CFPB and Three States Sue Over Predatory Immigrant Bail and GPS Scam
The lawsuit was filed on February 22, 2021, by the Consumer Financial Protection Bureau (CFPB), the state of New York, and the Commonwealths of Massachusetts and Virginia. The complaint alleges violations of the Consumer Financial Protection Act of 2010 and various state laws by Nexus Services, Inc. through its subsidiary Libre by Nexus, Inc., (Libre) and the company’s owners Michael Donovan, Richard Moore, and Evan Ajin.
Libre has lured thousands of detainees in the custody of the U.S. Immigration and Customs Enforcement (ICE) and their friends and family to contract for its services. The detainees are not deemed to be a flight risk or a threat to public safety, but they are unable to pay their cash bond, which averages $7,500 nationally. That leaves them with a choice to sit in detention until their cases are resolved by the Immigration Court, obtain third-party financing to pay the cash bond, or get bonded by a surety company.
“Through false and misleading statements and omissions, Libre targets detainees who are desperate to be released,” the complaint asserts. Libre offers to “securitize” immigration bonds for these impoverished detainees. Yet, it does not post the full cash bond, nor is it a certified surety company or a licensed bail bond agent in any state.
Once Libre is contacted by a detainee’s friends or family, it faxes them a written agreement for them to co-sign and “submit a substantial, non-refundable upfront payment.” After receiving the payment, “Libre obtains the detainee’s release by instructing a bond agent to post the bond.” A Libre representative picks up the detainee upon release and then takes them to a fast-food restaurant and then to a Libre office or a hotel.
The released detainee, who is often a Spanish speaker, is then presented with a 20-page agreement, of which all but one page is in English. The agreement says the “consumer” then agrees to be a Libre client and is obligated to wear a GPS ankle monitor and to pay a monthly fee of $420 until the immigration proceeding before ICE is resolved.
Such proceedings typically take three years to resolve when the immigrant is on ICE’s “non-detained” docket. Thus, a Libre client with a $10,000 bond whose case takes three years to resolve could expect to make nonrefundable payments to Libre in excess of $17,000. Libre never explains to clients that it has paid them and they need to make monthly payments to Libre to lease the GPS device, “leading consumers to reasonably believe that they owe a debt to Libre.”
The contract requires an upfront payment of 20% of the bond, a $420 advanced payment, and a $460 activation fee. Every client was required to wear the “bulky GPS ankle monitor and make monthly payments of $420 until” the immigration proceeding is resolved or the consumer makes “collateral” payments that add up to 80% of the amount of the bond and agree to pay the remaining 20% over a specified time. Clients were falsely told Libre paid the client’s bond and that that their monthly payments pay down the bond.
The complaint further asserts that “Libre’s written agreements contain misrepresentations designed to deceive and intimidate consumers.” Libre told clients that the collateral payments were refundable once their proceedings were resolved. It, however, did not properly record the clients’ payments. “In many cases, Libre did not refund or took months to refund consumers’ collateral payments,” the complaint alleged. “In some instances, Libre also did not refund or took months to provide refunds to consumers who had made initial payment but did not actually use Libre’s services.”
Libre’s contracts also said an “Agency” had an interest in the client remaining on GPS monitoring. Such involvement “gave consumers the false impression that noncompliance with the terms of the written agreement may lead to action by a governmental ‘Agency,’ such as re-arrest, re-detention, or negative consequences to their immigration case.” It also represented the bail bondsman required the GPS monitoring.
In fact, neither ICE nor any other agency or the bail bondsman was party to the contract or had an interest in GPS monitoring of the client. Libre also threatened to bring felony criminal prosecution if the client altered, damaged, or destroyed the GPS device or band.
“Libre has no authority to prosecute crimes,” the lawsuit alleged. “Moreover, in most jurisdictions where Libre operates ‘alteration, damage, or destruction of the GPS device or band’ would not be a felony.”
Libre continued to charge for GPS monitoring after its access to GPS location software was terminated. Three different companies ended services with Libre for non-payment. Libre subsequently stopped requiring GPS monitoring of its clients. It stated publicly that it did so as a sign of good faith despite the fact it actually could no longer obtain those services.
The lawsuit also alleged Libre had its representatives mislead clients about what its written agreement requires. It falsely told clients they would be re-arrested, deported, subject to collections, or reported to credit bureaus if they violated the agreement or failed to make payments. Libre had no authority to arrest or order deportations, and it never sent an account to collections or reported to credit bureaus.
The complaint alleged that Donovan, Moore, and Ajin “know about or were actively directing Libre’s misrepresentations and omissions to consumers.” The demand for relief requests an injunction to send the misrepresentations and seeks monetary damages. See: Consumer Financial Protection Bureau v. Nexus Services, Inc., USDC, W.D. Virginia, Case No. 5:21-cv-00016.
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Related legal case
Consumer Financial Protection Bureau v. Nexus Services, Inc.
|Cite||USDC, W.D. Virginia, Case No. 5:21-cv-00016|