NYLAG and Hughes Hubbard & Reed LLP have filed a class action complaint in federal court in Manhattan claiming that debt buyers and their attorneys have victimized thousands of New Yorkers, including many who are poor or working poor, in a massive debt collection scheme that used a strategy of aggressive and improper litigation to wrongfully obtain and enforce millions of dollars of default judgments against them.

The class action focuses on the defendants’ aggressive use of a mass litigation strategy that targeted approximately 15,000 New York City residents over a two-year period. The defendants sued these New Yorkers to collect debts allegedly purchased from AT&T Wireless, even though they had no evidence that the individuals owed any money. The defendants obtained default judgments, and used those judgments to seize consumers’ homes, wages, and other assets, often without ever notifying the alleged debter of the lawsuits.

“The defendants engaged in harassing, abusive, and fraudulent litigation tactics. They were running a litigation machine against New York City residents – filing as many as 200 lawsuits in a single day,” said NYLAG attorney Danielle Tarantolo. “These New Yorkers – many of whom never even owed any debt to AT&T Wireless in the first place – have had their lives turned upside down by these unlawful actions.”

The defendants include: Asta Funding (NASDAQ: ASFI), one of the nation’s largest debt buyers; Asta’s wholly owned subsidiary, Palisades Collection, which brought the thousands of consumer debt actions on Asta’s behalf; and the law firm of Pressler & Pressler, which litigated the actions.

According to one study, in 2006, Palisades Collection filed 39% of all consumer debt filings in NYC Civil Court, more than any other creditor. Its law firm, Pressler & Pressler, represented the plaintiffs in approximately one third of all consumer debt filings during that period.

“It became increasingly clear that here was a top-down strategy to seize assets from the most vulnerable New Yorkers without regard to whether a debt was owed or whether they even had the right person,” said Diane E. Lifton, a litigation partner at Hughes Hubbard, which is assisting with the case pro bono. “Thousands of New Yorkers — often poor or working poor – were victimized by mass-generated and improper complaints, accompanied by fraudulent affidavits and ”˜sewer service.’ This lawsuit seeks to put an end to these unlawful and abusive practices.”