Make us your home page

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Class-action debt-relief settlement approved

TAMPA — A federal judge this week approved a controversial settlement in a class-action lawsuit against a law firm accused of misleading and charging excessive fees to clients around the nation seeking debt relief.

U.S. District Court Judge Thomas Wilson ruled a proposed settlement paying attorneys who filed suit up to $300,000 but giving nothing to 125,000 clients of the Maryland firm, Persels & Associates, was "fair, reasonable and adequate."

A problem in securing a financial award for consumers, the judge said, was one the Maryland firm, Persels & Associates, shared with its cash-strapped clients.

It's broke.

"Unfortunately, there just weren't funds available to distribute," said Tampa attorney Katherine Earle Yanes on Wednesday. She is one of several attorneys who filed the suit.

The firm said it lost nearly $6 million in 2010 and 2011 and had a $14 million judgment against it from an unrelated court case.

But Yanes said the suit forced Persels to reform its behavior toward clients, so she said it did much good.

Still, the settlement was opposed by the attorney generals of five states, including Florida Attorney General Pam Bondi, because it did not compensate consumers. Bondi's office did not return a call seeking comment.

The only person aside from lawyers who will be paid any money is St. Petersburg resident Miranda Day, who as the lead plaintiff will be paid $5,000.

The settlement also calls for Persels to pay $100,000 to two organizations uninvolved in the litigation who provide low-cost legal advice to consumers.

Wilson said Persels was unable to pay even a relatively small award to its 125,000 clients.

"These circumstances . . . demonstrate the futility of the plaintiff taking this case to trial since any judgment would be uncollectable," the ruling said.

The judge also said a settlement was fair because every member of the class had the option of withdrawing from the case. That would have allowed them to file suit separately.

"It is easy enough for the objectors to criticize the (settlement) from the sidelines," Wilson said. "They do not have to deal with the legal hurdles in this case."

Attorneys for Persels, which has denied all wrongdoing, could not be reached for comment.

Here's how the suit said Persels operated:

Persels told clients it could negotiate settlements of their unsecured debts — usually credit cards — for a fraction of their face value. Clients then made monthly payments to a Persels' fund. When enough money accumulated, Persels was supposed to negotiate settlements with a client's creditors.

But Persels and a related company, CareOne Services, charged fees amounting to 15 percent of a client's total debt, the suit said.

So in reality, the suit said, many customers were not informed by Persels that they would not have enough cash, after fees were deducted, to successfully settle their debts.

William R. Levesque can be reached at or (813) 226-3432.

Class-action debt-relief settlement approved 03/14/12 [Last modified: Wednesday, March 14, 2012 11:08pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. What was Rays RF Steven Souza Jr. thinking on that comically bad dive?


    What could Rays RF Steven Souza Jr. been thinking in the seventh inning Friday when he dove for a ball and came up yards short?

    Actually, he insisted after all the laughing, teasing and standing ovation from the Twins fans was done, it was a matter of self-preservation.

  2. Judge tosses life sentences for D.C. sniper Lee Boyd Malvo


    McLEAN, Va. — A federal judge on Friday tossed out two life sentences for one of Virginia's most notorious criminals, sniper Lee Boyd Malvo, and ordered Virginia courts to hold new sentencing hearings.

    A federal judge has tossed out two life sentences for D.C. sniper shooter Lee Boyd Malvo. [Associated Press, 2004]
  3. Zbigniew Brzezinski, President Carter's national security adviser, dies


    Zbigniew Brzezinski, the hawkish strategic theorist who was national security adviser to President Jimmy Carter in the tumultuous years of the Iran hostage crisis and the Soviet invasion of Afghanistan in the late 1970s, died on Friday at a hospital in Virginia. He was 89.

    Zbigniew Brzezinski, former national security adviser to President Jimmy Carter, participates in Senate Foreign Relations Committee hearing on Capitol Hill on March 5, 2009, in Washington, D.C. [Photo by Mark Wilson/Getty Images]
  4. USF eliminated by UCF in AAC baseball; Florida, FSU, Miami win


    CLEARWATER — Roughly 16 hours after a ninth-inning collapse against East Carolina in the American Athletic Conference's double-elimination baseball tournament, USF returned to Spectrum Field presumably set for a reboot.

    It simply got booted instead.

    ’NOLES win: Tyler Holton gets a hug from Drew Carlton after his strong eight innings help Florida State beat Louisville.
  5. Pinellas licensing board executive director settled hundreds of cases without getting his board's approval

    Local Government

    By Mark Puente

    Times Staff Writer

    Eleanor Morrison complained to the Pinellas licensing board in 2015 that her contractor installed crooked walls and windows and poured too much concrete for her carport.

    Eleanor Morrison poses at her home in Treasure Island, 5/26/17. Morrison filed a complaint with the Pinellas County Construction Licensing Board and later learned that its former Executive Director, Rodney Fischer, dismissed the case in a private meeting with the contractor.