Borrowers lost $11M in student loan scam, feds claim
Federal investigators have halted an alleged student loan debt relief scam that bilked more than $11 million from consumers nationwide.
Strategic Student Solutions and several related companies falsely promised to reduce or eliminate student loan debt and also offered the borrowers nonexistent credit repair services in exchange for upfront fees and monthly payments, the Federal Trade Commission charged in court papers made public Thursday.
Although borrowers allegedly got no relief from their debts, Dave Green, owner of the companies, used corporate funds to pay for jewelry, casino tabs, mortgage payments, luxury vehicles and construction of a pool, the commission charged.
A federal court in Florida approved a temporary restraining order that halted the operation, pending a hearing on a permanent injunction.
“Consumers who paid Strategic Student Solutions for help with their student loans watched their situations go from bad to worse,” Tom Pahl, acting director of the FTC’s consumer protection bureau, said in a written statement.
Jeffrey Backman and Richard Epstein, attorneys representing the companies and Green, did not immediately respond to a phone message seeking comment.
Since at least 2014, the companies preyed on student loan borrowers by falsely promising to reduce their repayments or eliminate part of the debt by enrolling them in income-driving repayment plans or loanforgiveness programs, the FTC court complaint charged.
In exchange, the borrowers allegedly were charged illegal upfront fees as high as $1,200 plus monthly payments that typically totaled $49.99.
One of the company websites, which was inaccessible Thursday, promised “Payments as low as $0 Monthly,” the complaint charged.
Only afterward did the consumers learn that the promises were empty. They also learned that none of the payments they made to the companies had been applied toward paying off their student loans.