IN THE CIRCUIT COURT OF PULASKI COUNTY, ARKANSAS 3rd DIVISION CONSENT JUDGMENT

Transcription

1 IN THE CIRCUIT COURT OF PULASKI COUNTY, ARKANSAS 3rd DIVISION STATE OF ARKANSAS ex rei. DUSTIN MCDANIEL, ATTORNEY GENERAL PLAINTIFF vs. CASE NO MO' MONEY TAX SERVICE, LLC, MONEY CO. USA, LLC, MARKEY GRANBERRY, DERRICK ROBINSON, AND CANDIS SAULSBERRY FILED 11/22/11 14:23:31 Lan ::~ Cr.:~ne PrAl.a=-ki Circuit Clerk CROl DEFENDANTS CONSENT JUDGMENT The State of Arkansas ex rei. Dustin McDaniel, Attorney General, filed this action in order to redress and restrain alleged violations of the Arkansas Deceptive Trade Practices Act, Ark. Code Ann et seq. and the Arkansas Refund Anticipation Loan Act, Ark. Code Ann et seq. (hereinafter "the RALA"). The Attorney General and the Defendants wish to resolve this action and recognize that this Consent Judgment has been negotiated in good faith, and that this Judgment is fair, reasonable, and in the public interest. Based upon the facts and matters before this Court, and with the consent of the parties to this Judgment, it is hereby ORDERED, ADJUDGED, and DECREED: I. Definitions 1. Unless otherwise indicated, the terms used herein shall carry those definitions provided by the Arkansas Deceptive Trade Practices Act, ARK. CODE ANN , et seq. II. Jurisdiction 1

2 2. The Attorney General brought this enforcement action pursuant to the Refund Anticipation Loan Act and the Arkansas Deceptive Trade Practices Act. This Court has jurisdiction over this matter, and the parties hereto pursuant to Ark. Code Ann and the common law of the State of Arkansas. Venue is proper pursuant to Ark. Code Ann , , and the common law ofthe State of Arkansas. The Defendants have transacted business in the State of Arkansas. Defendants operate a tax preparation business which offers those services from several locations in Arkansas. Based upon their activities in the State of Arkansas, the Defendants should reasonably expect to defend themselves in the courts of this State for violations of applicable laws. 3. For purposes of this Consent Judgment, the Attorney General and the Defendants waive all objections and defenses that they may have to the jurisdiction or venue ofthe Circuit Court of Pulaski County, Arkansas, and shall not challenge the Court's jurisdiction in any subsequent action to enforce the terms of this Consent Judgment. III. Parties Bound 4. This Consent Judgment applies to and is binding upon the Attorney General, the Defendants, and Mitch Freeman. Mo' Money Tax Service, LLC, Money Co. USA, LLC, Markey Granberry, Derrick Robinson, and Candis Saulsberry are collectively referred to as "Defendants." 5. Mo' Money Tax Service, LLC was a tax preparation company and began operating as Money Co. USA, LLC during Money Co. continues to operate as a tax preparation business. 2

3 6. Markey Granberry and Derrick Robinson are the co-founders and owners of Money Co. USA, LLC, previously Mo' Money Tax Service. 7. Candis Saulsberry is a named Defendant. Saulsberry was the franchise owner of the Mo' Money location as 4612 Asher in Little Rock, Arkansas during the time period set out in the State's Complaint. 8. Mitch Freeman is the present owner of the Money Co USA franchise presently operating at 4612 Asher in Little Rock, Arkansas. Mitch Freemen managed this location during the time period set out in the State's Complaint. Mitch Freeman is Saulsberry's brother. 9. Any change in ownership or status of the Defendants, including, but not limited to, any transfer of assets or real or personal property, shall in no way alter the Defendants' responsibilities under this Consent Judgment. IV. The Attorney General's Position 10. Markey Granberry and Derrick Robinson are the co-founders and owners of Mo' Money Tax Service, and subsequently Money Co. USA, LLC. 11. Mo' Money Tax Service, LLC (hereinafter "Mo' Money") was a tax preparation business with its headquarters in Memphis, Tennessee. 12. In 2010, Mo' Money was rebranded as Money Co USA, LLC. 13. MoneyCo is the successor in interest to Mo' Money and is liable for the violations of law committed while using the name Mo' Money as set out in the State's complaint. 3

4 14. Mo' Money, now Money Co. USA, operates a number of tax preparation businesses, including several in Arkansas. The store-front locations are managed through franchise agreements with the individual owners ofthose stores. 15. Candis Saulsberry was the owner and operator of one of those franchises located at 4612 Asher in Little Rock, Arkansas. 16. As represented by the Defendants and Freeman, Saulsberry left the management and operation of this Mo' Money location to her brother, Freeman. 17. As represented by the Defendants and Freeman, full ownership and control of the Little Rock franchise of Mo' Money passed to Freeman; Saulsberry no longer has any ownership or control of any Mo' Money location. 18. In 2009, the Arkansas General Assembly passed the Refund Anticipation Loan Act, Ark. Code Ann , et seq., with the purpose of "protect[ing] consumers who enter into a refund anticipation loan and a refund anticipation check transaction." Ark. Code Ann (b). The RALA seeks to protect consumers by requiring specific \VTitten disclosures of fees and terms (Ark. Code Ann ), specific \VTitten disclosures during the RAL or RAC application process (Ark. Code Ann ), and specific oral disclosures (Ark. Code Ann ). The RALA prohibits certain actions at issue here, particularly with regard to the charging of fees (Ark. Code Ann ). The facilitator or preparer is prohibited from charging additional fees to a consumer obtaining an RAL or RAC, if those fees are not being charged to non-ral and non-rac customers. 19. For the 2009 tax season (tax returns due by April 15, 2010), Mo' Money facilitated RAL's and RAC's through JP Morgan Chase Bank. 4

5 20. For the 2009 tax season, Defendants processed approximately 1,157 tax returns at their store at 4612 Asher in Little Rock, Arkansas. Of those returns, 721 Arkansas consumers applied for an RAL and 235 applied for an RAC. 21. Because Defendants offered RAL's and RAC's, the RALA required Defendants to provide the disclosures set out by the RALA. 22. Defendants failed to provide the posted written disclosures required by Ark. Code Ann This section provides: (a) A facilitator shall display a schedule showing the current fees for refund anticipation loans or refund anticipation checks facilitated at the office. (b) A facilitator also shall prominently display on each fee schedule the following information: (1) Examples of the interest rates charged for refund anticipation loans in the amounts of: (A) Two hundred fifty dollars ($250); (B) Five hundred dollars ($500); (C) One thousand dollars ($1,000); and (D) Two thousand five hundred dollars ($2,500); (2) A legend, centered, in bold capital letters, and in one-inch letters stating: "NOTICE CONCERNING REFUND ANTICIPATION LOANS"; and (3) The following statement: "When you take out a refund anticipation loan, you are borrowing money against your tax refund. If your tax refund is less than expected, you will still owe the entire amount of the loan. If your refund is delayed, you may have to pay additional costs. YOU CAN USUALLY GET YOUR REFUND IN 8 TO 15 DAYS WITHOUT PAYING ANY EXTRA FEES AND TAKING OUT A LOAN. You can have your tax return filed electronically and your refund direct deposited into your own bank account without obtaining a loan or paying fees for an extra product." 5

6 Ark. Code Ann ( c )(I) The postings required by this section shall be made in no less than 28-point type on a document measuring no less than sixteen inches by twenty inches (16" by 20"). (2) The posting required in this section shall be displayed in a prominent location at each office where the facilitator is facilitating refund anticipation loans. (d) A facilitator shall not facilitate a refund anticipation loan or refund anticipation check unless; (1) The disclosures required by this section are displayed; and (2) The fee charged for the refund anticipation loan or refund anticipation check is the same as the fee displayed on the schedule. 23. Defendants violated Arkansas law by not posting the fee schedule in their 4612 Asher store on a document measuring at least 16" by 20" in no less than 28 point type; by not posting in their 4612 Asher store the interest rates resulting from loans in the amounts of two hundred fifty dollars ($250), five hundred dollars ($500), one thousand dollars ($1,000), and two thousand five hundred dollars ($2,500) on a document measuring at least 16" by 20" in not less than 28 point type; and by not posting the specific language of Ark. Code Ann (b )(3). 24. Defendants failed to provide the written disclosures required by Ark. Code Ann This section provides: (a) \Vhen a consumer applies for a refund anticipation loan, the facilitator shall disclose to the consumer on a colored-paper form separate from the application in 14-point type face, the following information: (1) The fee for the refund anticipation loan, including the fee for the tax preparation and other fees charged the consumer; (2) The time within which the proceeds of the refund anticipation loan will be paid to the consumer if the loan is approved; (3) For refund anticipation loans, the following disclosures: 6

7 (A) A legend, centered, in bold, capital letters, and in 18-point type stating: "NOTICE"; and (B) The statement: "This is a loan. You are borrowing money against your tax refund. If your tax refund is less than expected, you wijj still owe the entire amount of the loan. If your refund is delayed, you may have to pay additional costs. YOU CAN USUALLYGETYOURREFUND IN 8 TO 15 DAYS WITHOUT GETTING A LOAN OR PAYING EXTRA FEES. You can have your tax return filed electronically and your refund direct deposited into your bank account without obtaining a loan or other paid product."; and ( 4)(A) For refund anticipation loans, disclosure of the refund anticipation loan interest rate. (B) The refund anticipation loan interest rate shall be calculated utilizing the guidelines established under the federal Truth in Lending Act, 15 U.S.C et seq., as it existed on January 1, (b) If a consumer applies for a refund anticipation check, the facilitator shall disclose to the consumer on a colored-paper form separate from the application in 14-point type face, the following information: (1) The fee for the refund anticipation check, including the fee for tax preparation and other fees charged the consumer; (2) The time within which the proceeds of the refund anticipation check will be paid to the consumer; and (3) The following disclosures: (A) A legend, centered, in bold, capital letters, and in 18-point type stating: "NOTICE"; and (B) The statement: "You are paying [amount of refund anticipatjon check fee] to get your refund check through [name of issuer of the refund anticipation check]. YOU CAN A VOID THIS FEE AND STILL RECEIVE YOUR REFUND IN THE SAME AMOUNT OF TIME BY HAVING YOUR REFUND DIRECTLY DEPOSITED INTO YOUR BANK ACCOUNT. You can also wait for the Internal Revenue Service to mail you a check." 7

8 (c) The facilitator shall provide to the consumer before completing the loan or check transaction in a form that can be kept by the consumer the following: (1) The disclosures required by this subsection; (2.) A copy of the completed loan or check application and agreement; and i (3) For refund anticipation loans, the disclosures required by the federal Tmth in Lending Act. (d) The disclosures required by this section shall be provided in English and in the language used primarily for oral communication between the facilitator and the consumer. Ark. Code Ann Defendants violated Arkansas law by not providing any of the disclosures required by Ark. Code Ann on a separate colored piece of paper in 14-point type prior to consumers completing their RAL or RAC transactions. Among other items Defendants failed te disclose all of the fees to be charged; the resulting APR of the RAL or RAC; and the required statement concerning the availability of tax refunds without the use of an RAL or RAC. 26. Defendants failed to provide the oral disclosures required by ARK. CODE ANN Among other required disclosures, this section requires that a facilitator must orally inform the consumer that if the consumer's tax refund is less than expected, the consumer is liable for the full amount of the loan and must repay any difference. Defendants are in violation of Arkansas law by not disclosing to consumers that if the consumer's refund was less than expected, then the consumer would be responsible for repaying the full amount of the loan 27. Defendants charged fees prohibited by Ark. Code Ann Defendants charged a $29 fee, purportedly paid to Caymau Service Bureau, which is a 8

9 fictitious entity controlled by Granberry and Robinson. This fee was only charged to RAL and RAC customers. Non-RAL and Non-RAC customers were only charged a $5 fee. 28. Mo' Money, now Money Co USA, claims that it is not responsible for the actions or non-actions of its franchises. The State refutes that claim. Mo' Money, and through it Granberry and Robinson, controls what type of services are offered by their franchises and how those services are offered. Mo' Money provides the promotional materials to. its franchises and actively advertises on behalf of its franchises. Mo' Money controls what prices are charged and collects a portion of each amount collected per customer, and in this particular case, Mo' Money's headquarters directly controlled and profited from the fee that violated the RALA. For these reasons, and likely others, Mo' Money, Granberry, and Robinson are liable for the violations of their franchises. V. The Defendants' Position 29. Defendants maintain the position that their actions at all times have been in accordance with the Arkansas Deceptive Trade Practices Act, Ark. Code Ann et seq. and the Arkansas Refund Anticipation Loan Act, Ark. Code Ann , as well as any other applicable laws or regulations. Furthermore, Defendants deny liability for all claims and causes of action asserted against them in this litigation, and specifically deny all allegations set forth in section IV of this Consent Judgment. VI. Relief 30. Mo' Money, Money Co. USA, Granberry, Robinson, Saulsberry, and Freeman agree to comply with all terms of the Refund Anticipation Loan Act, as codified et seq. 9

10 31. Contemporaneous with the execution ofthis document, Money Co., USA, Granberry, or Robinson shall pay the sum of$12, to the Attorney General. On or before February 1, 2011, Money Co., USA, Granberry, or Robinson shall pay an additional sum of$12, All monies shall be delivered to the Chief Financial Officer ofthe Attorney General's office and shall be made payable to the Office of the Attorney General. A copy of all checks shall be delivered to Charles Saunders, Assistant Attorney General. All checks may be delivered to Carol Thompson, Chief Financial Officer, Office ofthe Attorney General, 323 Center Street, Suite 200, Little Rock, AR These sums shall be held by the Attorney General and deposited in the Consumer Education and Enforcement Fund and shall be held in trust there to be used by the Attorney General in his discretion to further efforts to investigate and prosecute consumer protection, e!1vironmental, public utilities and antitrust matters, and to educate consumers regarding such matters. 32. In addition to the total $25, payment, the Defendants agree to be contingently liable for the payment of an additional $50, However, the imposition of the additional $50, sum will be suspended for a period of five years. The payment of said additional sum shall be contingent upon the following conditions: 1) failure to make the full $25, payment as set out in the previous paragraph; 2) upon a specific finding by this Court that any one of the Defendants has materially breached a substantive term of this agreement within said five year period commencing on the date this Consent Judgment is entered. A violation of either provision shall cause the sum to be immediately due and payable. After the expiration of five years from the entry of this Judgment, this contingent liability shall expire and the contingent payment of $50,

11 shall no longer be collectable by the Attorney General. However, neither the suspension of such payment nor the expiration of such contingency shall prevent the Attorney General from pursuing any and all actions and claims available to the Attorney General for any conduct occurring after the entry of this Consent Judgment, and the injunctive provisions ofthis Consent Judgment shall remain in effect unless and until modified by this Court upon the petition of either party. 33. In considering whether or not Money Co. and/or Mo Money Tax Service, LLC materially violated the injunctive terms, the Court may consider whether or not the violation was committed by an individual franchise location and whether Money Co. and/or Mo Money Tax Service, LLC took appropriate steps to insure that its Arkansas franchises were educated about the requirements of the RALA. Such steps should include, but not be limited to, providing appropriate training and written direction, along with exemplar disclosures that comply with the RALA, to their Arkansas franchises on a yearly basis. These written directions would outline the requirements of the RALA, including the requirement for written and oral disclosures to each consumer, as well as the posting of appropriate signage, and descript the fee restrictions imposed by Arkansas law. Thereafter, Money Co. and/or Mo Money Tax Service, LLC should require a signed written acknowledgment, on a yearly basis prior to offering ofral's or RAC's for a given years tax season, that the franchisee is aware of the RALA and will comply with its requirements. Production of these directions and acknowledgement could act as a "safe harbor" to any unauthorized acts of a Money Co. and/or Mo Money Tax Service, LLC franchisee. Such directions and acknowledgment would not act as a defense should 11

12 the AG show that Money Co. and/or Mo Money Tax Service, LLC created the violation, knew or should have known about the violation, or actively participated in the violation. 34. This Consent Judgment constitutes the entire agreement of the Attorney General and the parties. The undersigned acknowledge that there are no communications or oral understandings contrary, different, or which in any way restrict this Consent Judgment, and that any and all prior agreements or understandings within the subject matter of this Consent Judgment are, upon the effective date of the Consent Judgment, superseded, null and void. 35. This Consent Judgment resolves and releases all civil claims, causes of action, or proceedings which were or could have been asserted by the Attorney General against Defendants for those practices alleged within its Original Complaint pertaining to the Mo' Money store located at 4612 Asher in Little Rock, Arkansas. It does not release any claims that may be based upon conduct which may have occurred at other Mo' Money locations in Arkansas. This release shall not in any way limit the authority of the Attorney General to conduct such investigations as he deems advisable or to bring any enforcement action regarding alleged violations of law unrelated to its Original Complaint or occurring after the date of this Consent Judgment. Also, the Attorney General is empowered to seek enforcement of any and all sections of this Consent Judgment by appropriate petition to this Court. 36. Nothing in this Consent Judgment shall be construed to deprive any person or entity not a signatory hereto of any private right of action of any kind whatsoever, nor shall this Consent Judgment be construed to create any private right of action for any person or entity not a signatory hereto. Further, the parties understand and 12

13 agree that this Consent Judgment is the compromise and settlement of all disputed claims; the payment made is not to be construed as an admission of liability on the part of the Defendants; that the Defendants deny liability for all claims and causes of action asserted against them in this litigation and have entered into this compromise settlement for the purpose of avoiding litigation; and that this Consent Judgment shall never be treated as an admission of liability or as an admission of any facts by the Defendants. 37. Nothing herein shall be construed as the endorsement of or acquiescence in, any trade practices of the Defendants, past, current, or future; and, the Defendants shall make no representations to the contrary. 38. This Consent Judgment will be construed and enforced under the laws of the State of Arkansas. VII. Signatories 39. Each undersigned representative of a party certifies that he or she is fully authorized to enter into the terms and conditions of this Consent Judgment and legally bind such parties to its terms. 40. This Consent Judgment is made and entered into by and between the parties hereto and on this ~day of 1\{,..J(/'tl"\.~.V ' Charles Saunders Assistant Attorney General Don Hearn, Jr. Attorney for the Defe 13

14 SO ORDERED: Dated: If{;. J-/1 I, ~ The Honorable Jay Moody Circuit Judge, 3rd Division PREPARED BY: Mr. Charles Saunders Assistant Attorney General Office of the Attorney General 323 Center Street, Suite 200 Little Rock, Arkansas 7220 I , v. I 14