidavit that he began managing the operations
of the Anchor Law Firm, PLLC in 2016, including managing Anchor Law’s attorneys and
Anchor Law’s non-attorney support services, which consist primarily of SFS and Client
Services Subsidiary employees. Blust stated in the affidavit that he was still managing
the firms at the time of the affidavit.
161. Jason Blust also holds official positions in some Façade Firms. For
example, he is a Vice President at Pioneer Law Firm, P.C.
Jason Blust Recruits Attorneys for Façade Firms
162. Jason Blust also recruits attorneys for several of the Façade Firms,
including Bedrock, Boulder, Carolina, Canyon, Harbor, Heartland, Rockwell, and Royal.
163. For example, he recruited an SFS employee, Lauren Montanile, to become
a member or supervising attorney of multiple Façade Firms, including Bedrock,
Boulder, Carolina, Canyon, Harbor, and Heartland. Montanile still works at SFS but also
reports to Jason Blust pursuant to her position at certain Façade Firms.
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164. As SFS CEO, Ryan Sasson also exercises control over Montanile, an SFS
employee. Montanile’s business address on file with the New York Bar is one of SFS’s
addresses: 711 3
rd
Avenue, 6
th
Floor, New York, New York 10017.
Jason Blust Is a Conduit Between Façade Firms and SFS
165. Jason Blust also serves as a conduit between the Façade Firms, SFS, and
the Client Services Subsidiaries, facilitating communications between the Façade Firms,
on one hand, and SFS and its Client Services Subsidiaries, on the other hand.
166. Jason Blust regularly emails and talks on the phone with employees of SFS
and its Client Services Subsidiaries about consumers in SFS’s debt-relief service.
167. When employees of SFS or its Client Services Subsidiaries, including
Montanile, are unable to resolve escalated consumer issues, they often consult with
Jason Blust or send the issue to him for resolution.
168. Jason Blust consults with employees of SFS, Client Services Subsidiaries,
and Façade Firms regarding consumer complaints against Façade Firms, including
complaints to state bars and the Better Business Bureau (BBB). Blust coordinates efforts
by SFS, Client Services Subsidiaries, and Façade Firms to pressure consumers to take
down negative reviews of Façade Firms to keep BBB ratings higher. The BBB ratings are
used by SFS as a sales pitch, with SFS representatives suggesting that high BBB ratings
are a reason that consumers should sign up for SFS’s debt-relief service.
169. Jason Blust controls when Façade Firm attorneys are allowed to work on
client files. Façade Firm attorneys communicate issues to Jason Blust, such as when
consumers are sued by their creditors. Blust then chooses whether to direct SFS to open
a litigation file.
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170. Jason Blust also participates in meetings between SFS, Client Services
Subsidiaries, and many of the Façade Firms, including Anchor Law Firm, PLLC,
Bedrock Legal, LLC, Boulder Legal Group, LLC, Carolina Legal Services, LLC, Canyon
Legal Group, LLC, Great Lakes Law Firm, LLC, Harbor Legal Group, LLC, Heartland
Legal Group, LLC, Monarch Legal Group, LLC, and Royal Legal Group, LLC. At least
one of the meetings between Blust and an attorney from Carolina Legal Services, LLC
took place in New York State. Notably, Jason Blust participates regardless of whether he
holds an official position with each firm.
Jason Blust Provides Websites for, and Shares an Address with, Multiple Façade Firms
171. Jason Blust also registered domain names for Façade Firms, including
Pioneer Law Firm, P.C., Harbor Legal Group, LLC, and Phoenix Legal Group, PLLC.
Jason Blust controls the Façade Firm websites by selecting the vendor that creates the
websites. Entities that Jason Blust controls or is the beneficiary of, including the Law
Office of Jason Blust, LLC and Relief Defendants Blust Family Irrevocable Trust and Lit
Def Strategies, use addresses in a co-working space at 211 W Wacker Drive, Chicago, IL
60606.
172. Numerous Façade Firms use addresses in the same co-working space at
211 W. Wacker Dr. Chicago, IL 60606. At least ten Façade Firms have used addresses in
that building:
Anchor Law Firm, PLLC;
Boulder Legal Group, LLC;
Burnette Legal Group, LLC, a/k/a Monarch Legal Group;
Credit Advocates Law Firm, LLC;
Great Lakes Law Firm, LLC;
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Gustafson Legal, P.C.;
Hallock & Associates;
Harbor Legal Group;
Henry Legal Group LLP;
Hinds Law LLC d/b/a First America Law;
Law Offices of Timothy F. Burnette;
Option 1 Legal;
Pioneer Law Firm, P.C.; and
Wyolaw, LLC, d/b/a Summit Law Firm, LLC.
Transfer of Assets to Individual Defendants and Relief Defendants
173. The Individual Defendants and Relief Defendants received funds obtained
from consumers through the unlawful practices described in this Complaint.
The Façade Firms and Client Services Subsidiaries
Benefit Jason Blust Financially
174. Individual Defendant Jason Blust benefits financially from the Façade
Firms and the Client Services Subsidiaries. Specifically, Blust has control over bank
accounts for certain Façade Firms which receive substantial funds from Client Services
Subsidiaries, and Blust funnels money from the Façade Firms to his consulting
companies.
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175. Jason Blust is the beneficial owner and signatory on bank accounts for
Pioneer Law Firm, P.C. As such, he has control over and entitlement to the funds in
those accounts. Bank account records show that in May and June 2018 alone, these
accounts received over $51,000 in payments from Pioneer Client Services, LLC, the
related Client Services Subsidiary.
176. Jason Blust also uses consulting companies to direct consumer funds from
the Façade Firms to himself. Jason Blust directs and controls Relief Defendants Lit Def
Strategies, LLC and Relialit, LLC. He is the sole beneficial owner for bank accounts for
those two entities. As of June 2021, Jason Blust was the sole member and manager of
Relialit, LLC and the manager of Lit Def Strategies, LLC.
177. Jason Blust and his various companies received significant payments from
Façade Firms. For example, the following Façade Firms regularly sent payments to Lit
Def Strategies:
A. Florio & Associates, PLLC d/b/a Bedrock Legal Group f/k/a Raggio &
Associates, PLLC;
Anchor Law Firm, PLLC;
Burnette Legal Group, LLC d/b/a Monarch Legal Group;
Daniel Rufty Legal d/b/a Carolina Legal Services;
Gardner Legal LLC d/b/a Option 1 Legal;
Great Lakes Law Firm, LLC;
Green Legal Services, LLC d/b/a Newport Legal Group;
Harbor Legal Group, LLC;
Henry Legal Group, LLP d/b/a Heartland Legal Group;
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Northstar Legal Group, LLC;
The Sands Law Group d/b/a Whitestone Legal Group; and
WyoLaw d/b/a Summit Law Firm.
From December 2019 to April 2021, payments from the foregoing Façade Firms to Lit
Def Strategies totaled over $28 million.
178. The following Façade Firms regularly sent payments to Relialit: The Sands
Law Group, LLP; Burnette Legal Group, LLC; WyoLaw, LLC; Turnbull & Associates,
LLC; Anchor Law Firm, PLLC; Raggio and Associates PLLC; Boulder Legal Group, LLC;
JMS Industries. LLC; Colonial Law Group, LLC; Cornerstone Legal Group, LLC; Law
Office of Amber Florio, PLLC; Crimson Legal Group, LLC; Frontier Consumer Law
Group, LLC; Chabner Legal and Associates, LLP; Great Lakes Law Firm, LLC; Harbor
Legal Group, LLC; Phoenix Legal Group, PLLC; Hodyno & Associates, PLLC; Donald
Norris Associates PLLC; Royal Legal Group, LLC; Gardner Legal Group LLC;
Lighthouse Tax & Financial, LLC; Pioneer Law Firm, P.C.; Henry Legal Group LLP;
Daniel Rufty Legal, PLLC; and Meg Sohmer Wood, PLLC. From March 2019 and
January 2020, these payments totaled over $358,000.
179. Façade Firms also pay both Jason Blust personally and the Law Office of
Jason Blust. For example, from January 2019 to May 2021, Monarch Legal Group paid
Jason Blust $18,311 and the Law Office of Jason Blust $215,000.
180. Similarly, Daniel Rufty, the local attorney for Façade Firm Carolina Legal
Services referenced above in Paragraphs 156-158, testified in a 2021 North Carolina
State Bar investigation that his firm paid consultants including Jason Blust and that
Global sent payments from consumers’ escrow accounts to Carolina Client Services, LLC
(an SFS-owned entity).
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181. Rufty further testified that he although he owned 99% of Carolina Legal
Services, he had rights to only 3% of its profits. The remaining 97% of profits were sent
to Jason Blust and his associates, either directly or through his companies. Rufty
testified that the payments were ostensibly for consulting work, data entry, and
administrative services.
182. The North Carolina State Bar ultimately found that consumer funds were
used to pay Lit Def Strategies, Jason Blust, and SFS.
Transfer to the ESOP Benefits Blumkin
183. Prior to the formation of Strategic ESOP and Strategic ESOT, Twist
Financial, LLC (Blumkin’s company) owned 17.99% of SFS.
184. When SFS formed Strategic ESOP and Strategic ESOT, Twist (i.e.,
Blumkin) loaned Strategic ESOP approximately $43,000,000 at 3% interest rather than
taking a lump sum payout for its ownership stake. Between December 2017 and March
2020, Blumkin received over $1,900,000 in interest payments and over $16,200,000 in
principal repayments on the loan. Blumkin receives regular payments of interest and
principal on this loan.
185. Between December 2017 and March 2020, Strategic ESOP paid Twist over
$16 million in principal and almost $2 million in interest.
Transfer of Assets to Shell Holding Companies Owned by the Individual Defendants
186. Defendant Sasson, Blumkin and Behar direct and control the Holding
Companies.
187. Between October 2016 and September 2017, SFS transferred almost
$9,000,000 to the Holding Companies. Ryan Sasson was the signatory on the SFS
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account that transferred the funds. As such, Sasson had control over the flow of money
into and out of the account.
188. Between October 2016 and September 2017, SFS transferred over
$3,200,000 to Blaise Investments, LLC.
189. Between October 2016 and September 2017, SFS transferred over
$3,400,000 to Duke Enterprises, LLC.
190. Between October 2016 and September 2017, SFS transferred over
$2,200,000 to Twist Financial, LLC.
191. Donald J. Holmgren is the trustee of the Blust Family Irrevocable Trust.
Holmgren resides at 7634 W Balmoral Ave, Chicago, IL. Jason Blust is the beneficiary of
the Blust Family Irrevocable Trust.
192. Between March 2020 to April 2021, Lit Def Strategies paid $36,000,000
to the Blust Family Irrevocable Trust.
193. Defendant Jason Blust directs and controls Relief Defendants Lit Def
Strategies, LLC and Relialit, LLC. Jason Blust is the sole beneficial owner on bank
accounts for these entities at Associated Bank, at least.
194. Between July 2020 and April 2021, the Blust Family Irrevocable Trust
paid $8,300,000 to Relief Defendant Jaclyn Blust.
195. Relief Defendants Lit Def Strategies, LLC, Relialit, LLC, the Blust Family
Irrevocable Trust Through Donald J. Holmgren, Trustee, Jaclyn Blust, Strategic ESOP,
and Strategic ESOT have received, directly or indirectly, funds and other assets from
Defendants that are traceable to funds obtained from consumers through Defendants
unlawful practices.
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Count 1
By the Bureau and the States
Charging Advance Fees in Violation of the TSR By Collecting Money Before the
Consumer Has Made at Least One Payment Under a Settlement Plan
(Against all Defendants except Jason Blust)
196. Plaintiffs incorporate by reference the allegations contained in Paragraphs
1-195 of this Complaint.
197. It is a violation of the TSR for any seller or telemarketer in connection with
the sale of any debt-relief service to request or receive payment of any fee or
consideration for any debt-relief service until and unless: (A) the seller or telemarketer
has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt
under a settlement agreement, debt-management plan, or other such valid contractual
agreement executed by the customer; and (B) the customer has made at least one
payment under that settlement agreement, debt-management plan, or other valid
contractual agreement between the customer and the creditor or debt collector. 16
C.F.R. § 310.4(a)(5)(i)(A)-(B).
198. From at least January 2016 through the present, SFS, the Client Services
Subsidiaries, the Holding Companies, Sasson, Blumkin, and Behar have engaged in
ongoing conduct to request and receive fees from consumers in connection with enrolled
debts even though Defendants had not yet renegotiated, settled, reduced, or otherwise
altered the terms of these debts under a settlement agreement, debt-management plan,
or other such valid contractual agreement executed by the consumers. Indeed, as noted
above, Defendants have frequently requested and received fees from consumers for
whom they have not renegotiated, settled, or reduced any debt.
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199. In addition, as discussed above, from at least January 2016 and continuing
through the present, Defendants have requested and received fees from consumers in
connection with enrolled debts even though consumers had not yet made any payments
under a settlement agreement, debt-management plan, or other valid contractual
agreement between the consumers and the creditor or debt collector and relating to
those enrolled debts.
200. As discussed above, Individual Defendants Sasson, Blumkin, and Behar
participated in this practice of requesting and receiving fees (including but not limited
to retainer fees, service fees, and administrative fees) before consumers made the first
debt-relief payment to a creditor. Sasson, Blumkin, and Behar were on the Board of
Directors of Strategic Family, Inc. Sasson also controlled SFS and its Client Services
Subsidiaries and had authority to control the manner and timing of their requests for
and receipt of fees and SFS’s use of telemarketing. Sasson, Blumkin, and Behar either
knew about or were recklessly indifferent to the fact that SFS was selling debt-relief
services by phone, including through interstate calls, and the manner and timing of
SFS’s and its Client Services Subsidiaries’ requests for and receipt of fees.
201. Defendants’ practice of requesting or receiving payment of fees (including
but not limited to service fees, administrative fees, and retainer fees) from consumers
under the circumstances described in Paragraphs 110-120 is an abusive act or practice in
telemarketing that violates the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B).
202. Individual Defendants Sasson, Blumkin, and Behar control SFS, its Client
Services Subsidiaries, and the Holding Companies and have authority to control
practices regarding telemarketing and fees. Sasson, Blumkin, and Behar also know, or
are recklessly indifferent to, the fact that SFS and its Client Services Subsidiaries sell
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debt-relief services by phone, including through interstate calls and that they request or
receive fees from consumers before consumers made the first debt-relief payment to a
creditor. Thus, Sasson, Blumkin, and Behar are individually liable for these violations of
the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B).
203. The Holding Companies are liable for these violations of the TSR because
they controlled SFS and because they operated in a common enterprise with SFS and
the Client Services Subsidiaries.
204. The Client Services Subsidiaries are liable for these violations of the TSR
because they were involved in the practices and because they operated in a common
enterprise with SFS and the Holding Companies.
Count 2
By the Bureau and the States
Charging Advance Fees in Violation of the TSR by Collecting Fees After Settling Some
but not all of a Consumer’s Debts When the Fees Are not Proportional to the Amount of
Debt Actually Settled or Based on a Fixed Percentage of the Amount Saved
(Against all Defendants except Jason Blust)
205. Plaintiffs incorporate by reference the allegations contained in Paragraphs
1-195 of this Complaint.
206. To the extent a seller or telemarketer renegotiates, settles, reduces, or
otherwise alters a consumer’s enrolled debts individually over time, the TSR prohibits
the seller or telemarketer from requesting or receiving any fee or consideration unless
such fee or consideration: (1) bears the same proportional relationship to the total fee
from renegotiating, settling, reducing, or altering the terms of the consumer’s entire
debt balance as the individual debt amount bears to the entire debt amount, with the
individual debt amount and the entire debt amount being those owed at the time the
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debt was enrolled in the service; or (2) is a percentage of the amount saved as a result of
the renegotiation, settlement, reduction, or alteration. 16 C.F.R. § 310.4(a)(5)(i)(C).
207. From at least January 2016 through the present, SFS, its Client Services
Subsidiaries, the Holding Companies, Sasson, Blumkin, and Behar have settled
consumers’ debts individually over time and after doing so, have requested or received
fees that: (1) do not bear the same proportional relationship to the total fee as the
individual debt amount bears to the entire debt amount at the time of enrollment; and
(2) are not a percentage of the amount saved as a result of the renegotiation, settlement,
reduction, or alteration.
208. As discussed above, Individual Defendants Sasson, Blumkin, and Behar
participated in settling consumers’ debts individually over time and while doing so,
requesting or receiving fees that: (1) do not bear the same proportional relationship to
the total fee as the individual debt amount bears to the entire debt amount at the time of
enrollment; and (2) are not a percentage of the amount saved as a result of the
renegotiation, settlement, reduction, or alteration.
209. Defendants’ practice of requesting or receiving fees described in
Paragraphs 110-120 constitutes an abusive act or practice in telemarketing that violates
the TSR. 16 C.F.R. § 310.4(a)(5)(i)(C).
210. Individual Defendants Sasson, Blumkin, and Behar control SFS, its Client
Services Subsidiaries, and the Holding Companies and have authority to control
practices regarding telemarketing and fees. Sasson, Blumkin, and Behar also know, or
are recklessly indifferent to, the fact that SFS and its Client Services Subsidiaries sell
debt-relief services by phone, including through interstate calls, and request or receive
fees or consideration that: (1) do not bear the same proportional relationship to the total
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fee from renegotiating, settling, reducing, or altering the terms of the consumer’s entire
debt balance as the individual debt amount bears to the entire debt amount, with the
individual debt amount and the entire debt amount being those owed at the time the
debt was enrolled in the service; or (2) are not a percentage of the amount saved as a
result of the renegotiation, settlement, reduction, or alteration. Thus, Sasson, Blumkin,
and Behar are individually liable for these violations of the TSR. 16 C.F.R. §
310.4(a)(5)(i)(C).
211. The Holding Companies are liable for these violations of the TSR because
they controlled SFS and because they operated in a common enterprise with SFS and
the Client Services Subsidiaries.
212. The Client Services Subsidiaries are liable for these violations of the TSR
because they were involved in the practices and because they operated in a common
enterprise with SFS and the Holding Companies.
Count 3
By the Bureau and the States
Substantial Assistance in Violation of the TSR
(Against SFS, the Client Services Subsidiaries, and the Holding Companies)
213. Plaintiffs incorporate by reference the allegations contained in Paragraphs
1-195 of this Complaint.
214. The TSR prohibits any person from providing substantial assistance or
support to any seller or telemarketer when that person knows or consciously avoids
knowing that the seller or telemarketer is engaged in any act or practice that constitutes
deceptive or abusive conduct under the TSR. 16 C.F.R. § 310.3(b).
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215. As explained above, the Façade Firms constitute “sellers” in connection
with their provision of, or arranging for others to provide, debt-relief services. 16 C.F.R.
§ 310.2(o), (dd), (ff).
216. As explained above, in the course of offering to provide or providing debt-
relief services to consumers, the Façade Firms have engaged, and continue to engage in,
abusive acts or practices in violation of the TSR. 16 C.F.R. § 310.4(a)(5).
217. SFS, the Holding Companies, and the Client Services Subsidiaries
provided, and continue to provide, substantial assistance or support to the Façade Firms
by, among other things: creating and controlling the Façade Firms; handling all (or
almost all) of the negotiation work on behalf of the Façade Firms; handling all (or
almost all) consumer interactions while holding themselves out as Façade Firms;
interacting with RAM and Global on behalf of the Façade Firms; and participating in the
day-to-day business operations of the Façade Firms.
218. SFS, the Holding Companies, and the Client Services Subsidiaries knew or
consciously avoided knowing that the Façade Firms were requesting or receiving fees
from consumers before consumers made the first debt-relief payment to a creditor; and
knew or consciously avoided knowing that the Façade Firms were settling consumer
debts one at a time and taking fees that: (1) do not bear the same proportional
relationship to the total fee as the individual debt amount bears to the entire debt
amount at the time of enrollment; and (2) are not a percentage of the amount saved as a
result of the renegotiation, settlement, reduction, or alteration.
219. SFS, the Holding Companies, and the Client Services Subsidiaries have
violated, and continue to violate, the TSR’s ban on assisting and facilitating others’
violations of that rule. 16 C.F.R. § 310.3(b).
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7
220. The Holding Companies are liable for these violations of the TSR because
they controlled SFS and because they operated in a common enterprise with SFS and
the Client Services Subsidiaries.
221. The Client Services Subsidiaries are liable for these violations of the TSR
because they were involved in the practices and because they operated in a common
enterprise with SFS and the Holding Companies.
Count 4
By the Bureau and the States
Substantial Assistance in Violation of the TSR
(Against Individual Defendants Sasson, Blumkin, Behar, and Blust)
222. Plaintiffs incorporate by reference the allegations contained in Paragraphs
1-195 of this Complaint.
223. As explained above, SFS constitutes a “telemarketer” and SFS, the Client
Services Subsidiaries, and the Façade Firms constitute “sellers” in connection with their
provision of, or arranging for others to provide, debt-relief services. 16 C.F.R. § 310.2(o),
(dd), (ff).
224. In the course of offering to provide or providing debt-relief services to
consumers, the Façade Firms, the Client Services Subsidiaries, and SFS (largely acting
through the Façade Firms and its Client Services Subsidiaries) have engaged, and
continue to engage in, abusive acts or practices in violation of the TSR. 16 C.F.R. §
310.4(a)(5).
225. The Individual Defendants provided, and continue to provide, substantial
assistance or support to SFS, the Façade Firms, and the Client Services Subsidiaries.
226. Ryan Sasson oversees all employees at SFS. He participated in the creation
of the Façade Firms, the Client Services Subsidiaries, and Duke Enterprises; he exerts
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control over them all. Sasson interacted with RAM and Global on behalf of SFS, the
Façade Firms, and the Client Services Subsidiaries. He participates in the day-to-day
business operations of SFS, the Façade Firms, and the Client Services Subsidiaries.
227. Jason Blust is a vice president for one Façade Firm, a member of another,
and was involved in the creation of yet another. He also registered the domains for two
of the Façade Firms. Jason Blust recruited attorneys to the Façade Firms and managed
the operations of Anchor Law Firm, PLLC from 2016 until at least 2020. He participates
in the day-to-day operations of the Façade Firms, in part through his consulting firms,
Relief Defendants Relialit and Lit Def Strategies. Jason Blust facilitated communication
between the Façade Firms and SFS.
228. Daniel Blumkin was Chief Sales Officer of Strategic Financial Solutions,
LLC and head of sales at Strategic Consulting, LLC. Blumkin is on the Board of Directors
of Strategic Family, Inc. His company, Twist Financial, owned voting stock in Strategic
Family, Inc. Blumkin was also a manager at Strategic Financial Solutions, LLC and
Strategic Client Support, LLC.
229. Albert Ian Behar is a member of Strategic Financial Solutions, LLC and
also on Strategic Family’s Board of Directors. His company, Blaise Investments, LLC,
owned voting stock in Strategic Family, Inc. Behar was also a manager at Strategic
Financial Solutions, LLC and Strategic Client Support, LLC.
230. Through their collective ownership in Strategic Family’s stock, by way of
their respective Holding Companies in which they are the sole owner, manager and
member, Blumkin, Behar, and Sasson controlled the business of Strategic Family, Inc.
231. The Individual Defendants knew or consciously avoided knowing: 1) that
SFS was selling debt-relief services by phone, including through interstate calls; 2) that
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following the phone sales, SFS, the Façade Firms, and the Client Services Subsidiaries
were providing debt-relief services for consideration; 3) that SFS, the Façade Firms, and
the Client Services Subsidiaries were requesting or receiving fees from consumers before
consumers made the first debt-relief payment to a creditor; and 4) that SFS, the Façade
Firms and the Client Services Subsidiaries were settling consumer debts one at a time
and taking fees that: (a) do not bear the same proportional relationship to the total fee
as the individual debt amount bears to the entire debt amount at the time of enrollment;
and (b) are not a percentage of the amount saved as a result of the renegotiation,
settlement, reduction, or alteration.
232. The Individual Defendants have violated, and continue to violate, the
TSR’s ban on assisting and facilitating others’ violations of that rule. 16 C.F.R.
§ 310.3(b).
Count 5
By the Bureau and the States
Deception in Violation of the TSR
(Against SFS, the Client Services Subsidiaries, the Holding Companies, and Individual
Defendants Sasson and Blumkin)
233. Plaintiffs incorporate by reference the allegations contained in Paragraphs
1-195 of this Complaint.
234. The TSR prohibits a seller or telemarketer from engaging in deceptive acts
or practices which include “[m]aking a false or misleading statement to induce any
person to pay for goods or services . . .” 16 C.F.R. § 310.3(a)(4).
235. SFS made several false or misleading statements to induce persons to pay
for debt-relief services in violation of the TSR.
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236. SFS employs third parties to mail personalized letters to debt-distressed
consumers that claim the consumers are “pre-approved” for a debt-consolidation loan at
attractive rates. Sometimes the packages sent to consumers also include fake checks
payable to the consumer. In reality, there is no actual lender and no actual pre-approval.
237. When consumers respond to the pre-approval letters, SFS’s sales
employees almost always advise them that they do not qualify for the loan. Instead, they
follow choreographed scripts that encourage the consumers to enroll in SFS’s debt-relief
service. The scripts assume that the consumer was not approved for the loan and explain
that “pre-approved” means the consumer has been pre-approved to go through the loan
application process.
238. Individual Defendants Sasson and Blumkin, in their roles as Chief
Executive Officer and Chief Sales Officer, respectively, control the processes of selling
the debt-relief service, including the practice described above. They also knew or were
recklessly indifferent to the fact that: 1) SFS misrepresented the availability of consumer
loans in order to sell debt-relief services and 2) SFS was selling debt-relief services by
phone, including through interstate calls.
239. By telling consumers they are “pre-approved” for a loan but then
rescinding that offer and pushing them into the debt-relief service instead, Defendants
made false or misleading statements to induce those consumers to pay for the debt-
relief service. 16 C.F.R. § 310.3(a)(4). As such, this practice constitutes a deceptive act or
practice in telemarketing that violates the TSR.
240. The Holding Companies are liable for these violations of the TSR because
they controlled SFS and because they operated in a common enterprise with SFS and
the Client Services Subsidiaries.
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241. The Client Services Subsidiaries are liable for these violations of the TSR
because they were involved in the practices and because they operated in a common
enterprise with SFS and the Holding Companies.
Count 6
By the Bureau and the States
Deception in Violation of the TSR
(Against SFS, the Client Services Subsidiaries, the Holding Companies, and Individual
Defendants Sasson and Blumkin)
242. Plaintiffs incorporate by reference the allegations contained in Paragraphs
1-195 of this Complaint.
243. The TSR prohibits a seller or telemarketer from engaging in deceptive acts
or practices which include “[m]isrepresenting, directly or by implication, . . .[a]ny
material aspect of any debt relief service . . .” 16 C.F.R. § 310.3(a)(2)(x).
244. SFS made several misrepresentations about material aspects of the debt-
relief services offered by Defendants and the Façade Firms in violation of the TSR.
245. During the sales process, SFS employees routinely refer to the debt-relief
service as the “0% interest option” while speaking with consumers.
246. Referring to the debt-relief service as the “0% interest option” creates
confusion for consumers, particularly in light of the mailers many consumers received
claiming they were “preapproved” for a debt-consolidation loan.
247. In truth, the debt-relief service is not a loan. So while SFS does not charge
consumers interest for using this service, SFS charges exorbitant fees to consumers who
enroll. Further, SFS’s debt-relief program is not interest-free: while consumers are
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enrolled in the debt-relief service, they continue to accrue interest on their outstanding
debts.
248. Individual Defendants Sasson and Blumkin, in their roles as Chief
Executive Officer and Chief Sales Officer, respectively, control the processes of selling
the debt-relief service, including the practice described above. Sasson and Blumkin
knew or were recklessly indifferent to the fact that: 1) SFS employees made deceptive
statements about the accrual of interest while consumers were in the debt-relief
program; and 2) SFS was selling debt-relief services by phone, including through
interstate calls.
249. Defendants’ practice of referring to the law firm debt-relief service as the
“0% interest option” is a misrepresentation of a material aspect of a debt-relief service.
16 C.F.R. § 310.3(a)(2)(x). As such, this practice constitutes a deceptive act or practice in
telemarketing that violates the TSR.
250. The Holding Companies are liable for these violations of the TSR because
they controlled SFS and because they operated in a common enterprise with SFS and
the Client Services Subsidiaries.
251. The Client Services Subsidiaries are liable for these violations of the TSR
because they were involved in the practices and because they operated in a common
enterprise with SFS and the Holding Companies.
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Count 7
By the People of the State of New York
Repeated Fraudulent Acts in Violation of Exec. Law § 63(12)
(Against SFS, the Client Services Subsidiaries, and the Individual Defendants)
252. The NYAG incorporates by reference the allegations contained in
Paragraphs 1-195 of the Complaint.
253. New York Executive Law § 63(12) empowers the Attorney General to seek
restitution, damages and injunctive relief when any person or business entity has
engaged in repeated fraudulent or illegal acts or otherwise demonstrates persistent
fraud or illegality in the carrying on, conducting, or transaction of business. Statutory
fraud under Executive Law § 63(12) is broader than common law fraud and includes any
acts that have a tendency to deceive.
254. Defendants have engaged in repeated fraudulent acts or otherwise
demonstrated persistent fraud in the carrying on, conducting, or transaction of their
debt relief business.
255. The Individual Defendants participated in, had the ability to control, were
aware of, or should have been aware of, the fraudulent acts of SFS and the Client
Services Subsidiaries.
Count 8
By the People of the State of New York
Engaging in Deceptive Acts or Practices in Violation of GBL § 349
(Against SFS, the Client Services Subsidiaries, and Individual Defendants)
256. The NYAG incorporates by reference the allegations contained in
Paragraphs 1-195 of this Complaint.
257. New York General Business Law § 349 provides that “[d]eceptive acts or
practices in the conduct of any business . . . in this state are hereby declared unlawful.”
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258. In numerous instances, Defendants have violated GBL § 349 by engaging
in deceptive acts or practices in connection with conducting their debt relief business.
259. The Individual Defendants participated in, had the ability to control, were
aware of, or should have been aware of, the deceptive acts and practices of SFS and the
Client Services Subsidiaries.
Count 9
By the Bureau and the States
Funds and Assets Obtained Through Unlawful Practices Held in Constructive Trust
(Relief Defendants)
260. Plaintiffs incorporate by reference the allegations contained in Paragraphs
1-195 of the Complaint.
261. Relief Defendants have received, directly or indirectly, funds or other
assets from Defendants that are traceable to, or commingled with, funds obtained from
consumers through the unlawful practices described in this Complaint.
262. Relief Defendants are not bona fide purchasers with legal or equitable title
or other legitimate claim to the funds or other assets received from Defendants.
263. Relief Defendants would be unjustly enriched if not required to disgorge
funds or the value of the benefits received as a result of Defendants’ unlawful acts or
practices.
264. The Relief Defendants hold funds and assets in constructive trust for the
benefit of affected consumers.
Count 10
By the State of Wisconsin
Operating as Adjustment Service Company in Wisconsin Without License
(Great Lakes Client Services, LLC, StratFS, LLC, Strategic Client Support, LLC, Strategic
CS, LLC, Strategic FS Buffalo, LLC, Strategic NYC, LLC, Strategic Consulting, LLC,
Strategic Family, Inc., Twist Financial, LLC, Duke Enterprises, LLC, Blaise Investments,
LLC, Ryan Sasson, Jason Blust, Daniel Blumkin and Albert Behar)
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265. The State of Wisconsin incorporates by reference the allegations contained
in Paragraphs 1-195 of this Complaint.
266. Wisconsin Stat. § 218.02(1)(a) defines “adjustment service company,” in
relevant part, as a “corporation, limited liability company, association, partnership or
individual engaged as principal in the business of prorating the income of a debtor to
the debtor’s creditor or creditors . . . in return for which the principal receives a service
charge or other consideration.”
267. Defendants Great Lakes Client Services, LLC, StratFS, LLC, Strategic
Client Support, LLC, Strategic CS, LLC, Strategic FS Buffalo, LLC, Strategic NYC, LLC,
Strategic Consulting, LLC, Strategic Family, Inc., Twist Financial, LLC, Duke
Enterprises, LLC, Blaise Investments, LLC, Ryan Sasson, Jason Blust, Daniel Blumkin
and Albert Behar are each “adjustment service companies” within the scope of Wis.
Stat. § 218.02(1)(a).
268. Wis. Stat. § 218.02(2)(a)1. requires every adjustment service company to
“apply to the division [of banking] for a license to engage in such business.”
269. None of Defendants has ever applied for an adjustment service company
license as required by Wis. Stat. § 218.02(2)(a)1.
Count 11
By the State of Wisconsin
Violations of Wisconsin Adjustment Service Company Rules
(Great Lakes Client Services, LLC, StratFS, LLC, Strategic Client Support, LLC, Strategic
CS, LLC, Strategic FS Buffalo, LLC, Strategic NYC, LLC, Strategic Consulting, LLC,
Strategic Family, Inc., Twist Financial, LLC, Duke Enterprises, LLC, Blaise Investments,
LLC, Ryan Sasson, Jason Blust, Daniel Blumkin and Albert Behar)
270. The State of Wisconsin incorporates by reference the allegations contained
in Paragraphs 1-195 of this Complaint.
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271. Wisconsin Stat. § 218.02(7) provides that “It shall be the duty of the
division [of banking] and the division shall have the power, jurisdiction and authority
. . . [t]o issue general or special orders in execution of or supplementary to this section,
but not in conflict therewith, to protect debtors from oppressive or deceptive practices of
licensees.” Subsection (7)(d) further authorizes the division “[t]o determine and fix by
general order the maximum fees or charges that such companies may make.”
272. The division has promulgated Wis. Admin. Code § DFI-Bkg chapter 73
pursuant to the preceding legislative authorizations.
273. Defendants Great Lakes Client Services, LLC, StratFS, LLC, Strategic
Client Support, LLC, Strategic CS, LLC, Strategic FS Buffalo, LLC, Strategic NYC, LLC,
Strategic Consulting, LLC, Strategic Family, Inc., Twist Financial, LLC, Duke
Enterprises, LLC, Blaise Investments, LLC, Ryan Sasson, Jason Blust, Daniel Blumkin
and Albert Behar have violated Wis. Admin. Code § DFI-Bkg 73 by: (a) charging fees far
in excess of what is permitted under the rule, and (b) charging fees before any of the
debtors’ funds are remitted to the debtors’ creditors as part of settlement.
DEMAND FOR RELIEF
Plaintiffs request that the Court:
a. Award the Plaintiffs such preliminary injunctive and ancillary relief as may be
necessary to avert the likelihood of consumer injury during the pendency of
this action, including but not limited to a temporary restraining order and
preliminary injunction on taking advance fees prior to the settlement of a
consumer debt, an order freezing assets, directing the preservation of records,
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and allowing expedited discovery and financial reporting, and appointment of
a temporary receiver;
b. Permanently enjoin Defendants from committing future violations of the
Telemarketing Act, 15 U.S.C. §§ 6102(c), 6105(d); the TSR, 16 C.F.R. pt. 310;
and the CFPA, 12 U.S.C. § 5536(a), and any other provision of “Federal
consumer financial law,” as defined by 12 U.S.C. § 5481(14), as well as New
York General Business Law Articles 22-A and 28-B, and New York Executive
Law § 63(12);
c. Permanently enjoin Defendants from the advertisement, marketing,
promotion, offering for sale, or selling of any consumer financial product or
service, including but not limited to any debt-relief service, and prohibit SFS,
the Façade Firms, the Client Services Subsidiaries, and the Individual
Defendants from having an ownership stake in any company that provides a
debt-relief service;
d. Award damages and other monetary relief against Defendants and Relief
Defendants as the Court finds necessary to redress consumer injury resulting
from Defendants’ violations of the TSR, New York state law, and Wisconsin
state law, including but not limited to rescission or reformation of contracts,
refund of moneys paid, restitution, disgorgement or compensation for unjust
enrichment, payment of damages, civil penalties pursuant to New York
General Business Law § 350-d, and prejudgment interest;
e. Award the Bureau and the States civil money penalties;
f. Order Defendants to pay Plaintiffs’ costs incurred in connection with
prosecuting this action; and
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g. Award additional relief as the Court may determine to be just and proper.
Dated: March 27, 2024
Respectfully submitted,
Attorneys for Plaintiff
Consumer Financial Protection Bureau
ERIC HALPERIN
Enforcement Director
RICHA SHYAM DASGUPTA
Deputy Enforcement Director
TIMOTHY M. BELSAN
Assistant Litigation Deputy
/s/ Vanessa Buchko
Vanessa Buchko
E-mail: [email protected]
Phone: 202-435-9593
Monika Moore
E-mail: [email protected]
Phone: 202-360-9505
Joseph Sanders
E-mail: [email protected]
Phone: 202-377-9846
Shirley Chiu
E-mail: [email protected]
Phone: 202-435-7592
1700 G Street, NW
Washington, DC 20552
Facsimile: (202) 435-7722
And
LETITIA JAMES
Attorney General of the State of New
York
/s/ Christopher L. Boyd
Christopher L. Boyd
Genevieve S. Rados
Assistant Attorney General
350 Main Street, Suite 300A
Buffalo, NY 14202
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Phone: (716) 853-8457
Email: [email protected]
Attorney for State of New York
PHILIP J. WEISER
Attorney General
State of Colorado
/s/ Kevin J. Burns
Kevin J. Burns, CO Reg. No. 44527
(pro hac vice)
Senior Assistant Attorney General
Colorado Department of Law
Ralph L. Carr Judicial Center
Consumer Protection Section
1300 Broadway, 6th Floor
Denver, CO 80203
Phone: (720) 508-6110
Attorney for Plaintiff State of Colorado,
ex rel. Philip J. Weiser, Attorney
General
KATHLEEN JENNINGS
Attorney General State of Delaware
/s/ Marion M. Quirk
Marion M. Quirk (pro hac vice)
Director of Consumer Protection
Kevin D. Levitsky (pro hac vice
forthcoming, if required)
Deputy Attorney General
Delaware Department of Justice
820 N. French Street, 5th Floor
Wilmington, DE 19801
Phone: (302) 683-8810
Attorneys for State of Delaware
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KWAME RAOUL
Attorney General
State of Illinois
By: /s/ Greg Grzeskiewicz
Greg Grzeskiewicz, Chief, Consumer
Fraud Bureau
Pro hac vice application forthcoming, if
required
Daniel Edelstein, Supervising Attorney,
Consumer Fraud Bureau
Pro hac vice application forthcoming, if
required
Amanda E. Bacoyanis, Assistant
Attorney
General, Consumer Fraud Bureau
(pro hac vice)
Matthew Davies, Assistant Attorney
General,
Consumer Fraud Bureau
(pro hac vice)
Office of the Illinois Attorney General
100 W. Randolph Street, 12
th
Floor
Chicago, Illinois 60601
312-814-2218
Attorneys for the People of the State of
Illinois
KEITH ELLISON
Attorney General of Minnesota
/s/ Evan Romanoff
Evan Romanoff (pro hac vice)
Assistant Attorney General
445 Minnesota Street, Suite 1200
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St. Paul, Minnesota 55101-2130
Telephone: (651) 728-4126
Attorney for the State of Minnesota
JOSHUA H. STEIN
Attorney General of North Carolina
/s/ M. Lynne Weaver
M. Lynne Weaver (pro hac vice)
Special Deputy Attorney General
N.C. State Bar No. 19397
114 W. Edenton Street
Raleigh, NC 27602
Telephone: (919) 716-6039
Attorney for the State of North Carolina
JOSHUA L. KAUL
Attorney General of Wisconsin
/s/ Lewis W. Beilin
Lewis W. Beilin (pro hac vice)
Assistant Attorney General
Wisconsin Department of Justice
17 West Main Street
Post Office Box 7857
Madison, WI 53707-7857
(608) 266-1221
Attorney for State of Wisconsin
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