DOJ Sues Network of Firms in Phony Debt Service Robocall Case

The DOJ filed a complaint Thursday in U.S. District Court for Southern California in San Diego on the FTC's behalf to stop a network of companies and individuals allegedly responsible for delivering “tens of millions” of unwanted VoIP and ringless voicemail (RVM) phony debt service robocalls to consumers nationwide. The case (docket 3:23-cv-00313) targets “the ecosystem of companies who perpetrate illegal telemarketing to cheat American consumers who are struggling financially,” said Samuel Levine, FTC Bureau of Consumer Protection director.

Also as part of an effort to curb “the scourge of illegal robocalls,” the FTC filed a proposed consent order Friday against Stratics Networks and others involved in an “interconnected web” of robocall operations, which would bar them from making “further misrepresentations” about debt relief services and ordering them to comply with the Telemarketing Sales Rule (TSR).

Stratics’ outbound calling service enabled its clients to transmit millions of robocalls using VoIP, alleged the complaint. From 2013 to 2020, Stratics sold its wholesale SIP service to other VoIP service companies, including defendants Netlatitude and its owner Kurt Hannigan, and “many others,” it said. Stratics also sold access to its platform delivering RVM, a call that goes to consumers' voicemail without ringing their phone, the FTC said. Netlatitude used Stratics’ wholesale SIP termination services to operate its RVM service, which it later sold to a foreign telemarketer of debt relief services, it said.

Other Stratics customers included lead generation telemarketers that allegedly used the company’s services to “blast illegal robocalls” pitching supposed debt relief services. Despite receiving notices from USTelecom’s Industry Traceback Group saying some customers’ robocall traffic was likely illegal, Stratics “continued to assist a California-based debt relief scheme,” involving defendants Kasm, Atlas Marketing Partners, Atlas Investment Ventures, Provident Solutions and the companies’ owners, the complaint said. Defendant Ace Business Solutions and its owner, Sandra Barnes, allegedly provided debt validation letter writing services and payment processing as part of Provident’s debt relief scam, the complaint said.

The complaint alleges the web of platform providers, lead generators, telemarketers and debt relief service sellers violated the TSR by (1) making misrepresentations about debt relief services; (2) assisting and facilitating violations of the TSR by knowing their customers’ operations caused the initiation of calls to numbers on the do not call registry; (3) initiating illegal robocalls; (4) failing to make oral disclosures of the identities of debt relief sellers; (5) misrepresenting material aspects of debt relief services; and (6) charging or receiving a fee from consumers before providing a debt relief service.

One set of defendants, Kasm and its owner Kenan Azzeh, agreed to settle the complaint. A Friday proposed court order would prohibit the defendants from making the misrepresentations made in the complaint and from violating the TSR, the FTC said. The proposed consent order imposes a $3.4 million judgment against the defendants, which will be partially suspended based on their inability to pay, after they pay the FTC $7,500 to be used for consumer redress.