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7-1005-21089-2 |
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STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE DEPARTMENT OF COMMERCE
|
In the Matter of First Financial Services, Inc. and the Debt Collector
Registrations and the Real Estate
Salesperson License of Khemall “Kenny” Jokhoo[1] |
FINDINGS OF FACT, CONCLUSIONS AND RECOMMENDATION |
This matter was heard by Administrative Law Judge
Christopher M. Kaisershot, Assistant
Attorney General, appeared on behalf of the Department. Jay A. Tentinger, Esq., Tentinger Law Firm,
P.A., appeared on behalf of Respondents Khemall
“Kenny” Jokhoo and First Financial Services, Inc. (“Respondents”).
STATEMENT OF ISSUES
Whether Respondents are subject to discipline by the Commissioner of the
Department of Commerce for committing the following violations:
1. Respondents contacted and caused, or
directed another to contact and cause, the bank of California residents Edwin
and Medick Galestian to send a $40,000 check made payable to the Galestians to
Respondents without the Galestians’ authorization and, as such, engaged in
unfair practices, made false, deceptive and misleading representations in
connection with the collection of a purported debt, engaged in fraudulent,
deceptive, or dishonest practices, and engaged in conduct that demonstrates
that they are untrustworthy, financially irresponsible, or otherwise
incompetent or unqualified to act under the license and registrations granted
by the Commissioner.[2]
2. Respondents participated in, directed, or authorized, or
failed to learn about, diligently investigate, or prevent the forging of the Galestians’
endorsements on the back of a $40,000 check that was deposited into Respondents’
bank account and, as such, made false, deceptive and misleading representations
in connection with the collection of a purported debt, engaged in fraudulent,
deceptive, or dishonest practices, and engaged in conduct that demonstrates
that they are untrustworthy, financially irresponsible, or otherwise
incompetent or unqualified to act under the license and registrations granted
by the Commissioner.[3]
3. Respondents violated the Fair Debt
Collection Practices Act and Minnesota law by calling the Galestians and
threatening that they would be arrested, threatening to take action that could
not legally be taken or that is not intended to be taken, making false
representations, falsely holding themselves out as attorneys during collection
activities, and engaging in conduct that harassed, oppressed, or abused the Galestians.[4]
4. Respondents contacted and caused the bank
of California residents Jill and Keith Diffey to electronically transfer
$5,166.77 to FFSI’s bank account without the Diffeys’ authorization and, as
such, engaged in unfair practices, made false, deceptive and misleading
representations in connection with the collection of a purported debt, engaged
in fraudulent, deceptive, or dishonest practices, and engaged in conduct that
demonstrates that they are untrustworthy, financially irresponsible, or
otherwise incompetent or unqualified to act under the license and registrations
granted by the Commissioner.[5]
5. Respondents contacted and caused the
credit card issuer of the Diffeys to electronically transfer $3,900 to FFSI’s
bank account without the Diffeys’ authorization and, as such, engaged in unfair
practices, made false, deceptive and misleading representations in connection
with the collection of a purported debt, engaged in fraudulent, deceptive, or
dishonest practices, and engaged in conduct that demonstrates that they are
untrustworthy, financially irresponsible, or otherwise incompetent or unqualified
to act under the license and registrations granted by the Commissioner.[6]
6. Respondents violated the Fair Debt
Collection Practices Act and Minnesota law by calling the Diffeys and
threatening that they would be arrested, threatening to take action that could
not legally be taken or that is not intended to be taken, and making false representations,
by falsely holding themselves out as attorneys and federal investigators during
collection activities, and by otherwise engaging in conduct that harassed,
oppressed, or abused the Diffeys, including misrepresenting to Ms. Diffey’s employer
that she would be arrested at work.[7]
7. Respondents submitted license and
registration applications, and a license transfer application, to the
Department that contained false and misleading information concerning Jokhoo’s
criminal record.[8]
8. Jokhoo engaged in fraudulent, deceptive
or dishonest practices, and conduct that demonstrated he is untrustworthy,
financially irresponsible, or otherwise incompetent or unqualified to act under
the license and registrations granted by the Commissioner by failing to satisfy
multiple judgments totaling more than $28,000, including a $10,000 judgment for
converting a refundable damage deposit.[9]
9. Jokhoo contacted and caused, or directed
another to contact and cause, the banks of Colorado citizen James Dorrough to
electronically transfer $6,750 to FFSI’s bank account without Dorrough’s
authorization (and to request another $6,200 transfer that was canceled before
it was processed) and, as such, engaged in conduct that demonstrates that he is
untrustworthy, financially irresponsible, or otherwise incompetent or unqualified
to act under the license and registrations granted by the Commissioner.[10]
10. Jokhoo contacted and caused, or directed another to contact and
cause, the bank of Illinois citizen Mike Norpell to electronically transfer
$5,700 to FFSI’s bank account without Norpell’s authorization and, as such,
engaged in conduct that demonstrates that he is untrustworthy, financially
irresponsible, or otherwise incompetent or unqualified to act under the license
and registrations granted by the Commissioner.[11]
Based on the proceedings
herein, the Administrative Law Judge makes the following:
FINDINGS OF FACT
Licensing History
1. First
Financial Services, Inc. (“FFSI”) was incorporated by Mr. Khemall “Kenny” Jokhoo
on or about May 9, 2002.[12] FFSI was registered
as a collection agency from July 10, 2007, until the Department issued an order
that summarily revoked FFSI’s registration effective November 3, 2009.[13] FFSI did not
request a hearing to contest the summary revocation order, which specifically
reserved the Department’s rights to seek civil penalties against FFSI in a
future regulatory proceeding and, as such, the summary revocation order is now
final.[14]
2. Jokhoo
concurrently held two debt collector registrations, Nos. 20556728 and
20608242. Registration No. 20556728 was
issued on January 9, 2006, and Registration No. 20608242 was issued on January
16, 2007. These debt collector registrations
lapsed due to non-renewal effective June 30, 2009.[15]
3. Jokhoo’s
registered debt collector alias was “Kevin Smith.”[16]
4. On
October 4, 2006, the Department issued Jokhoo a real estate salesperson
license, No. 20594168. Jokhoo’s real
estate license lapsed due to non-renewal on June 30, 2010.[17]
5. Under
Minn. Stat. §§ 45.027, subd. 11 and 332.395 (2008), the Commissioner properly
instituted this proceeding because it had been less than two years since Jokhoo’s
debt collector registrations and real estate salesperson license were last in
effect.
Debt Collection
Activities
6. In
addition to being its sole owner and officer, Jokhoo is the only debt collector
employed by FFSI.[18]
7. A
significant majority of the debts FFSI attempts to collect are purchased from a
broker, as opposed to the original creditor.
Jokhoo recalled that in the summer of 2009, FFSI had between 3,000 to
3,500 accounts that it was attempting to collect, all of which were “owned” by
FFSI. Jokhoo confirmed that there was no
way for him to tell how many other debt collectors owned these accounts before
the broker sold them to FFSI.[19]
8. Jokhoo
explained that FFSI purchased the accounts, on average, for 1 cent to 1.5 cents
on the dollar. For example, if FFSI
purchased a $100 debt, FFSI would typically pay between $1.00 to $1.50 for the
rights to that debt. The low purchase
price reflected the difficulty in collecting the obligations, which were
delinquent and had not been reduced to any judgment, as well as the low
likelihood of successful collection efforts.
FFSI typically retained any purchased accounts for 60 to 90 days, at
which time they were sold back to the broker from whom they were originally purchased
and new accounts were purchased to collect upon. Jokhoo estimates he had a less than 1%
success rate in collecting these delinquent accounts and, specifically, that
FFSI successfully collected money from the debtor between .25 % to .50% of the
time.[20] Given this
low success rate, Jokhoo claimed that he invariably would offer a reduced
payment to any debtor he could actually contact.[21]
9. The ALJ
finds that, based on the extremely low purchase price and virtually
non-existent success rate, the debts purchased by Respondents are generally
older obligations.
10. Other than
“scrubbing” the purchased accounts to eliminate debts that had been discharged
in bankruptcy, Jokhoo operated under the assumption that the debts were valid
obligations upon which he could commence collections.[22]
11. Jokhoo testified
that he did not do any independent research to ascertain the applicable statute
of limitations in
12. Jokhoo recalled
that in the fall of 2009, the Lonsdale Police Department seized FFSI’s business
assets, including the computer that apparently contained all the data that FFSI
would have received when it purchased the debts.[24]
13. The only
documentary evidence Jokhoo produced concerning the purported debts were “account
history” sheets for each of the Debtors.[25] He claimed these
sheets were stored on a computer that had not been seized by the Lonsdale
Police Department. Nevertheless, even
though he had not seen any of the underlying data concerning the details of the
debts purportedly owed by the Debtors since his other computer was seized in
the fall of 2009, Jokhoo claimed an ability to recall specific details related
to the Debtors’ accounts, including the date of last payment made by the
Debtors to the original creditor.[26]
14. Respondents
were actively engaged in collection activities against each Debtor at the time
of the alleged misconduct at issue for each Debtor.
15. The Diffeys
and Mr. Dorrough recalled that they obtained their credit reports and that FFSI
was listed as an entity that had inquired and accessed their credit report
information,[27] contrary to Mr. Jokhoo’s testimony. FFSI’s bank statements detail purchases from the
credit bureau Experian on June 11 and July 20, 2009, respectively.[28] Jokhoo had no
explanation for the transactions with Experian that were identified on FFSI’s
bank statements and in contradiction to his prior testimony.[29]
16. Respondents
had access to credit bureau data and submitted inquiries to credit bureaus concerning
each Debtor.
17. The four
Debtors reside in three different states and their only apparent connection is
that they were contacted by Respondents in attempts to collect purported debts. The Debtors’ testimony and the documentary
evidence showed a similar fact pattern engaged in by Respondents toward each
Debtor.
Edwin Galestian
18. Jokhoo claimed
that Mr. Galestian, a
19. Jokhoo
could not explain why the check was made payable to the Galestians, yet listed them
as residing at Respondents’ business address in
20. On July 9,
2009, Jokhoo endorsed and deposited the $40,000 check into FFSI’s bank account
at M&I Bank (“M&I”).[32] On July 15,
2009, Jokhoo withdrew $38,010.52 from FFSI’s account:[33] Jokhoo caused
M&I to issue a $37,905.52 cashier’s
check to “L. Latchman,”[34] paid $5 for the check issuance fee,[35] and received $100 cash.[36] Jokhoo and
Latchman are husband and wife, and are the co-owners of the residential
property from which Respondents conduct business in
21. Jokhoo
admits that he was called by Detective Zaun from the
22. While
Jokhoo claims that Mr. Galestian continues to owe over $20,000 on the purported
debt, Jokhoo maintains that he has not made any further attempts to collect the
balance from Mr. Galestian since he received the $40,000 payment in July 2009, notwithstanding
Jokhoo’s claim that Mr. Galestian admitted that he owes the entire obligation and
willingly tendered a $40,000 payment.[41]
23. The ALJ
finds that the endorsements on the $40,000 check were forgeries as they do not
resemble any of Mr. Galestian’s authentic signatures contained in the record.[42] In addition,
contrary to Jokhoo’s testimony, the special endorsement looks identical to
Jokhoo’s writing on Respondents’ license/registration applications. For example, all of the letters in the
special endorsement -- “Pay to the order
of First Financial” -- are in capital letters, with the exception of the lower
case “t” at the end of the word “First.”[43] FFSI’s
collection agency license application displays this identical anomaly, with only
the letter “t” at the end of the word “First” appearing in the lower case and
all other letters appearing in the upper case.[44]
24. Mr.
Galestian repeatedly disputed the purported debt with Respondents and refused
to discuss making any payment until FFSI established the validity of the
obligation. Jokhoo refused to tell Mr.
Galestian any details about the purported debt and insisted that Mr. Galestian knew
what it was about. Mr. Galestian never
received anything in writing from Respondents concerning the purported debt and
denied sending or authorizing his bank to send the $40,000 check to
Respondents. The signatures on the back
of the check were not authorized by Mr. Galestian or his wife, but were
forgeries. Mr. Galestian first learned
about the transaction when he received a letter from his bank in late July
2009. Galestian immediately disputed the
transaction with his bank, and filed multiple complaints with law enforcement
officials.[45] His bank
agreed that the transaction was fraudulent and refunded the entire
$40,000. While he is not out of pocket
any money, Mr. Galestian described his interactions with Respondents as a
“nightmare” that required him to spend hundreds of hours of his personal time
attempting to rectify the situation and prevent further fraudulent transactions.[46]
25. In
attempting to collect the purported debt from Mr. Galestian, Respondents
incorrectly portrayed themselves as working at a law firm and made the
following threats: that Mr. Galestian
would be prosecuted in federal court; that warrants would be issued against Mr.
Galestian; and, that other official action would be taken against Mr. Galestian
by the Sheriff and the California Insurance Department.[47] Jokhoo never
intended to take any of these threatened courses of action against Mr.
Galestian.[48] Because Respondents
never intended to take any such actions, the threats noted above were meant to
harass, oppress, or abuse Mr. Galestian.
Jill and Keith Diffey
26. Jokhoo
claimed that Ms. Diffey, a
27. On June 16,
2009, Jokhoo used a AMG SecurePay’s (“AMG”) software to process an electronic
funds transfer from Mr. Diffey’s account at US Bank in the amount of $5,166.77.[52] These funds
were transferred into FFSI’s account from Mr. Diffey’s account on June 19,
2009;[53] however, on June 24, 2009, the $5,166.77 was
transferred back out of FFSI’s account based on a description of “reverse
electronic payments.”[54] On June 25,
2009, the $5,166,77 was transferred back into FFSI’s account; however, on June
30, 2009, the $5,166.77 was transferred back out of FFSI’s account based on
another “reverse electronic payments.”[55] Thereafter,
$5,166.77 was attempted to be transferred into FFSI’s account again on July 1
and July 30, 2009.[56] These
attempts were ultimately unsuccessful because the Diffeys closed the account at
US Bank at the end of June 2009.[57]
28. Jokhoo
confirmed that all transactions involving the specific amount of $5,166.77 referenced
in FFSI’s bank accounts related to the Diffeys.[58]
29. The Diffeys
disputed with Jokhoo the underlying obligation, and Jokhoo refused to tell them
any details about the purported debt, insisting they knew what it was about. The Diffeys confirmed that they did not receive
anything in writing from Respondents and never authorized Respondents to
process any electronic funds transfers from Mr. Diffey’s US Bank account. Records from US Bank also confirm that the
Diffeys experienced problems with repeated fraudulent balance transfer attempts
from this account between April 9 and June 30, 2009,[59] the time frame that Respondents admit they were
attempting to collect from the Diffeys.[60]
30. US Bank
referred the Diffeys to the
31. The Diffeys
did not authorize any of the $5,166.77 transactions listed on FFSI’s bank
accounts.
32. The Diffeys
never authorized any balance transfers to FFSI from their Discover credit card.[64] In that connection,
Respondents caused a $3,900 electronic balance transfer to be processed from the
Diffeys’ Discover credit card on May 16, 2009.
The Diffeys reported to Discover that they did not authorize this
transaction and “[o]n May 31, 2009, First Financial returned the funds to
Discover for $3900 hence [Discover’s] fraud loss is zero.”[65]
33. Jokhoo
initially claimed that he never attempted to facilitate any $3,900 transaction
from the Diffeys’ Discover credit card and that it must have been perpetrated
by another.[66] He conceded
on cross-examination that the June 2, 2009 charge-back listed on FFSI’s bank account
in the amount of $3,900 and under the description of “stop pay” represented the
reversal of the attempted balance transfer from the Diffeys’ Discover credit
card[67] but later changed his testimony and claimed that the
$3,900 payment represented a discount that he had previously offered. He claimed also that Ms. Diffey willingly
provided the Discover credit card account number.
34. The Diffeys
did not authorize the $3,900 balance transfer to FFSI from the Discover credit
card. Respondents fraudulently submitted
the balance transfer request to Discover.
35. In
attempting to collect the purported debt from the Diffeys, Respondents
incorrectly portrayed themselves as working at a law firm or as federal
investigators, called after acceptable hours, used inappropriate language,[68] and made the following threats: that the Diffeys would
be prosecuted in federal court; that warrants would be issued against them;
that he would have someone shoot their dog; that he would take their home; that
he would have them fired from their jobs; and that they would be arrested at
work that day if they did not immediately pay the obligation. Respondents tactics almost resulted in Ms.
Diffey losing her job because Jokhoo made defamatory comments about her to her
superiors at work, as well as calling at least one company president on his
cellular telephone. At the hearing,
Jokhoo confirmed that he never intended to take any of the legal courses of
action he had threatened against the Diffeys.[69]
James Dorrough
36. Jokhoo commenced
collection activities against Mr. Dorrough, a
37. Mr.
Dorrough confirmed that he spoke with Jokhoo on or about February 12,
2010. During that exchange, Mr. Dorrough
disputed the underlying obligation and told Jokhoo that he had the wrong
person. Jokhoo did not send Dorrough any
confirming documentation or disclose any details about the purported debt. Jokhoo insisted that Mr. Dorrough knew what
he was calling about and demanded that Mr. Dorrough take care of it over the
telephone. Mr. Dorrough thought Jokhoo
was a scam artist, but became unnerved and hung up on Jokhoo when he told Mr.
Dorrough the exact balance of his checking account at US Bank.[74]
38. Mr.
Dorrough never spoke to Jokhoo again, although Jokhoo did leave at least seven
voicemails on Mr. Dorrough’s answering machine.
Jokhoo threatened to have Mr. Dorrough prosecuted to the fullest extent
of the law, that he would send out the Sheriff’s department, and that he would
report the delinquent obligation to the credit bureaus to ruin Mr. Dorrough’s
credit score.[75] Jokhoo admits
that he never intended to take any of these threatened courses of action
against Mr. Dorrough.[76]
39. On or about
February 15, 2010, Mr. Dorrough received a call from a representative at
Capital One Bank, who asked him whether he was attempting to facilitate a
$12,000 balance transfer. Mr. Dorrough
reported that the transfer was fraudulent and Capital One Bank did not make the
transfer. When Mr. Dorrough asked about
the source of the request, the representative told him that it was coming from a
40. In
late-February or early-March, 2010, US Bank notified Mr. Dorrough in writing that
a $6,000 balance transfer was sent to “First Financial” on February 16,
2010. Mr. Dorrough filed fraud reports
with US Bank and it reversed the charges on his account.[77]
41. In
late-February 2010, Mr. Dorrough was notified by USAA that $750 was transferred
to FFSI. Mr. Dorrough notified USAA that
the transfer was fraudulent and it reversed the charges to his account.
42. On March
24, 2010, US Bank sent Mr. Dorrough a letter that stated as follows: “Per your request, a check for $6,200 will be
mailed to First Financial/Capital 1. The
check amount will appear on your credit card statement as a Purchase and will
be paid to your account ending in 3202.”[78] Mr. Dorrough
was able to halt this transaction before US Bank sent the check pursuant to the
fraudulent request.
43. Mr.
Dorrough has since filed complaints against Respondents with numerous state and
federal law enforcement officials.
44. FFSI’s name
appears on the transactional documents respecting transfers from Mr. Dorrough’s
accounts. Jokhoo denies that FFSI
attempted to facilitate any balance transfers from Mr. Dorrough’s bank
accounts.
45. The ALJ
finds that Respondents made the above-referenced fraudulent balance transfer requests
from Mr. Dorrough’s bank accounts.
Mike Norpell
46. Jokhoo initiated
efforts to collect $32,321.44[79] from Mr. Mike Norpell, an
47. On May 11,
2010, a $5,700 balance transfer to “First Financial” was requested on a credit
card associated with Mr. Norpell’s overdraft protection account at Fifth Third
Bank (“FTB”).[82] Upon
notification of this unauthorized balance transfer, Mr. Norpell immediately
disputed the transaction with FTB as fraudulent and filed an affidavit of
identity theft.[83] FTB has since
reversed as fraudulent the sums related to the “First Financial” balance
transfer request. Mr. Norpell also
reported that the check issued by FTB to “First Financial” has never been
cashed.[84]
48. On May 18,
2010, Norpell obtained a copy of his credit report from Experian, which
confirmed that FFSI had viewed his credit history detail on May 5, 2010.[85]
49. On May 24,
2010, Mr. Norpell filed a complaint with Respondents concerning its
unauthorized credit check on him, as well as the fraudulent wire transfer.[86] Respondents
never responded to Mr. Norpell’s letter to dispute or otherwise deny his
allegations.[87]
50. On May 25,
2010, Mr. Norpell filed a complaint with the
51. Jokhoo claims
he was extremely concerned that the Norpell transaction reflects that another
person may be conducting business in FFSI’s name; however, Respondents have not
made any attempt to investigate the situation and have not offered to assist FTB
or any law enforcement officials to investigate the matter.[89]
52. Respondents
were attempting to collect from Norpell at the time of the fraudulent transfer,
and FFSI obtained a copy of Norpell’s credit report shortly before the
fraudulent transaction. This manner of
fraudulent transaction is identical to the unauthorized transactions that
Respondents facilitated against the accounts of Mr. Galestian, the Diffeys, and
Mr. Dorrough.
53. The ALJ
finds that Respondents fraudulently requested FTB to process the $5,700 balance
transfer from Mr. Norpell’s account.
Unsatisfied Civil
Judgments
54. On February
6, 2008, Tasha Anderson, Richard Hopkins, and Kristy Strong sued Jokhoo in
Hennepin County District Court. On June
10, 2009, following a court trial, judgments totaling $14,965.11 were entered
against Jokhoo. Specifically, Ms. Anderson
was awarded a $10,000 judgment against Jokhoo for converting her refundable
damage deposit, and all plaintiffs were awarded a $3,745 judgment based on
Jokhoo’s breach of contract, whereby he leased property without a license from
the City of
55. On October
22, 2008, Bock & Battina, LLP, filed a lawsuit against Jokhoo in
56. On December
2, 2009, Citibank (
57. On November
13, 2009, Capital One Bank (USA), NA obtained a $4,603.38 judgment against
Jokhoo in Rice County District Court.[96] To date,
Jokhoo has failed to satisfy Capital One’s judgment.[97]
58. Jokhoo has
made no effort to make arrangements with any of the creditors noted above to
satisfy the delinquent obligations noted in the preceding Findings (54-57).[98]
59. The fact
that these judgments may not directly relate to Jokhoo’s conduct as a real
estate salesperson or debt collector is irrelevant because the Commissioner is
authorized to take action against any licensee or registrant regardless if the
misconduct relates to the licensee’s or registrant’s professional activities.[99]
License/Registration
Application Misrepresentations
60. All the
various license/registration applications at issue contain a variation of a
question asking whether the applicant had ever been charged, indicted, pleaded
to, or convicted of any criminal offense in State or Federal Court.[100] If the
applicant responds in the affirmative, the applicant is required to provide a
written statement concerning the circumstances of each incident, a copy of the
charging document, a copy of the official document concerning the resolution of
the charges, and an update on any probation status.[101]
61. On seven separate
applications submitted to the Department since 2005, Jokhoo certified that he
had never been charged, indicted, pleaded to, or convicted of any criminal
offense in State or Federal Court.[102] On March 17,
1999, Jokhoo was charged with Felony First Degree Attempted Aggravated Robbery
and Misdemeanor Third Degree Assault in Hennepin County District Court. On January 14, 1998, Jokhoo pleaded guilty to
Third Degree Assault and received a Stay of Imposition.[103]
62. Jokhoo was
required to disclose the charges and his conviction on each license/registration
application. Jokhoo failed to produce
the required documentation concerning the criminal charges and their
resolution. Jokhoo’s failure to disclose
this requisite information precluded the Department from considering all the
facts when it considered the various license/registration applications.
Based on the Findings of
Fact, the Administrative Law Judge makes the following:
CONCLUSIONS
1.
The
Administrative Law Judge and the Commissioner of Commerce are authorized to
consider the charges against Respondents under Minn. Stat. §§ 14.50, 45.027,
subd. 7 and 11, 82.35, subds. 1 and 5, 332.355, and 332.395 (2008).
2.
Respondents
received due, proper, and timely notice of the charges against them, and of the
time and place of the hearing. This
matter is, therefore, properly before the Commissioner and the Administrative
Law Judge.
3.
The Commissioner
properly instituted this proceeding because it had been less than two years
since Jokhoo’s debt collector registrations and real estate salesperson license
were last in effect before this action was commenced.[104]
4.
The burden of
proof in this proceeding is on the Department to show by a preponderance of the
evidence that Respondents committed the alleged violations.[105]
5.
Respondents
failed to show cause, as ordered, why discipline should not be imposed against
them.[106]
6.
The Department
proved by a preponderance of the evidence that Respondents contacted and
caused, or directed another to contact and cause, the bank of California residents
Edwin and Medick Galestian to send a $40,000 check made payable to the Galestians
to Respondents without the Galestians’ authorization and, as such, engaged in
unfair practices, made false, deceptive and misleading representations in
connection with the collection of a purported debt, engaged in fraudulent, deceptive,
or dishonest practices, and engaged in conduct that demonstrates that they are
untrustworthy, financially irresponsible, or otherwise incompetent or unqualified
to act under the license and registrations granted by the Commissioner.[107]
7.
The Department
proved by a preponderance of the evidence that Respondents participated in,
directed, or authorized, or failed to learn about, diligently investigate, or
prevent the forging of the Galestians’ endorsements on the back of the $40,000
check that was deposited into Respondents’ bank account and, as such, made
false, deceptive and misleading representations in connection with the
collection of a purported debt, engaged in fraudulent, deceptive, or dishonest
practices, and engaged in conduct that demonstrates that they are untrustworthy,
financially irresponsible, or otherwise incompetent or unqualified to act under
the license and registrations granted by the Commissioner.[108]
8.
The Department
proved by a preponderance of the evidence that Respondents violated the Fair
Debt Collection Practices Act and Minnesota law by calling the Galestians and
threatening that they would be arrested, threatening to take action that could
not legally be taken or that is not intended to be taken, making false
representations, falsely holding themselves out as attorneys during collection
activities, and engaging in conduct that harassed, oppressed, or abused the Galestians.[109]
9.
The Department
proved by a preponderance of the evidence that Respondents contacted and caused
the bank of California residents Jill and Keith Diffey to electronically
transfer $5,166.77 to FFSI’s bank account without the Diffeys’ authorization
and, as such, engaged in unfair practices, made false, deceptive and misleading
representations in connection with the collection of a purported debt, engaged
in fraudulent, deceptive, or dishonest practices, and engaged in conduct that
demonstrates that they are untrustworthy, financially irresponsible, or
otherwise incompetent or unqualified to act under the license or registrations
granted by the Commissioner.[110]
10.
The Department
proved by a preponderance of the evidence that Respondents contacted and caused
the credit card issuer of the Diffeys to electronically transfer $3,900 to
FFSI’s bank account without the Diffeys’ authorization and, as such, engaged in
unfair practices, made false, deceptive and misleading representations in
connection with the collection of a purported debt, engaged in fraudulent,
deceptive, or dishonest practices, and engaged in conduct that demonstrates
that they are untrustworthy, financially irresponsible, or otherwise
incompetent or unqualified to act under the license and registrations granted
by the Commissioner.[111]
11.
The Department
proved by a preponderance of the evidence that Respondents violated the Fair
Debt Collection Practices Act and Minnesota law by calling the Diffeys and
threatening that they would be arrested, threatening to take action that could
not legally be taken or that is not intended to be taken, and making false
representations, by falsely holding themselves out as attorneys and federal
investigators during collection activities, and by otherwise engaging in
conduct that harassed, oppressed, or abused the Diffeys, including
misrepresenting to Ms. Diffey’s employer that she would be arrested at work.[112]
12.
The Department
proved by a preponderance of the evidence that Jokhoo engaged in fraudulent,
deceptive or dishonest practices, and conduct that demonstrated he is
untrustworthy, financially irresponsible, or otherwise incompetent or unqualified
to act under the license and registrations granted by the Commissioner by
failing to satisfy multiple judgments totaling more than $28,000, including a
$10,000 judgment for converting a refundable damage deposit.[113]
13.
The Department
proved by a preponderance of the evidence that Jokhoo contacted and caused, or
directed another to contact and cause, the banks of Colorado citizen James
Dorrough to electronically transfer $6,750 to FFSI’s bank account without
Dorrough’s authorization (and to request another $6,200 transfer that was
canceled before it was processed), thereby engaging in conduct that
demonstrates that he is untrustworthy, financially irresponsible, or otherwise
incompetent or unqualified to act under the license and registrations granted
by the Commissioner.[114]
14.
The Department
proved by a preponderance of the evidence that Jokhoo contacted and caused, or
directed another to contact and cause, the bank of Illinois citizen Mike
Norpell to electronically transfer $5,700 to FFSI’s bank account without
Norpell’s authorization and, as such, engaged in conduct that demonstrates that
he is untrustworthy, financially irresponsible, or otherwise incompetent or
unqualified to act under the license and registrations granted by the
Commissioner.[115]
15.
An Order imposing
discipline against Respondents for their multiple violations of law is in the
public interest.
Based on the Conclusions, the
Administrative Law Judge makes the following:
RECOMMENDATION
IT IS
RECOMMENDED that the Department impose discipline against Respondents,
including revocation of Jokhoo’s debt collector registrations and real estate
salesperson license and the imposition of civil penalties against Respondents
up to $10,000 per violation, pursuant to 15 U.S.C. §§ 1692d, 1692e and 1692f, Minn.
Stat. §§ 45.027, 82.35, 332.37 (2008),
and Minn. Rule 2870.3300 and 2870.3400 (2009).
Dated: December 8th, 2010
s/Richard
C. Luis
|
RICHARD C. LUIS Administrative Law Judge |
Reported:
Digitally Recorded
NOTICE
This
report is a recommendation, not a final decision. The Commissioner of Commerce will make the
final decision after a review of the record.
The Commissioner may adopt, reject or modify the Findings of Fact,
Conclusions, and Recommendations. Under
Minn. Stat. § 14.61, the final decision of the Commissioner shall not be made
until this Report has been made available to the parties to the proceeding for
at least ten days. An opportunity must
be afforded to each party adversely affected by this Report to file exceptions
and present argument to the Commissioner.
Parties should contact Glenn Wilson, Commissioner, Attn: Melissa
Knoepfler, Minnesota Department of Commerce,
If
the Commissioner fails to issue a final decision within 90 days of the close of
the record, this report will constitute the final agency decision under Minn.
Stat. § 14.62, subd. 2a. In order to
comply with this statute, the Commissioner must then return the record to the
Administrative Law Judge within 10 calendar days to allow the Judge to
determine the discipline to be imposed.
The record closes upon the filing of exceptions to the report and the
presentation of argument to the Commissioner, or upon the expiration of the
deadline for doing so. The Commissioner
must notify the parties and the Administrative Law Judge of the date on which
the record closes.
Under
Minn. Stat. § 14.62, subd. 1, the agency is required to serve its final
decision upon each party and the Administrative Law Judge by first class mail
or as otherwise provided by law.
MEMORANDUM
It is
obvious that Mr. Jokhoo has spent considerable time, on behalf of himself or
First Financial Services, Inc. (FFSI), attempting to obtain money from debtors
by means of illegal activity outside the scope of his licenses. Moreover, Mr. Jokhoo’s testimony regarding
the allegations against him in the Statement of Charges is not credible.
In
making aggressive collection efforts against Edwin Galestian, Jill Thompson,
nka Jill Diffey, James Dorrough, and Mike Norpell (“Debtors”), Mr. Jokhoo
either ignored or carelessly failed to check the Statute of Limitations for
filing a debt collection lawsuit in Illinois, Colorado or California (the
states in which the Debtors reside).
Once the applicable Statute of Limitations expires, it is unlawful to
file or threaten to file a lawsuit on purported debts, which Mr. Jokhoo
threatened to do with respect to the named individuals. A significant problem arises with respect to
Mr. Jokhoo’s credibility from his testimony concerning specific facts regarding
the Debtors named above, who represent only four out of approximately 3,500
files owned by FFSI, and in particular because Mr. Jokhoo had not had the
opportunity to review his files for almost a year since they were seized by the
Lonsdale, Minnesota Police Department.
It is noted in that connection that the Department did not commence any
regulatory action against Respondents until after the Lonsdale Police Department
seized Respondents’ assets. Given that
Mr. Jokhoo would not have had any specific reason to examine the specific
debtor accounts at issue in the course of any more than routine business
activities prior to police seizure of his business records, which also occurred
before the Department commenced its actions, Mr. Jokhoo’s specific
recollections of transactions with these specific Debtors is suspect.
In
response to questions on direct and cross examination, Mr. Jokhoo claimed that
FFSI’s account history sheets – Exhibits A through D – contained a complete and
accurate listing of all the collection activities he performed on each account,
but retracted that testimony when he was pressed to explain why the account
history sheets did not list entries for all the voice mails he left for Mr. Galestian
and Mr. Dorrough, or why no conversations with the Diffeys were memorialized
regarding their purported agreement to make payments and provide account
numbers to FFSI in May and June of 2009.
After he was unable to offer any explanation concerning these
discrepancies, Jokhoo claimed there was yet another “page” to each account
history sheet that he was unable to print or otherwise produce at the hearing.
Mr.
Jokhoo’s testimony concerning the alleged accuracy of account history sheets is
not credible. The account history sheets
produced by Respondents do not credibly or accurately detail the collection
activities conducted – however, they do establish that the Respondents were
actively engaged in collection activities against each Debtor involved in this
proceeding at the time of the allegations of misconduct at issue with respect
to each such Debtor.
Mr.
Jokhoo’s testimony that FFSI did not have the ability to obtain any Debtor’s
credit report and that FFSI did not conduct any business with any of the three
major credit bureaus (Experian, Equifax or TransUnion) is called into question
by credit reports obtained from Experian with respect to Mr. Norpell and Mr.
Galestian, showing that FFSI inquired and accessed their credit
information. Jokhoo’s testimony that he
did not have access to credit report data from Experian is not credible.
The
only apparent connection between the Debtors involved in this matter, who live
in three different states, is that they were contacted by the Respondents in
attempts to collect purported debts. The
similarity of Debtors’ individual experiences with the Respondents shows a fact
pattern similar to that engaged in by the Respondents toward the other
Debtors. These factual similarities
enhance the credibility of the testimony of the Debtors in this proceeding.
If Mr.
Jokhoo is to be believed, Mr. Galestian sent him a pre-endorsed $40,000 check
by way of First Class U.S. Mail. This is one specific reason why the
Administrative Law Judge does not find Jokhoo’s testimony to be credible
concerning his relationship with Mr. Galestian.
The
Administrative Law Judge is persuaded that the Respondents fraudulently
submitted electronic funds transfer requests to U.S. Bank attempting to collect
$5,166.77 from the Diffeys. Mr. Jokhoo’s
testimony regarding his attempt to facilitate the $3,900.00 transfer from the
Diffeys’ Discover credit card account is not credible. The Administrative Law Judge is not persuaded
by Mr. Jokhoo’s claim that the $3,900.00 payment represented a discount he had
previously offered and Ms. Diffey accepted, willingly providing Jokhoo with her
Discover credit card number.
The
Administrative Law Judge is persuaded that Mr. Jokhoo’s actions with respect to
the Diffeys were meant to harass, oppress or abuse them. Respecting Jim Dorrough, the Administrative
Law Judge is not persuaded that Jokhoo’s testimony is credible when he insisted
that Mr. Dorrough acknowledged responsibility to the Respondents for his
purported debt, because Jokhoo has made no further attempts to collect that
obligation from Mr. Dorrough since February 24, 2010. Respecting Mr. Dorrough, and regarding Mr.
Jokhoo’s claims that threatened courses of action against Mr. Dorrough were not
remedies he intended to pursue, the Judge finds the threats made were meant to
harass, oppress or abuse Jim Dorrough.
These include threats to have him prosecuted, threats to have him
visited by the sheriff, and threats that he would report Dorrough’s delinquent
obligation to credit bureaus in order to ruin Mr. Dorrough’s credit score. Even
though FFSI’s name appears on the transactional documents respecting transfer
from Mr. Dorrough’s account balances, Mr. Jokhoo denies that FFSI attempted to
facilitate such balance transfers from Dorrough’s bank accounts. The Judge does not find Jokhoo’s testimony in
this regard to be credible.
Nor is
Jokhoo’s testimony concerning his collection activities against Mike Norpell
credible – these include Mr. Jokhoo’s claim that he never spoke to Mr. Norpell
or otherwise attempted to facilitate a balance transfer from Norpell’s bank
account. In his efforts to collect over
$32,000.00 from Mr. Norpell in early in May 2010, $5,700.00 was transferred by
Mr. Jokhoo to “First Financial” (which transfer has since been reversed), and
Mr. Norpell obtained a copy of his credit report from Experian, which confirms
that FFSI had viewed his credit history details on May 5, 2010.[116]
In
applying for his licenses and registrations, Mr. Jokhoo was asked whether he
had ever been charged, indicted, pleaded to, or convicted of any criminal
offense in State or Federal Court. Mr.
Jokhoo falsely replied that he had never been indicted or charged on seven
separate applications submitted to the Department since 2005, even though he
was charged with Felony First Degree Attempted Aggravated Robbery and
Misdemeanor Third Degree Assault, eventually pleading guilty to Third Degree
Assault. Mr. Jokhoo’s representations to
the contrary were false and misleading.
In
order to conclude that the Department has not proven its grounds for discipline
in this case, the ALJ must believe Mr. Jokhoo’s testimony regarding the
allegations and events relied on by the Department. For the reasons noted above, the Judge
concludes to the contrary, finding that Mr. Jokhoo’s testimony is, for the
greater part, not credible.
R.C.L.
[1] The caption in this matter is
amended to reflect that a debt collector receives a “registration” and not a
“license.” Minn. Stat. § 332.33, subd. 1
(2008).
[2] 15 U.S.C. §§ 1692e and 1692f, Minn.
Stat. §§ 45.027, subd. 7(a)(4), 82.35, subd. 1(b), 332.355, and 332.37(12)
(2008), and
[3] 15 U.S.C. §§ 1692e and 1692f,
[4] 15 U.S.C. §§ 1692d, 1692e and
1692f, Minn. Stat. §§ 45.027, subd. 7(a)(4), 332.355, and 332.37(12) (2008),
and
[5] 15 U.S.C. §§ 1692e and 1692f, Minn.
Stat. §§ 45.027, subd. 7(a)(4), 82.35, subd. 1(b), 332.355, and 332.37(12)
(2008), and
[6] 15 U.S.C. §§ 1692e and 1692f, Minn.
Stat. §§ 45.027, subd. 7(a)(4), 82.35, subd. 1(b), 332.355, and 332.37(12)
(2008), and
[7] 15 U.S.C. §§ 1692d, 1692e and
1692f, Minn. Stat. §§ 45.027, subd. 7(a)(4), 332.355, and 332.37(12) (2008),
and
[8] Minn. Stat. §§ 45.027, subd.
7(a)(3), and 82.35, subd, 1(a) (2008).
[9] Minn. Stat. §§ 45.027, subd.
7(a)(4), and 82.35, subd, 1(b) (2008).
[10]
[11]
[12] Ex. 16 at DOC000351 - DOC000352.
[13] See
[14] Ex. 22; Testimony of Mike Kaehler
(“Kaehler Test.”).
[15] Exs. 24-25; see also Kaehler Test.; Testimony of Khemall Jokhoo (“Jokhoo Test.”)
[16] Jokhoo Test.; Kaehler Test.
[17] Kaehler Test.; Jokhoo Test.; Ex. 15
at DOC000069 - DOC000076.
[18] Jokhoo Test.
[19]
[20] Jokhoo Test.
[21] Jokhoo Test.; see also Kaehler Test.
[22] Jokhoo Test.
[23] Once the applicable statute of
limitations expires it is unlawful to file or to threaten to file a lawsuit on
a purported debt. Jokhoo Test.; see also Kaehler Test., 15 U.S.C. §
1692e(5), and Minn. Stat.
§ 332.37(12) (2008).
[24] Jokhoo Test.
[25] Jokhoo Test.; see also Exs. A, B, C, and D.
[26] Jokhoo Test. The date of last payment is significant
because that fact implicates the applicable statute of limitations in each of
the respective Debtors’ states.
[27] Dorrough Test.; K. Diffey Test.; J.
Diffey Test; see also Ex. 8 at
DOC000016 (“a suspicious inquiry by [FFSI] appears on the [Diffeys’] credit
report which may arise from potential fraud or identify theft involving the
[Diffeys].”)
[28] Ex. 8 at DOC000022 ($121.63
purchase from Experian on June 11, 2009) and DOC000027 ($250.88 purchase from
Experian on July 20, 2009).
[29] Jokhoo Test.
[30]
Jokhoo Test.; see also Ex. 1.
[31]
[32] Ex. 3.
[33] Ex. 2 at DOC000005. See
also Ex. 8 at DOC000017 (listing $38,010.52 withdrawal on July 15, 2010).
[34] Ex. 2 at DOC000004.
[35] Ex. 2 at DOC000006.
[36] Ex. 2 at DOC000007.
[37] Jokhoo Test.; Ex. 7.
[38] Ex. 6 at DOC000009; Kaehler Test.
[39] Ex. 6 at DOC000010, DOC000012 -
DOC000014.
[40] Jokhoo Test.; Ex. D (8/12/2009
entry).
[41]
Jokhoo Test.; see also Ex. 1.
and Ex. D (listing $20,590.87 as the “current balance”).
[42] Compare
Ex. 1 with Ex. 24 at DOC000778 -
DOC000779, DOC000794 - DOC000795, DOC000797 - DOC000798; see also Galestian Test.
[43] Ex. 1 at DOC000002.
[44] Ex. 15 at DOC000059; see also DOC000064, DOC000066, DOC000068
(all containing “FIRSt” as the spelling of FFSI’s name).
[45] Mr. Galestian’s testimony regarding
filing complaints with law enforcement officials is corroborated by Jokhoo’s
testimony and Respondents’ account history sheet concerning an inquiry from
Detective Zaun.
[46] Galestian Test.; see also Ex. 19.
[47] Galestian Test.; Ex. 18; see also Kaehler Test.
[48] Jokhoo Test.
[49] The original balance on the account
was purportedly $1,408.25, which suggests that (even at 22% interest) the
underlying obligation would have to be quite delinquent to grow to the sum of
$5,575.89. Ex. B.
[50] Respondents’ account history sheet
for this debtor lists the name “Jill Thompson,” a name from Ms. Diffey’s
previous marriage. Ex. B. Ms. Diffey testified that she had been
married to Mr. Diffey for over 10 years and had not gone by the name “Jill
Thompson” since at least 2000. J. Diffey
Test.
[51] Jokhoo Test.
[52] Ex. 8 at DOC000015.
[53] Ex. 8 at DOC000023.
[54] Ex. 8 at DOC000024.
[55]
[56] Ex. 8 at DOC000025 and DOC000029.
[57] J. Diffey Test.; K. Diffey Test.
[58] Jokhoo Test.
[59] J. Diffey Test.; K. Diffey Test.;
Ex. 8 at DOC000031 - DOC000037; see also Ex.
19.
[60] See
Ex. B.
[61] Ex. 8 at DOC000016.
[62] Kaehler Test.
[63] Jokhoo Test.
[64] J. Diffey Test.; K. Diffey Test.
[65] Ex. 8 at DOC000030; see also J. Diffey Test. and K. Diffey
Test.
[66] Jokhoo Test.
[67] Ex. 8 at DOC000022.
[68] The ALJ finds credible Ms. Diffey’s
testimony that Jokhoo called her “scum,” “low-life”, and a “liar,” among other
names, as well as used the “F” word toward her.
[69] Jokhoo Test.
[70] The ALJ notes that Respondents were
either attempting to collect on a debt for which they did not possess any
underlying data, which had been seized by the Lonsdale Police Department in
fall of 2009, or that Respondents had since purchased additional accounts and
failed to produce any evidence corroborating the underlying obligation at the
hearing. In any event, Respondents’
collection activities concerning Mr. Dorrough occurred after FFSI’s license had
been revoked and after the above-entitled regulatory action was commenced on
January 27, 2010.
[71] The original balance on the account
was purportedly $12,733.41, which suggests that (even at 28% interest) the
underlying obligation would have to be quite delinquent to grow to the sum of
$60,528.70. Ex. C.
[72] Jokhoo Test.; Ex. C (2/12/2010 at
9:53 p.m.).
[73] Jokhoo Test.; see also Ex. C.
[74] Dorrough Test.
[75] The ALJ notes that the fact that
Mr. Dorrough had good credit and that this purported debt was not already
listed on his credit report further suggests that, to the extent the debt ever
existed, it is rather old.
[76] Jokhoo Test.
[77] Dorrough Test.; see also Ex. 9 at DOC000737 and
DOC000745; Ex. 21.
[78] Dorrough Test.; Ex. 9 at DOC000740.
[79] The original balance on the account
was purportedly $8,454.44, which suggests that (even at 28% interest) the
underlying obligation would have to be quite delinquent to grow to the sum of
$32,321.44. Ex. A.
[80] The ALJ notes that, as with Mr.
Dorrough, Respondents were either attempting to collect on a debt for which
they did not possess the underlying data, which had been seized by the Lonsdale
Police Department in fall of 2009, or that Respondents had since purchased
additional accounts and failed to produce any evidence corroborating the
underlying obligation at the hearing. In
any event, Respondents’ collection activities concerning Mr. Norpell occurred
after FFSI’s license had been revoked, after the above-entitled regulatory
action was commenced on January 27, 2010, and after the prehearing conference
in this case on March 23, 2010.
[81] Jokhoo Test.; see also Ex. A.
[82] See
also Ex. 10 at DOC000765.
[83] Norpell Test.; Ex. 10 at DOC000759
- DOC000763.
[84] Norpell Test.; see also Ex. 20.
[85] Ex. 10 at DOC000752.
[86] Ex. 10 at DOC000756.
[87] Norpell Test.; Jokhoo Test.
[88] Ex. 10 at DOC000757 - DOC000758.
[89] Jokhoo Test.
[90] Ex. 11.
[91] Jokhoo Test.
[92] Ex. 13.
[93] Jokhoo Test.
[94] Ex. 15.
[95] Jokhoo Test.
[96] Ex. 12.
[97] Jokhoo Test.
[98] Jokhoo Test.
[99] Minn. Stat. § 45.027, subd. 7(a)(4)
(2008).
[100] Ex. 15 at DOC000067, DOC000070,
DOC000078, DOC000081, DOC000085, DOC000088, DOC000091.
[101] See,
e.g., Ex. 15 at DOC000067.
[102] Ex. 15 at DOC000067, DOC000070,
DOC000078, DOC000081, DOC000085, DOC000088, DOC000091.
[103] Ex. 17; see also Jokhoo Test.; Kaehler Test.
[104] Minn. Stat. §§ 45.027, subd. 11,
and 332.395 (2008).
[105] Minn. Rule 1400.7300, subp. 5
(2009).
[106] Minn. Stat. §§ 45.027,
subd. 7(b) and 60K.43, subds. 2 and 5 (2008).
[107] 15 U.S.C. §§ 1692e and 1692f, Minn.
Stat. §§ 45.027, subd. 7(a)(4), 82.35, subd. 1(b), 332.355, and 332.37(12)
(2008), and
[108] 15 U.S.C. §§ 1692e and 1692f,
[109] 15 U.S.C. §§ 1692d, 1692e and
1692f, Minn. Stat. §§ 45.027, subd. 7(a)(4), 332.355, and 332.37(12) (2008),
and
[110] 15 U.S.C. §§ 1692e and 1692f, Minn.
Stat. §§ 45.027, subd. 7(a)(4), 82.35, subd. 1(b), 332.355, and 332.37(12)
(2008), and
[111] 15 U.S.C. §§ 1692e and 1692f, Minn.
Stat. §§ 45.027, subd. 7(a)(4), 82.35, subd. 1(b), 332.355, and 332.37(12)
(2008), and
[112] 15 U.S.C. §§ 1692d, 1692e and
1692f, Minn. Stat. §§ 45.027, subd. 7(a)(4), 332.355, and 332.37(12) (2008),
and
[113] Minn. Stat. §§ 45.027, subd.
7(a)(4), and 82.35, subd, 1(b) (2008).
[114]
[115]
[116] Exhibit 10, at DOC 000752.