IN THE CIRCUIT COURT OF PULASKI COUNTY, ARKANSAS DIVISION ELECTRONICALLY FILED 2014-Apr-01 09:20:04 60CV-14-1271 C06D02 : 15 Pages STATE OF ARKANSAS, ex rel. DUSTIN McDANIEL, ATTORNEY GENERAL PLAINTIFF v. CASE NO. CMCS SERVICES, LLC and JEFFREY R. DAVIS DEFENDANT PETITION TO ENFORCE CIVIL INVESTIGATIVE DEMAND COMES NOW the State of Arkansas, by and through Dustin McDaniel, Attorney General ( the State ), and for its Petition to Enforce a Civil Investigative Demand submitted to CMCS Services, LLC and Jeffrey R. Davis, does hereby state and allege the following: I. Introduction 1. This is a consumer protection action brought pursuant to the Arkansas Deceptive Trade Practices Act, Ark. Code Ann. 4-88-101 through 115 ( ADTPA ). 2. In this action, the State seeks an order, pursuant to Ark. Code Ann. 4-88-112(a), requiring Defendants to fully respond to the Civil Investigative Demand ( CID ) issued on December 26, 2013, under the authority of Ark. Code Ann. 4-88-111. The CID is attached to this pleading as Exhibit A. 3. The State seeks a temporary injunction against Defendants precluding them from undertaking any further business activities in the State of Arkansas until such time that they fully respond to the CID issued by the Attorney General and produce all of the documentary materials requested by the CID. II. Parties 1
4. Plaintiff is the State of Arkansas ex rel. Dustin McDaniel, Attorney General. The Attorney General is the chief legal officer of the State. Pursuant to Ark. Code Ann. 4-88-104, 4-88-112, and 4-88-113, the State may seek civil enforcement of the ADTPA against those parties alleged to be in violation thereof. 5. CMCS Services, LLC ( CMCS ) is a for-profit entity organized and registered in the State of Texas. CMCS operates a storefront location at 2901 Alta Mere Drive, Suite 400, Fort Worth, Texas 76116. The registered agent for service for CMCS is James E. Walton, 1169 N. Burleson Boulevard, Suite 107-328, Burleson, Texas 76028. 6. Jeffrey R. Davis is a resident of the State of Texas. He resides at 709 NW Summercrest Blvd., Burleson, TX 76028. He is the founder and director of Defendant CMCS. Defendant Davis, at all times relevant to the circumstances described herein, operated, controlled, and directed the business activities of CMCS, causing, personally participating in, and ratifying the acts and practices of CMCS. Defendant Davis is a controlling person of CMCS within the meaning of Ark. Code Ann. 4-88-113(d). As such, he is personally liable for not only his personal acts which violated Arkansas law, but also for the individual and collective acts of CMCS. III. Jurisdiction 7. Defendants transacted business in Arkansas and conducted activities sufficient to establish jurisdiction. Defendants advertised and sold services for credit repair in Arkansas. 8. This Court has jurisdiction over this matter pursuant to Ark. Code Ann. 4-88- 104, 4-88-112, and the common law of the State of Arkansas. 9. Venue is proper pursuant to Ark. Code Ann. 4-88-104 and Ark. Code Ann. 4-88-112, and the common law of the State of Arkansas. 2
IV. Factual Background 10. In October of 2013, the Attorney General s Office was made aware of a sign posted along a roadside in North Little Rock, Arkansas. A copy of the sign is attached to this pleading as Exhibit B. The sign was approximately 12 inches by 24 inches with a white background and orange lettering. The text of the sign said, www.fastcreditrepairarkansas.com Credit Repair 100% Guarantee! 501-246-7133 Sa Habla Espanol 11. The Attorney General identified additional signs placed in the central Arkansas area advertising the same website and telephone number. 12. Through investigation, the Attorney General identified that the telephone number is subscribed to CMCS with Jeffrey Davis listed as the contact person as well as the person who paid for the subscription. 13. The website, www.fastcreditrepairarkansas.com, is automatically redirected to www.fastcreditrepairstore.com. Both websites are registered to Defendant Davis. A printout of the website s front page is included as Exhibit C. The website promises, among other things, to remove negative information from your credit score. 14. On December 26, 2013, the Attorney General issued a Civil Investigative Demand to Defendants to seek information regarding the representations in the signage and on the website, and to inquire into the pricing structure and contract arrangements between Defendants and Arkansas consumers. 3
15. The CID was served upon Defendants on December 28, 2013 at 2901 Alta Mere Drive, Suite 400, Fort Worth, Texas 76116, via certified mail. A copy of the green card is attached to this pleading as Exhibit D. 16. A response to the CID was due no later than Monday, January 27, 2014. To date, no response, or communication of any kind, has been received. V. Basis for Action and Claims 17. The Arkansas Deceptive Trade Practices Act, Ark. Code Ann. 4-88-101 through 115 sets forth the State s statutory mechanism for prohibiting deceptive and unconscionable trade practices. 18. Pursuant to Ark. Code Ann. 4-88-111(a), the Attorney General may undertake an investigation to establish "whether a person has engaged in, is engaging in, or shows evidence of intent to engage in any practice declared to be unlawful." The Attorney General may examine under oath or take the deposition of any person in connection with the matter. Ark. Code Ann. 4-88-111(a)(2). 19. The DTPA allows the Attorney General to "[r]equire that person to file a statement or report in writing as to the facts and circumstances concerning the matter, together with such other data as may be reasonably related thereto." Ark. Code Ann. 4-88-111(a)(1). 20. Additionally, the Attorney General may conduct depositions and examine records. Ark. Code Ann. 4-88-111(a)(2)-(3). 21. Ark. Code Ann. 4-88-112(a) provides that in the event any person fails or refuses to file a statement, appear, or produce records as required by Ark. Code Ann. 4-88-111, the Attorney General may file, in the circuit or chancery court of the county in which the person 4
resides or transacts business or of the judicial district in which the State Capitol is located, a petition for an order of such court for the civil enforcement of such section. 22. Ark. Code Ann. 4-88-112(b) further provides upon the filing of the petition and service upon the person, the court shall have jurisdiction to hear and determine the matter so presented and to enter such orders, including temporary injunctions, as may be required to effectuate the Arkansas Deceptive Trade Practices Act. WHEREFORE, premises considered, the State of Arkansas ex rel. Dustin McDaniel, Attorney General, respectfully requests that this Honorable Court: a. Issue an Order, pursuant to ARK. CODE ANN. 4-88-112(b), requiring Defendants to respond to the Civil Investigative Demands issued by the Office of the Attorney General in this matter; b. Issue an Order, pursuant to ARK. CODE ANN. 4-88-112(b), requiring Defendants to cease all business activities in the State of Arkansas until such time that it has answered the Civil Investigative Demand issued by the Attorney General; c. Issue an Order, pursuant to ARK. CODE ANN. 4-88-112(b), requiring Defendants to pay the State s costs in this litigation, including, but not limited to, attorney s fees; and d. Grant all other relief which may be just and appropriate. Respectfully submitted, DUSTIN McDANIEL Attorney General By: Sarah R. Tacker, Ark. Bar No. 2002189 5
Senior Assistant Attorney General Office of the Arkansas Attorney General 323 Center Street, Suite 500 Little Rock, Arkansas 72201 Phone: (501) 682-1321 Fax: (501) 682-8118 Email: Sarah.Tacker@ArkansasAG.gov 6
THE ATTORNEY GENERAL STATE OF ARKANSAS DUSTIN McDANIEL December 26, 2013 TO: CMCS Services, LLC ATTN: Jeffrey R. Davis 2901 Alta Mere Drive, Suite 400 Fort Worth, TX 76116 Via Certified Mail, # 7011 1570 0002 7549 5231 Return Receipt Requested CIVIL INVESTIGATIVE DEMAND The State of Arkansas by Dustin McDaniel, Attorney General, and Sarah R. Tacker, Senior Assistant Attorney General, pursuant to ARK. CODE ANN. 4-88-101 et seq., directs to you the following Civil Investigative Demand. Therefore, you are directed to deliver to Sarah R. Tacker, Senior Assistant Attorney General, Consumer Protection Division, 323 Center Street, Suite 500, Little Rock, Arkansas 72201, sarah.tacker@arkansasag.gov, within thirty (30) days of the receipt of this demand, a written response given under oath to the following requests for information and documents. Pursuant to Ark. Code Ann. 4-88-112, failure to cooperate in this investigation may lead to the filing of a petition to enforce this Civil Investigative Demand. Note that failure to cooperate in this investigation, willful concealment, destruction, alteration, or falsification of facts or documents in response to this Demand is a per se violation of the Arkansas Deceptive Trade Practices Act. Instructions and Definitions 1. Unless otherwise specified herein, these requests cover the time period from January 1, 2011 to the present. 2. The terms you, and your refer to CMCS Services, LLC and Jeffrey R. Davis. 323 Center Street, Suite 200 Little Rock, Arkansas 72201 Telephone (501) 682-2007 Fax (501) 682-8118 http://www.arkanasag.gov Exhibit A
March 25, 2014 Page 2 of 5 3. The term Documents shall be used in its broadest sense and shall mean and include all written, printed, typed, and recorded matter of every kind and description, originals and copies, and all attachments and appendices thereto. Without limiting the foregoing, documents shall include all agreements, contracts, communications, correspondence, messages, memoranda, records, reports, books, diary entries, calendars, appointment books, time records, instructions, work assignments, statistical data, work papers, drafts, graphs, charts, tables, consultants reports, notices, marginal notations, bills, statements, records of obligation and expenditure, invoices, advertising, storyboards, recommendations, studies, surveys, transcripts of hearings or testimony, microfilm, articles, speeches, recordings, film, tapes, photographs, electronic mail, web pages, data compilations, and all other printed, handwritten, typewritten, recorded, stenographic, computer-generated, computer-stored, or electronically stored matter, however and by whomever produced, prepared, reproduced, disseminated, or made. 4. Please provide any electronic documents in their original format. 5. Identical copies of documents which do not contain any additional markings, additions, or deletions need not be separately produced. Documents includes all matter within the foregoing description that is in your possession, control or custody. A document is deemed to be within your control if you have the right to secure the document or a copy from any person having physical possession thereof. 6. The term relating to means to be relevant in any way to the subject matter in question, including without limitation all information that directly or indirectly contains, records, reflects, summarizes, evaluates, refers to, indicates, comments upon, or discusses the subject matter or that states the background of, or was the basis for, or that records, evaluates, comments upon, or was referred to, relied upon, utilized, generated, transmitted, or received in arriving at any conclusion, opinion, estimate, position, decision, belief, or assertion concerning the subject matter. 7. The term Person shall include natural persons, corporations, firms, associations, partnerships, joint ventures, any form of business entity, any governmental agencies, departments, units, or subdivisions thereof. 8. The term Contract means any contract, understanding, or arrangement, whether oral or written, including all attachments, addenda, modifications, amendments, memoranda of understanding and modifications thereto. 9. The term Solicitation shall mean any attempt to sell a product or service. 10. The term Identify, when used in reference to: a. a natural person, means to state his/her full name, including middle name or initial, date of birth, present or last known address, and his/her present or last known business position and affiliation; b. a corporation, partnership, or other business entity, means to state the full name and last known address of the entity; Page 2 of 5 Exhibit A
March 25, 2014 Page 3 of 5 c. a document, means to state its date, its author, its recipient and his/her address, and the names of each of its present custodians; and d. when used in reference to a factual situation or allegation means to state with particularity and specificity all facts known which bear upon or are related to the matter which is the subject of the inquiry, using the simplest and most factual statements of which you are capable. Claims of privilege 11. If any document called for by this Request is withheld under any claim or privilege, furnish a list identifying each document for which the privilege is claimed, the names and addresses of the author(s) and recipient(s) of the document, a description of the substance of the document, and the nature or basis for the claim of privilege. Verification of Investigative Report 12. Your responses to requests for information other than documents shall be set forth in a separate document, captioned Investigative Report which sets forth each request, and for each request your response, the paragraphs of which shall be numbered, and to which a signed, notarized verification shall be attached for each person providing information responsive to the request, in the following form: Before me, the undersigned Notary Public, on this day personally appeared, who being by me duly sworn on oath deposed and said: I affirm under penalty of perjury, that I am over the age of 18 and reside at. I have personal knowledge of the information provided in [if you only provided part of the information requested, indicate by paragraph number(s) the information provided] this investigative report and that information is true, correct and complete. Name of Affiant Subscribed and sworn to before me on this the day of, 2011, to certify which witness my hand and official seal. Notary Page 3 of 5 Exhibit A
March 25, 2014 Page 4 of 5 REQUESTS FOR INFORMATION REQUEST NO. 1: Please identify each person answering or assisting in answering this Civil Investigative Demand. REQUEST NO. 2: Services, LLC. Please describe the general business operations of CMCS REQUEST NO. 3: Identify all products and services advertised, offered for sale, sold, or provided by CMCS Services, LLC to Arkansas consumers. REQUEST NO. 4: Please describe the amount of money charged for each of the products and services listed in response to Request No. 3. For each product or service, please describe the structure and timing of the payments. REQUEST NO. 5: Please provide a list of all Arkansas consumers who have engaged the services of CMCS, including the name, address and telephone number of each. REQUEST NO. 6: Please provide a list of all Arkansas consumers from whom you have received payment for products and services, identifying the product or service that was purchased, the day that such service was provided, the amount you charged for such product or services, and the day that the amount was paid by the consumer. REQUEST NO. 7: Please provide an explanation of how CMCS fully guarantees the results of its credit repair services, as advertised on its signage as 100% Guaranteed. REQUESTS FOR DOCUMENTS REQUEST FOR DOCUMENTS NO. 1: and customer agreements used by CMCS. Please provide exemplar copies of all contracts REQUEST FOR DOCUMENTS NO. 2: Please provide copies of all advertisements, promotion materials, and solicitations used by CMCS. Page 4 of 5 Exhibit A
March 25, 2014 Page 5 of 5 Remember that you are required, pursuant to Arkansas Law, to provide a written response to these questions, along with all requested documentation, within twenty days of your receipt of this letter. Your responses must be given under oath as described more fully above. Failure to do so will result in civil penalties and other relief as entitled by law. If you have any questions, I may be contacted at the number below. Thank you for your cooperation in this matter. Sincerely, DUSTIN McDANIEL ATTORNEY GENERAL By: Sarah R. Tacker, Ark. Bar No. 2002-189 Senior Assistant Attorney General Consumer Protection Division Office of the Arkansas Attorney General 323 Center Street, Suite 500 Little Rock, AR 72201 Phone: (501) 683-1321 Email: sarah.tacker@arkansasag.gov Certified Mail, # 7011 1570 0002 7549 5231 Return Receipt Requested Page 5 of 5 Exhibit A
Photograph of Credit Repair Sign Exhibit B
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Exhibit D