United States District Court, W.D. New York
FEDERAL TRADE COMMISSION and PEOPLE OF THE STATE OF NEW YORK, by ERIC T. SCHNEIDERMAN, Attorney General of the State of New York, Plaintiffs,
VANTAGE POINT SERVICES, LLC, Defendants.
DECISION AND ORDER
WILLIAM M. SKRETNY United States District Judge
the Federal Trade Commission (“FTC”) and the New
York State Attorney General, commenced this action under
Section 13(b) of the Federal Trade Commission Act, 15 U.S.C.
§ 53(b) (“FTCA”); Section 814 of the Fair
Debt Collection Practices Act (“FDCPA”), 15
U.S.C. § 1692l; New York Executive Law § 63(12);
and New York General Business Law § 349 and § 602
for Defendants' alleged abusive and deceptive debt
collection practices. The complaint names four individual
defendants and four corporate defendants. Presently before
this Court is Plaintiffs' Motion for Summary Judgment
(Docket No. 146), which seeks a permanent injunction and
monetary judgment against three individuals, Gregory
Mackinnon, Angela Burdorf, and Joseph Ciffa (together, the
“Individual Defendants”), and four corporate
defendants, Vantage Point Services, LLC
(“Vantage”), Payment Management Solutions, Inc.
(“PMSI”), and Bonified Payment Solutions, Inc.
(“Bonified”) (together, the “Corporate
Defendants”). Also pending before this Court are
Plaintiffs' motion to strike and Defendants' appeals
of a Decision and Order by the Magistrate Judge. For the
following reasons, the motions and appeals are denied.
following facts are taken from the pleadings and motion
papers in this action, including Plaintiffs' Statement of
Material Facts (Docket No. 146-2 (“SOF”)). The
SOF attaches 470 exhibits totaling more than 1, 500 pages.
(Docket Nos. 146-4 through 146-99, 147-1 through 147-3,
163-2). The exhibits consist of excerpts from Defendants'
depositions, consumer declarations, correspondence, business
records, telephone recording transcriptions, discovery
responses, and other evidence concerning the Defendants'
alleged unlawful debt collection practices. The Defendants
have failed to properly respond to the SOF pursuant to Local
Rule 56, but do submit memoranda of law and accompanying
evidence arguing that they did not participate in, and were
unaware of, any unlawful debt collection
activities. This order sets forth only those facts
necessary to resolve the pending motions.
was initially formed in 2008 by Defendant VanDeViver, against
whom Plaintiffs have not sought summary judgment. At that
time, Vantage was a debt collection company that placed
collections calls on debt that was owned by third parties.
VanDeViver transferred ownership of Vantage to MacKinnon in
January 2010. Under MacKinnon's ownership, Vantage
initially continued collecting debt, but later began
brokering debt: purchasing it, selling it, and placing the
debt it owned with third parties for collection.
acknowledges that it continued some debt collection
activities until the initiation of this suit, but maintains
that this was “limited in scope and time” and
“represented a small fraction of the collection
activity at issue in this litigation.” (Docket No. 167
¶¶ 30-34.) Vantage contends that its primary line
of business was purchasing and placing debt with third
parties, and it therefore rarely had direct interaction with
consumers. Consumer contact came instead from
third-party call initiators, who were responsible for
contacting consumers directly to convince them to pay on the
debt owned by Vantage. Once a consumer agreed to make a
payment, the call initiators would transfer the consumer to a
separate payment processor, who would obtain the
consumer's payment information and authorization for
payment. Defendants maintain that the call initiators and
payment processors were wholly independent entities, and that
there is no evidence that Vantage or any other Defendant
owned or otherwise had the ability to control the third
parties who conducted collection activities on Vantage's
2012, Burdorf began working for Vantage as an independent
contractor providing payment processing services to Vantage.
Burdorf was made an equitable partner and officer of Vantage,
but she states that this was a nominal role, put into place
solely so that she could monitor the company's merchant
accounts for payment processing without true control of the
company. In April 2013, she left her work as a contractor at
Vantage and founded PMSI, where she was the principal member
and owner. Burdorf used money lent by MacKinnon to fund PMSI
and to purchase a debt portfolio for collection. Although
PMSI initially collected debt on that portfolio, Burdorf
later placed the debt with a third party call initiator
located in Nevada and PMSI changed its focus to payment
processing. PMSI began acting as a payment processor for debt
owned by Vantage in August of 2013, and assumed all payment
processing services for Vantage-owned debt as of April 2014.
At the time the suit was filed, approximately 75% of
PMSI's payment processing services were performed for
Vantage. Between August 2013 and September 2014, PMSI had
revenues of approximately $4, 423, 795 and, between April
2013 and November 2014, PMSI wired over $2, 400, 000 to
Vantage. PMSI also provided payment processing services for
several smaller debt collectors.
was formed by Ciffa and incorporated in New York State in
June 2014. Plaintiffs allege that Bonified was formed to open
additional merchant accounts that could accept consumer
payments on debt owned by Vantage. Bonified paid individuals
who worked under the name Island Recovery Group, which
Plaintiffs allege is a fictitious entity created by Ciffa
that also collected on debts owned by Vantage.
initially operated Vantage from a location on Delaware Avenue
in Buffalo, then moved to office space at 4248 Ridge Lea Road
in Amherst, New York, where it paid rent for Suites 45, 25,
and 9, and also held itself out as doing business from Suites
1 and 101. PMSI operated out of 4248 Ridge Lea Road, Suites
25 and 45. Burdorf has stated that she had a verbal lease
with MacKinnon for use of the premises, and that her business
was kept entirely separate from Vantage, with separate
entrances and locked doors in between the spaces. Ciffa also
operated Island Recovery Group out of 4248 Ridge Lea Road in
Amherst, New York. Ciffa had a lease for the premises he
operated out of at Ridge Lea, and deducted the funds for his
rent from payments Vantage made to Ciffa for sales and
collection work. All three businesses later left the Ridge
Lea offices and Vantage ultimately had operations in three
separate locations. Plaintiffs present evidence that suggests
that at least one other Defendant operated out of each of
Vantage's locations. Defendants maintain that, although
they may have been in the same building, the operations were
separate and independent from each other.
third-party call initiators who collected on debt owned by
Vantage have not been named as defendants in this suit. They
include Island Recovery Group, Northwest Capital Solutions,
Financial Solutions a/k/a Alternative Dispute Resolution,
Ross Delong & Associates, and a company doing business as
Stewart Silverman & Associates. Plaintiffs contend that
these businesses (Vantage, PMSI, Bonified, and the call
initiators) are interconnected, and that Defendants
structured their businesses as separate corporate entities in
order to avoid liability. Specifically, by separating the
debt collection business into (at least) three parts-the
owner of the debt, the call initiator, and the payment
processor-Defendants hoped to insulate themselves from any
wrongdoing on the part of those who contacted consumers.
Further, by recording the payment processor's interaction
with the consumer separately from the interaction with the
call initiator, Defendants created a record of consent for
payment that did not include any deceptive or illegal
tactics. Plaintiffs contend that Defendants used these
recordings to fight chargebacks and other payment disputes.
Defendants contend that each business operated separately and
independently, and that all interactions between the entities
happened at arm's length. Defendants further contend that
any wrongdoing was committed by the entities who were not
named as defendants, and over which the Defendants had no
control or oversight.
and the State of New York filed a nine-count complaint on
January 5, 2015. (Docket No. 1.) The same day they filed
their complaint, Plaintiffs moved for an ex parte
temporary restraining order (“TRO”). On January
5, 2015, this Court granted Plaintiffs' ex parte
motion and issued a TRO with an asset freeze and appointment
of a Receiver to oversee the named Corporate Defendants and
their assets, subsidiaries, and affiliates, including
accounts held by Solidified Payment Solutions, LLC and Vision
Asset Management Group, LLC. (Docket No. 11.) Pursuant to the
authority granted by the TRO, Plaintiffs and the Receiver
entered Defendants' business premises on January 7, 2015,
and the Receiver took control of the Corporate Defendants and
related entities. Plaintiffs then moved for a preliminary
injunction with terms similar to the TRO, which this Court
granted on May 15, 2015, over Defendants' objections.
(Docket Nos. 61, 62.)
discovery, on August 19, 2016, Plaintiffs moved for summary
judgment as to six of the seven Defendants. (Docket No. 146.)
In support of the motion, Plaintiffs argue that recordings,
scripts, consumer declarations, complaints, consumer
lawsuits, collection letters, and other documents show that
the corporate defendants and other allegedly associated
businesses violated the FTC Act, the FDCPA, and New York law.
With respect to MacKinnon, Burdorf, and Ciffa, Plaintiffs
argue that they are individually liable for the Corporate
Defendants' wrongdoing because they participated in, or
had the authority to control, the Corporate Defendants'
activities, and they had knowledge of their unlawful
practices. Plaintiffs seek a permanent injunction that would
prohibit the Defendants from engaging in debt collection
activities, bar them from making certain misrepresentations
with respect to related consumer financial products and
service markets, enable the FTC to monitor their compliance
with a final order, and impose a money judgment for $22, 534,
919, i.e., the amount deposited into a Vantage
account used for deposits derived from consumer payments
between January 2012 and December 2014.