Complaint Review: Charles T. Hutchins National Check Control - Secaucus New Jersey

Wendy, you may wish to peruse the following: FOR IMMEDIATE RELEASE CONTACT: Norman Googel 304-558-8986 1-800-368-8808 ATTORNEY GENERAL DARRELL V. McGRAW, JR. FILES SUIT TO SHUT DOWN NATIONAL CHECK CONTROL OF SECAUCUS, NEW JERSEY, ALLEGING THAT THE COMPANY ENGAGED IN FRAUDULENT DEBT COLLECTION PRACTICES http://www.state.wv.us/wvag/press/2003/May/15.htm Attorney General Darrell V. McGraw, Jr., announced the filing of a suit today to end the fraudulent debt collection practices of National Check Control of Secaucus, New Jersey. The suit charges that National Check Control has unlawfully threatened hundreds of West Virginia consumers with check fraud, falsely threatened that nonpayment of alleged debts could result in arrest and criminal prosecution, and added hundreds of dollars in unlawful collection fees to each check it sought to collect. McGraw said that these debt collection practices are expressly prohibited by state and federal law. Attorney General McGraws Consumer Protection Division began investigating National Check Control last year after numerous West Virginia consumers complained that the companys agents threatened them with arrest and criminal prosecution unless they paid debts from alleged bad checks and which, in many cases, the consumer denied writing at all. Prior to filing todays suit the Attorney General warned National Check Control, "We would be hard-pressed to identify any collection agencies which have ever committed more egregious violations of state and federal debt collection law in West Virginia than National Check Control. We cannot and will not allow to continue these practices here." Notwithstanding Attorney General McGraws stern warning and demand that the practices cease, National Check Control persisted in violating the law, making it necessary to file suit today against National Check Control. The Attorney Generals suit alleges that National Check Control began harassing West Virginia consumers in January 2002 after purchasing more one million alleged bad checks from three check guarantee companies, namely, TeleCheck Services, Inc. of Houston, Texas; Check Velocity, Inc. of Nashville, Tennessee; and Certegy Check Services, Inc. of St. Petersburg, Florida. The check purchase agreements indicated that all of the checks were for very small amounts, mostly under $25, and were written in 1998 and 1999. Attorney General McGraws suit also explains that National Check Control would be legally barred by West Virginias one year statute of limitations from prosecuting any of the alleged bad checks because they were all for amounts under $500. The suit alleges that "National Check Control consisted of four defendants, including Check Investors, Inc., a New Jersey corporation; Barry Sussman, its President & CEO; Charles T. Hutchins, its General Counsel; and Wayne Krouse, its Vice President and broker of check purchase agreements. The suit also discloses that defendant Sussman is a law graduate who has been denied admission to the New Jersey Bar Association "because he has shown no evidence of rehabilitation since his previous convictions for bank and mail fraud." Any persons wishing to file a complaint about a consumer matter or to alert the Attorney General about unfair or deceptive acts or practices may do so by calling the Consumer Protection Hot Line, 1-800-368-8808, or by downloading a complaint form from this site. (Complaint Form) It appears that Attorney Hutchins wanted to represent the great people of NewJersey, as he ran for elected office in 2000: http://www.dcpoliticalreport.com/2000/NJResults.htm 6th Congressional District Frank Pallone, Jr. (D) ex-St. Sen. Brian T. Kennedy (R) 66.3%, attorney Charles T. Hutchins (R) 33.7%, Steve Nagle (L), Earl Gray (G), Some cases Attorney Hutchins has been involved in: http://caselaw.lp.findlaw.com/data2/circs/7th/014189p.pdf http://vls.law.vill.edu/locator/3d/Aug2001/986248o.txt A lot of discussion about these schisters here: Posted by James Divine (66.162.230.34) on April 03, 2003 at 12:13:41: http://www.cardreport.com/wwwboard/messages/9637.html http://www.ademilaw.com/cases/nnc.pdf http://www.cjnj.org/html/documents/0602022.pdf In Reply to: National Check Control posted by Shocked on April 02, 2003 at 21:12:12: I received this email this morning... and I'm on board.... ------------- You are receiving this email because you contacted Ademi & O'Reilly, LLP regarding a New jersey debt collector going by the name National Check Control. Last summer, I filed suit on behalf of a client of National Check Control. National Check Control did not respond, and I won a default judgment. Ultimately, I chose not to pursue a class action aspect to the case because in cases under the Fair Debt Collection Practices Act, damages are capped at 1% of the Defendant's Net Worth. Moreover, I thought National Check Control would be out of business by now. In hindsight, I think I was wrong. National Check Control thrives. I have even had a call from another debt collector who wants to put National Check Control out of business because it gives debt collectors a bad name. Further, it seems that NCC is actually convincing people to send funds through Western Union. My idea is to obtain a judgment for the individuals who wish to participate. Under the FDCPA, damages are capped at $1,000 per person, but if I have 20 individuals, that should sting plenty. Then I would garnish Western Union. The idea would be to cut off NCC's revenue stream, leaving it to wither on the vine. I have also been contacted by attorneys from a few different states, some of whom should bve receiving this email. I would be happy to share all of my information I have, including a process server in Secacus, NJ, some judicial materials re: Charles T. Hutchins, and legal materials. I have fixed the typo that prevented the complaint from loading. Please go to http://www.ademilaw.com/cases/nnc.pdf to view the complaint from the first case. For those who are interested in participating in a lawsuit against National Check Control, my firm would handle the case on a strictly contingnecy fee basis. Please note we have only one year from the time you were contacted by National Check Control to start a lawsuit. The following is an outline of the terms under which we, individually or in combination with other counsel, will represent clients as a plaintiff. 1. Pursuant to this retainer agreement, Ademi & O'Reilly LLP agrees to represent you in this litigation on a fully contingent basis with respect to its fees. In addition, Ademi & O'Reilly, LLP will advance all costs and expenses that plaintiffs' counsel deem necessary to prosecute the case. You will not have to pay any costs, fees, expenses or any other out of pocket funds in advance (they will only be paid if we win). 2. Ademi & O'Reilly, LLP shall be receive the greater of 33% of the gross recovered, or the hourly rate of $195.00 per hour for each hour worked on this case, or the amount awarded by the Court, whichever is the greater amount. 3. You agree that our files and papers compiled in connection with our investigation and prosecution of this matter constitute the work product and property of this firm and over which the firm has complete control with respect to its use and/or disclosure. You grant us a lien in any funds recovered on your behalf. 4. You give Ademi & O'Reilly, LLP the power to endorse checks for deposit to its trust account, in order to distribute money at the end of the case. I agree that the Defendants shall put Ademi & O'Reilly LLP as a payee on all checks. If this is acceptable, please reply to this email, noting that you agree, and include your name address and telephone number. I will contact you for a brief telephone interview to prepare facts in the complaint. If you are not interested, please disregard this email. But thank you for contacting me. -- Attorney Robert K. O'Reilly Ademi & O'Reilly, LLP 3620 East Layton Avenue Cudahy, WI 53110 (414) 482-8000 voice (414) 482-8001 telecopier Confidentiality: This e-mail is confidential and intended only for the recipient(s) named. Unless you are a named recipient, your reading, distributing, forwarding, or copying this communication is prohibited and may violate the legal rights of others. If you received this communication in error, please call me, return the e-mail to me, and delete it from your system. Apparently, even Attorney Hutchins filed bankruptcy to avoid his creditors at one time: http://vls.law.vill.edu/locator/3d/Oct1995/95a1174p.doc UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. 94-5509 and 94-5510 CHARLES T. HUTCHINS, Appellant in 94-5509 v. INTERNAL REVENUE SERVICE; UNITED STATES OF AMERICA CHARLES T. HUTCHINS v. INTERNAL REVENUE SERVICE; UNITED STATES OF AMERICA UNITED STATES OF AMERICA, Appellant in 94-5510 On Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 92-cv-04134) Submitted Pursuant to Third Circuit LAR 34.1(a) May 24, 1995 Before: GREENBERG, ROTH and ALDISERT, Circuit Judges (Opinion Filed October 3, 1995) Charles T. Hutchins 5011 Marshall Road Farmingdale, NJ 07727 Pro Se Appellant\Cross-Appellee Faith S. Hochberg United States Attorney Loretta C. Argrett Gary R. Allen Bruce R. Ellisen Bridget Rowan Laurie Snyder Assistant U.S. Attorneys Tax Division U.S Department of Justice Post Office Box 502 Washington, D.C. 20044 Attorneys for Appellee\Cross-Appellant OPINION OF THE COURT Roth, Circuit Judge: In this appeal, Charles T. Hutchins, appearing pro se, and the Internal Revenue Service each challenge aspects of the entry of summary judgment below. The district court granted summary judgment to the I.R.S. on its counterclaim to recoup an erroneous tax credit, but then, disturbed by this result, invoked equitable estoppel sua sponte to bar the I.R.S. from recovering all but a minor portion its claim. This holding necessarily denied Hutchins' standing to sue for the original tax credit. We reverse. Hutchins had standing to pursue his original tax claim because in the bankruptcy proceedings that gave rise to this case, the tax refund descended to him through abandonment as part of a properly scheduled antitrust action. Because the I.R.S. grounded its recoupment claim solely on Hutchins' lack of standing, our ruling on this issue is dispositive. We reach neither the validity of the underlying tax refund, which is not properly before us, nor the application of equitable estoppel, which is rendered superfluous. I. Factual and Procedural History In November 1979 Hutchins, as sole proprietor of Hutchins Supply Company, filed a Chapter 7 Bankruptcy Petition in the U.S. Bankruptcy Court in Anchorage, Alaska. After the initial scheduling of all known assets and liabilities pursuant to 11 U.S.C. 521(1), Hutchins learned that his business had failed because of his competitors' antitrust violations and unfair business practices. Hutchins instituted an antitrust action against these competitors, amending his schedules to reflect the antitrust cause of action as an asset of the bankrupt estate. By stipulation, the estate trustee allowed Hutchins to pursue the action, reserving the right to all settlement proceeds. In 1986, the resulting claims were settled for $243,000 in cash, which was turned over to the bankruptcy trustee. In addition, the antitrust defendants withdrew claims against the bankrupt estate for approximately $76,000 in business debt. On January 27, 1987, the trustee filed an estate income tax return reflecting both the cash and the retired debt as income. On September 21, 1988, the trustee petitioned the U.S. Bankruptcy Court to abandon any remaining assets to Hutchins. The requisite order was issued on March 23, 1989. The bankruptcy proceedings were closed sometime prior to February 1989, re-opened on March 1, 1989, and closed a second time on March 14, 1990. On April 2, 1989, Hutchins filed an amended tax return for 1987, asserting that pursuant to 26 U.S.C. 108, the $76,000 in retired business debt was not taxable income. Hutchins sought a tax credit of $38,458, the amount he believed the trustee had overpaid by erroneously including the $76,000 in retired business debt as income. On January 22, 1992, the I.R.S. granted in part the claimed refund and applied a credit of $37,897.04 to Hutchins' tax arrearages. On September 29, 1992, Hutchins responded by filing a complaint against the I.R.S. in the U.S. District Court for the District of New Jersey seeking, among other relief, an additional credit of $650. The I.R.S. responded by counterclaiming for the entire January 1992 tax credit, alleging it was granted erroneously since Hutchins was not the proper party to receive a refund of taxes paid by the bankruptcy estate. On May 24, 1993, the district court dismissed Hutchins' various prayers for relief on several grounds, leaving the I.R.S.'s counterclaim as the sole remaining dispute. That order has not been appealed. On January 10, 1994, on cross motions for summary judgment, the district court ruled in favor of the I.R.S. on its counterclaim, denied Hutchins' motion to dismiss, and invoked equitable estoppel to bar the I.R.S. from recovering all but $663 plus interest from Hutchins. Both parties appealed to this court. II. Jurisdiction The district court properly asserted federal jurisdiction over the I.R.S.'s counterclaim under 26 U.S.C. 7405(b). We have jurisdiction over the district court's final order pursuant to 28 U.S.C. 1291. Our review of a grant of summary judgment is plenary. Oritani Sav. & Loan a*s'n v. Fidelity & Deposit Co., 989 F.2d 635, 637 (3d Cir. 1993); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038 (1977). The question of standing is itself subject to plenary review. Polychrome Int'l Corp. v. Krigger, 5 F.3d 1522, 1530 n.19 (3d Cir. 1993). III. Discussion In its counterclaim in district court, the I.R.S. sought to recoup the entire tax credit it had granted Hutchins by asserting that he lacked standing to pursue the discrepancy. The I.R.S. argued that because Hutchins had failed to schedule the tax claim explicitly as an asset of the bankrupt estate, the right to the refund was not abandoned but was instead retained by the estate. Since the refund belonged to that separately taxable entity, only the trustee could sue for its recovery. Hutchins therefore had no basis for his claim. Consequently, any tax refund granted to Hutchins was erroneous and could be recovered. The district court implicitly conceded this much in an elliptical comment1 followed by its sua sponte application of equitable estoppel. We disagree. This line of reasoning ignores the fact that the tax refund originated as part of the properly scheduled antitrust action. The refund claim was at best a derivative asset that arose as a result of the trustee's tax filings on behalf of the estate. Moreover, the claim was not asserted until after the bankruptcy had closed. Since it existed during the bankruptcy as an integral part of the antitrust claim--or if separately as a still inchoate right--the tax claim was properly scheduled through the scheduling of the antitrust action and descended to Hutchins through abandonment. Hutchins had standing to sue. A. We observe in passing that if the tax refund were a unique asset that had to be scheduled separately, as the I.R.S. asserts, then the failure to schedule the refund is fatal to Hutchins' claim. It is clear that an asset must be properly scheduled in order to pass to the debtor through abandonment under 11 U.S.C. 554. See Vreugdenhill v. Navistar Int'l Transp. Corp., 950 F.2d 524, 526 (8th Cir. 1991) (refusing to find unscheduled cause of action abandoned even where trustee was aware of it prior to abandonment); In re Medley, 29 B.R. 84, 86-87 (Bankr. M.D. Tenn. 1983) (refusing to abandon unscheduled refund claim to debtor); DiStasio v. United States, 22 Cl. Ct. 36, 52 (1990) (holding claim for refund abandoned only if scheduled); Weiner v. United States, 15 Cl. Ct. 43, 45 (1988) (retaining unscheduled tax refund claim as property of bankrupt estate); see generally 4 Collier on Bankruptcy 554.03 (15th ed. 1994). It is equally clear that since the bankrupt estate retains unscheduled assets, only the bankruptcy trustee has the authority to control them. 26 U.S.C. 554(d) ("property . . . not abandoned under this section . . . remains property of the estate"). This authority includes the power to file an amended tax return. See 26 U.S.C. 6012(b)(4) (requiring that fiduciary for estate file estate return); see also Mindlin v. Drexel Burnham Lambert Group, 160 B.R. 508, 514 (Bankr. S.D.N.Y. 1993) ("By operation of 11 U.S.C. 554(c) and (d), any asset not scheduled pursuant to 11 U.S.C. 521(1) remains property of the estate, and the debtor loses all rights to enforce it under his own name."). These propositions, however, beg the fundamental question raised by this dispute, viz. were the antitrust action and tax refund claim separate assets? If they were not, then the tax refund was scheduled as part and parcel of the antitrust claim, and it descended to Hutchins through abandonment. After reviewing the respective arguments, we conclude that during the pendency of the bankruptcy, the tax refund existed as an inherent part of the properly scheduled antitrust claim. Initially, it bears noting that the tax refund in this case differs from the tax refunds that typically appear as unscheduled assets in bankruptcy proceedings. The standard case of an unscheduled tax refund involves an expected refund computed by the debtor and entered on a personal or corporate tax return, which the debtor then fails to schedule after declaring bankruptcy. See, e.g., Mertz v. Rott, 955 F.2d 596 (8th Cir. 1992) (considering estate tax refund that debtors anticipated but failed to schedule); Doan v. Hudgins, 672 F.2d 831 (11th Cir. 1982) (considering debtor's failure to list expected tax refund); Barowsky v. Serelson, 102 B.R. 250 (Bankr. D. Wyo. 1989) (reopening bankruptcy after discovery of anticipated but unscheduled income tax refund). The scenario is even clearer when the refund has already been paid by the I.R.S. and yet goes unscheduled. See In re Maynard, 162 B.R. 349 (Bankr. M.D. Fla. 1993); In re Walton, 158 B.R. 943 (Bankr. N.D. Ohio 1993). In either case, the debtor knows of the existence of the asset, expects to receive it, and should have scheduled it. The instant facts are different. Here, the tax refund was the result of action by the bankruptcy trustee, and the claimed discrepancy was not asserted until after the bankruptcy had closed. More importantly, there was no reason for the debtor or the trustee to assume, believe, or even guess that any refund existed. The taxes were paid on income from an antitrust settlement, so there had been no prior withholding. Assuming that the trustee computed the tax correctly, there would be no refund.2 These important factual distinctions indicate that at the time of the bankruptcy, the crucial asset, indeed the only asset, was the antitrust settlement. During the bankruptcy, no "tax refund" asset existed. It was at best an inchoate right. Creating the legal fiction that this asset arose at the time of the erroneous filing and existed independently, albeit covertly, would require every debtor to list as an additional asset a potential tax refund due to the possibly erroneous filings of the trustee. Alternatively, the debtor would have to supervise and double check the actions of the trustee, contrary to the intention of 11 U.S.C. 704, which makes the bankruptcy trustee accountable for all property received. See In re R.E. Lee & Sons, Inc., 95 B.R. 316 (Bankr. M.D. Pa. 1989) (limiting debtor's burden to reasonable diligence in completing schedules). There seems little to recommend either course as an innovation in bankruptcy procedure. Neither the district court nor the parties have cited any authority addressing the status of an undiscovered tax refund that arises post-petition as a result of the filings of the trustee. Our efforts have revealed no case on point. The extensive citations to cases on unscheduled assets are inapposite if the tax refund did not yet exist. Indeed, these cases would support Hutchins' claim since he properly scheduled the only existing asset, the antitrust proceeds. Despite the absence of authority, both parties offer arguments on the issue, and logic dictates the result. First, we agree with Hutchins that "[i]t was not the appellant's right, position or responsibility to amend his schedules to reflect trustee's accounting and tax payment errors." Brief of Appellant at 16. Hutchins appears to contend that, as suggested above, he had no reason to suspect the error and hence the existence of the refund. We make explicit the necessary implication: The tax refund was not a known asset at the time of the bankruptcy and so could not be scheduled separately pursuant to 11 U.S.C. 521(1). Further support flows from the concept of valuation. At the time of the bankruptcy, the principal asset for distribution to creditors was the income from the antitrust settlement. Creditors could reasonably assume that the estate would owe tax on this money, so the net value of the asset was the amount of the proceeds less the correct amount of tax. Alternatively, creditors could expect the net value to equal the amount of the proceeds less the amount of tax paid by the trustee plus the amount of any tax refund. There is no need to take this latter course, which unnecessarily creates two assets from a single fund. Instead, the antitrust cause of action c*m tax refund can best be viewed as a single asset that was inadvertently misappraised by the bankruptcy trustee. Assuming for the moment that Hutchins is correct on the merits of the tax refund, the trustee's failure to complete the tax return correctly effectively undervalued the antitrust claim by approximately $37,000. This mistake was not discovered until after abandonment. It is well established in bankruptcy law that mistakes in valuation will not enable the trustee to recover an abandoned asset. In re McGowan, 95 B.R. 104 (Bankr. N.D. Iowa 1988) (ruling that abandonment of misvalued asset is irrevocable); Matter of Enriquez, 22 B.R. 934 (Bankr. Neb. 1982) (same). We find these arguments persuasive. We are less impressed with the I.R.S.'s conclusory assertion that the antitrust cause of action was "clearly a separate asset" from the tax refund. Nor are we swayed by the agency's cursory comparison: The antitrust action involved damage claims against various of Hutchins's competitors. The Government was not a party to that action, and no federal income tax issues were involved. Here, in contrast, the Government is a party, the issue is one of taxation, and neither the competitors nor antitrust violations are of concern. Brief of Appellee at 21. While an accurate description of the two causes of action as they currently stand, these distinctions ignore the fact that the relevant time period for scheduling is not the onset of subsequent litigation but rather the pendency of the bankruptcy. At that point, no separate tax refund asset existed, or to the extent that it did, it was subsumed in the original declaration of the value of the antitrust proceeds. Our review of these arguments indicates that the tax refund was properly scheduled to the extent that it could be. Hutchins scheduled the only asset of which he was aware, the antitrust claim. The tax refund arose later as a result of the actions of the trustee. Hutchins did not cause the trustee to file an erroneous tax return, and he had no reason to suspect its existence. Indeed, the discrepancy was not discovered until after the close of the bankruptcy. We hold that Hutchins acted properly in scheduling his assets. B. This resolution of the scheduling issue necessitates the conclusion that Hutchins had standing to sue for the tax refund. Since he properly scheduled the antitrust claim, the right to the refund descended to him through abandonment. Hutchins scheduled the antitrust claim properly. On April 7, 1983, he filed in the U.S. Bankruptcy Court a Motion to File Amended Schedule B - Statement of All Property of Debtor. Page 6, line 17 of the amended Schedule B reflected "unliquidated antitrust claims." This filing scheduled the antitrust claim pursuant to 11 U.S.C. 521(1). The tax claim was necessarily scheduled through this action. Hutchins then received the right to this tax claim as an undifferentiated part of the antitrust claim he acquired through abandonment. On September 21, 1988, the trustee moved pursuant to 11 U.S.C. 554(a) for an order "that any remaining property scheduled by the debtor(s) be abandoned to the debtor(s) and that any further interest in said property be disclaimed." On March 23, 1989, the Bankruptcy Court entered the requisite Abandonment Order. Through the abandonment of the antitrust claim, Hutchins held the right to the potential tax refund on April 2, 1989, when he filed the amended tax return. As a result, he had standing to contest the I.R.S.'s decision regarding his refund. See 26 U.S.C. 6402(a), 6511(a), 7422(a); 28 U.S.C. 1346(a); see also Boryan v. United States, 690 F.Supp. 459, 463 (E.D. Va. 1988). C. Although as a general rule an affirmative holding on standing is merely a precursor to consideration of the merits, in the instant case it disposes of the controversy. The I.R.S. cannot prevail as a matter of law because it took no position in the district court on the underlying validity of the refund. The I.R.S. chose to assert only the claim that the refund was paid to the wrong party, and this argument depended on Hutchins' lack of standing. Our contrary conclusion resolves the case. We decline to consider an insufficiently explored, fact-specific, non-dispositive theory that was not raised below. On appeal, the I.R.S. attempts to argue for the first time that the underlying basis of Hutchins' claimed tax refund is incorrect because the discharge of debt by the antitrust defendants is not excludible income. Brief of Appellee at 13, 14, 28-33. This argument was not asserted at the trial level. The I.R.S.'s eleventh hour Reply Brief reference to an isolated footnote in the record supports rather than contradicts this conclusion. See Reply Brief of Appellee at 3. Under the prudential policy recognized in Hormel v. Helvering, 312 U.S. 552, 556 (1941), we need not consider the I.R.S.'s new argument. See Patterson v. Cuyler, 729 F.2d 925 (3d Cir. 1984); Toyota Indus. Trucks U.S.A. Inc. v. Citizen Nat'l Bank, 611 F.2d 465, 470 (3d Cir. 1979); see also Singleton v. Wulff, 428 U.S. 106, 120 (1976). The reference discovered by the I.R.S. is remarkable only in its unobtrusiveness. A lone and diminutive footnote does not constitute the assertion of a legal theory, especially when the same theory merited seven pages in the I.R.S.'s appellate brief. See Brief of Appellee at 27-34. Had the issue truly been asserted at the trial level, these seven closely argued pages would not have been needed. More importantly, it is by no means clear that the I.R.S.'s newfound champion can carry the day. The argument ultimately turns on whether the $76,000 in claims against the bankrupt estate that was retired by the antitrust defendants represents "discharge of indebtedness" excludible under 26 U.S.C. 108(a)(1) or instead taxable income for which the discharged debt is merely the "medium of payment." See United States v. Centennial Savings Bank F.S.B., 499 U.S. 573, 582 n.7 (1991). Further factual development would be required to resolve this issue and determine the extent of any resulting tax differential. An appellate tribunal is not the proper forum for this task. See Newark Morning Ledger v. United States, 539 F.2d 929, 932 (3d Cir. 1976). Put simply, the I.R.S.'s contentions regarding the merits of the tax refund come too late. In the district court, the I.R.S. based its counterclaim solely on standing, and only that issue is properly before us. Our contrary disposition of this point resolves the case. D. The district court invoked equitable estoppel sua sponte because its holding on standing left no bar to the I.R.S.'s recoupment of the tax credit, a sanction the court found overly severe. We are disturbed that estoppel would be applied by the district court without allowing the parties to voice their opposition to it. Our conclusion, however, renders this issue superfluous, and we need not reach it. IV. Conclusion Contrary to the holding of the district court, Hutchins had standing to sue as a matter of law. Because at the trial level the I.R.S. based its counterclaim solely on the absence of standing, we will reverse and remand with instructions to enter summary judgment in favor of Hutchins. In doing so, we note only that appellant must consider himself the fortunate beneficiary of the appellee's litigation strategy. Had the I.R.S. assiduously pressed the validity of the tax refund at the trial level, Hutchins could well have lost his $37,897 bird in the hand in an ill-conceived grasp at $650 in the bush. Judge freezes assets of ex-inmate's collection agency http://www.newsmaxstore.com/nmstore/images/books/weasels.jpg By Jeffrey Gold, Associated Press, 5/15/2003 17:21 NEWARK, N.J. (AP) A federal judge on Thursday froze the assets of a collection agency that regulators consider one of the nation's most abusive. By improperly threatening consumers with arrest, criminal prosecution and civil action, Check Investors Inc. of Secaucus collected at least $10.2 million from about 42,100 people since 1995, the Federal Trade Commission charged. Many did not even owe any money, the agency said. ''The abusive, harassing, illegal conduct is going to stop,'' said Gregory A. Ashe, a senior lawyer in the FTC's Bureau of Consumer Protection. Also Thursday, New Jersey and West Virginia sued the company, which does business as National Check Control, accusing it of charging unlawful fees and check fraud. The company's president, Barry S. Sussman, served 3 years in federal prison in the late 1980s for mail fraud, bank fraud and impersonating a federal official. He is now in his early 40s. While in prison, he wrote a how-to guide to credit card fraud, ''I Scam ... You Scam: Specific Methods for Defeating Bureaucratic Organizations.'' Neither Sussman nor lawyer Stephen R. LaCheen immediately returned messages seeking comment. Besides Sussman and Check Investors, the FTC complaint names his wife, Elisabeth M. Sussman, the company's vice president, and company lawyer Charles T. Hutchins, who is accused of signing dunning letters whose language violated the Fair Debt Collections Practices Act. In addition to freezing assets, Chief U.S. District Judge John W. Bissell issued a restraining order barring the defendants from violating the debt collections act and barring them from suing any consumer. Ashe noted that although consumers were also threatened with lawsuits, none were filed. Bissell scheduled a June 9 hearing on whether to grant a preliminary injunction against the defendants. Check Investors bought checks that had been returned to check guarantee companies for insufficient funds, typically paying pennies on the dollar, according to FTC court papers. Check guarantee companies contract with merchants, agreeing to any bad checks that the merchant had first run through their system to ensure it was a valid account. Check Investors demanded immediate payment from consumers, plus and additional fee of $125 to $130, although most states only allow about $30 in fees, Ashe said. The collection letters, however, only mentioned the ''amount due,'' without noting the value of the check or the fee, the FTC said. The company threatened arrest and prosecution in letters and phone calls to consumers and their family members, usually for six months, the FTC said. ''Numerous consumers report that defendants' collectors verbally assaulted them, lacing their demands for immediate payment with invective, insults, profanity, and threats,'' FTC court papers said. One person reported getting 17 calls within 10 minutes. The collection letters routinely lied that nonpayment would result in garnishment of property or wages, the agency said. New charges for man with a history of fraud http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-3/1053066981302100.xml He is accused of extorting millions from writers of bad checks Friday, May 16, 2003 BY JOHN P. MARTIN Star-Ledger Staff Barry Sussman spent much of the 1980s honing his knowledge of the credit card industry and his skills at ripping it off. During one prison stint for credit fraud, the Fort Lee resident wrote a 103-page how-to manual called "I Scam-You Scam" and distributed it to inmates. After skipping out on his probation and being declared a fugitive, Sussman sent his sentencing judge a photo of him atop a camel near the Egyptian pyramids. Sussman, 42, has a wife, two kids and a law degree now, but authorities say he's not a changed man. Yesterday, state and federal regulators accused him of running a Secaucus-based collection agency that abused, harassed and extorted millions of dollars from people who allegedly passed bad checks. Joe Hall, a plumber in Winter Haven, Fla., told investigators that a Sussman company collector phoned him 17 times in a 10 minutes one afternoon last fall, called Hall's mother "a racist (expletive)" and Hall a "(expletive) criminal" who was "worse than the Taliban." The collector claimed Hall wrote a $62 check to Pet World that bounced. Hall said he didn't. Stephanie Stephenson of Brewster, N.Y., said Sussman's collectors hounded her for $169 three years after she bought a $39 necklace by check from the Home Shopping Network. Stephenson said she had returned the necklace after it arrived broken. "This message is for the criminal check writer, Stephanie Stephenson," said a message left on her answering machine. "You may need to turn yourself in to the local county sheriff's office." Their accounts were included as evidence by Federal Trade Commission attorneys yesterday who persuaded a federal judge to freeze Sussman's assets and temporarily restrain his company, National Check Control, from using strong-armed collection tactics. At the same time, the New Jersey attorney general's consumer affairs division sued Sussman in Superior Court in Hudson County, alleging 350 complaints against his companies. Sussman insisted he had done nothing wrong. "Evidently, there are a lot of people that don't like the fact that they are being aggressively pursued for their unlawful obligations," he said after a hearing in federal court in Newark. "We are the largest purchaser of bad checks in the United States. All I can say is this is a legitimate business." Authorities aren't disputing the size of the business. They said Sussman's companies -- which also included Check Investors Inc., Check Enforcers Inc. and Jaredco -- collected as much as $10 million during the past two years from 42,000 consumers and millions of dollars more since 1995. State Labor Department records submitted in the case suggest Sussman drew a salary close to $150,000 as the sole officer or a president of the companies. In the process, regulators contend Sussman's collectors committed some of the most egregious violations of the Fair Debt Collection Practices Act that they have encountered. They also said a federal grand jury is weighing criminal charges against the defendants. FTC staff attorneys Gregory Ashe and Seena Gressin gave Chief U.S. District Judge John Bissell a foot-high stack of affidavits outlining complaints from individuals and government agencies. They said Sussman and his partners -- his wife, Elisabeth, and lawyer Charles Hutchins -- are not licensed to collect debts in any state, have ignored cease-and-desist orders in at least six states, and are running a "boiler room" operation in Las Vegas in addition to their New Jersey call centers. Sussman bought hundreds of thousands of bad checks for pennies on the dollar from legitimate companies that had written off the collections, officials said. The debts were often minor and sometimes accounting mistakes. Some of the victims didn't even know about the bad checks because their checkbooks had been stolen. Sussman's collectors allegedly tacked illegal fees -- usually $125 or $130 -- onto the check balances. They also purported to be law enforcement personnel and threatened the debtors or their relatives with jail. "Regardless of whether the consumers owed the debts or not, the defendants' allegedly aggressive and shameless tactics fly in the face of basic decency and New Jersey law," acting state Attorney General Peter Harvey said. One woman told investigators the collector threatened that her kids would "be bringing their mommy care packages in prison." Another said she got a call in the morning in which she was told her husband would be arrested if he didn't pay by noon that day. Dennis Snyder, a lawyer in Grand Blanc, Mich., said a collector demanded that he pay $612 for a $172 bad check written by his son, a Navy serviceman. The collector claimed he was a former military lawyer, and allegedly told Snyder, "Your son may be coming home (from the Navy) sooner than you think." Sussman said nothing during the hearing, but his attorney, Steve LaCheen, argued that many of the allegations "are simply way off the mark." LaCheen called the consumers "deadbeats" and contended that because Sussman bought the accounts outright, he was not a debt collector and thus not subject to federal regulations. "I think my client had every right to do what he had to do," he said. Bissell scheduled a June 9 hearing on whether to impose a permanent injunction. In 1981, Sussman was arrested for impersonating an FBI agent while trying to collect a debt. He was sentenced to probation, but fled the country. He was captured in Florida in 1986 and ordered to serve two years in prison. Not long after, federal prosecutors filed new charges against him and he was sentenced to an additional five years. He served about half. In the late 1990s, Sussman completed a law degree and applied to be licensed in New Jersey, but the state's board of bar examiners rejected him, citing his past. John P. Martin covers federal courts and law enforcement. He can be reached at [email protected] or (973) 622-3405.