Money scale higher education

Former Student of Predatory For-Profit College Fights Back against Illegal Debt Collection

By Jessica Ranucci 

Predatory for-profit colleges use misleading tactics to convince students to pay large sums of money for what turns out to be a substandard education. If you or someone you know has been a victim of a fraudulent school, our experienced attorneys in NYLAG’s Special Litigation unit or Consumer Protection unit can help. Continue reading to find out how we recently helped our client, Victor Philemon, fight back against illegal debt collection stemming from a predatory for-profit college.

About ten years ago, Mr. Philemon attended the now-defunct for-profit college, Technical Career Institutes (TCI). In 2017, a debt buyer, Aries Capital Partners (Aries), sued Mr. Philemon in Kings County Civil Court, claiming the company purchased a debt that Mr. Philemon owed TCI for unpaid tuition and fees.

However, Mr. Philemon never owed that debt to TCI in the first place and the state court lawsuit that Aries filed against him was rife with other problems. The lawsuit was filed after the statute of limitations expired, it illegally demanded attorneys’ fees when there was no basis to do so, and it disclosed Mr. Philemon’s full social security and date of birth in the public court file.

“Throughout this complex litigation, the Court has found Class Counsel [NYLAG] to be well-qualified…. An award to NYLAG supports actions like this one, in which the rights of low-income New Yorkers who would likely otherwise be without the ability to secure legal representation are vindicated in the courts and individuals are provided with meaningful redress.”

NYLAG successfully defended Mr. Philemon in the state court suit. The case against him was dismissed and his personal information was removed from the public court file. But, Mr. Philemon was not the only one subject to this illegal debt collection. Around the same time, Aries sued more than 200 other TCI students across the five boroughs, with nearly identical litigation documents that contained the same problems.

To stop this illegal debt collection, in 2018 NYLAG filed a class-action lawsuit on behalf of Mr. Philemon against Aries, its president, and its attorneys, Philemon v. Aries Capital Partners, Inc., No. 18 Civ. 1927 (E.D.N.Y.). Our lawsuit asserted the illegal debt collection lawsuits violated the Fair Debt Collection Practices Act, and New York Judiciary Law § 487, which prohibits attorney deceit and misconduct.

We reached a class-wide settlement, which was finally approved by the court in December 2019. The settlement provides tremendous benefits to the entire 200+ person class. Defendants will pay back every dollar collected from every student on the TCI debt. And class members who appeared in court to defend themselves paid money on the accounts or had a judgment entered against them, are eligible to receive a payment of approximately $700—in addition to receiving a full refund for any money they paid on the account.

All of the state court collections lawsuits will be dismissed and all judgments obtained in those lawsuits will be vacated. The underlying alleged debts from TCI will not be collected on in the future and cannot be sold.

This lawsuit is an impressive example of the power of class action litigation to achieve swift, valuable relief for large groups of New Yorkers harmed by a single course of illegal action and to hold bad actors accountable to the people they harm.

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