Weitlauf v. Hopkins

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JENNIFER WEITLAUF, Plaintiff, v. GREGORY L. HOPKINS, et al., Defendants.

No. 21-CV-1052-LJV

United States District Court, W.D. New York

March 17, 2023

DECISION & ORDER

LAWRENCE J. VILARDO, UNITED STATES DISTRICT JUDGE.

On September 27, 2021, the plaintiff, Jennifer Weitlauf commenced this putative class action under the Fair Debt Collection Practices Act (“FDCPA”), the Racketeer Influenced and Corrupt Organizations Act (“RICO”), and New York State law. Docket Item 1. She alleges that the defendants, a group of individuals and business entities, are part of an enterprise that illegally collects debt. Docket Item 18. After some defendants moved to dismiss the action, Docket Item 9, Weitlauf amended her complaint, Docket Item 18. On March 30, 2022, those same defendants moved to dismiss the amended complaint, Docket Item 23; on April 13, 2022, Weitlauf responded to the motion to dismiss, Docket Item 24; and on April 20, 2022, the moving defendants replied, Docket Item 25.

For the following reasons, the defendants' second motion to dismiss is granted in part and denied in part, and what remains of the claims against the moving defendants will be dismissed if Weitlauf does not amend her complaint within 30 days.

BACKGROUND^[1]

Weitlauf alleges that the defendants in this case are part of an “illegal collections enterprise,” Docket Item 18 at ¶ 11 (1),^[2] operating within the “vast and seedy underbelly of the American debt collection industry,” id. at ¶ 2 (1), which largely is concentrated in the Buffalo-Rochester metropolitan area, id. at ¶ 7 (1). Unlike law-abiding debt collectors who “make significant efforts to comply” with the FDCPA, id. at ¶ 1, illicit debt collectors operate pseudonymously and thus can “engage in the worst sort of debt collection abuses safe in the knowledge that their anonymity renders them nearly invulnerable,” id. at ¶ 2 (1). They “commonly employ collection tactics” that are intended to “harass and shame [debtors] into payment,” including contacting debtors' friends and family, falsely threatening to serve debtors with “papers” at their workplaces, and falsely threatening to repossess debtors' property or garnish their wages. Id. at ¶ 3 (1).

Pseudonymous debt collectors target “debts for which the likelihood of repayment is extremely low,” such as “payday loans that have already been worked by other collectors[ and] out-of-statute debts.” Id. at ¶ 4 (1). Because they “do not report debts to credit reporting agencies or file collection lawsuits,” these collectors are not concerned with proving that the debts they pursue are still owed, let alone that they have a legal right to collect those debts. Id. at ¶ 5 (1). In fact, they often do not have a legal right to the money they pursue because they often source their “targets” from spreadsheets known as “bad paper.” Id. at ¶ 6 (1). Those spreadsheets contain “the personal information of purported debtors” and are “sold off after the debts they record have been paid” or are “stolen by [] employee[s] of one debt collector and fenced to another.” Id.

I. THE DEFENDANTS

The players in the pseudonymous debt collection industry are “deeply interconnected”; they move “among an ever-changing stable of business entities that are created and discarded . . . in order to evade liability.” Id. at ¶ 8 (1). The individual defendants in this case are three such players: Gregory L. Hopkins, Roy J Richards, and Bradley C. Williams (collectively, the “individual defendants”). Id. at ¶ 9 (1). “All three are repeat ‘customers' of FDCPA attorneys.” Id.

Hopkins “has been active on the Buffalo-Rochester . . . debt collection scene since at least 2015, when he and his first known company”-defendant GPG Processing, LLC (“GPG”), then called Revenue Management Group, LLC-were “sued for violating the FDCPA” by threatening to pursue criminal charges against a debtor and to serve him at his workplace. Id. at ¶¶ 29-30. Since then, GPG “has been sued at least eleven additional times for substantially similar alleged violations.” Id. at ¶ 31. In 2016, Hopkins's half-brother-Travell Thomas, who is not a party to this action- “ple[aded] guilty to [c]onspiracy to [c]ommit [w]ire [f]raud and [w]ire [f]raud . . . for operating an illegal debt collection scheme.” Id. at ¶ 5.

Richards “has been active on the Buffalo-Rochester . . . debt collection scene since at least 2018, when he began operating [d]efendant Source Solutions Management, LLC (‘SSM')[,] as its managing member.” Id. at ¶ 33. “SSM has been sued for violations of the FDCPA at least eleven times, including at least two instances in which it and GPG were sued jointly.” Id. at ¶ 35. “The allegations in th[o]se cases included the use of false and misleading names . . ., attempts to collect debts not owed and out-of-statute debts, threats of legal action that SSM could not and did not intend to take, and even threats of arrest.” Id.

Williams “was active on the Buffalo-Rochester . . . debt collection scene from at least 2018, when he registered [d]efendant 4CIS, Inc. [(‘4CIS')], until at least mid-2019,” when he relocated to the area near Charlotte, North Carolina, and Rock Hill, South Carolina, another “hotbed of pseudonymous debt collection.” Id. at ¶¶ 37, 39. “4CIS has been sued once for violations of the FDCPA.” Id. at ¶ 38. The complaint in that case alleged that 4CIS used a false and misleading name; claimed to be a mediation company; and falsely threatened to sue the debtor, seize the debtor's assets, and serve the debtor at his workplace. Id.

“Williams has continued to cooperate with Hopkins and Richards” since relocating. Id. at ¶ 39. “For example, more than a year [after he relocated,] Williams remained listed as the point of contact with a payment processor for a company whose website was registered by Richards.” Id. In 2021, Williams “ple[aded] guilty to one count of [f]inancial [i]nstitution [f]raud” for creating and depositing 173 fraudulent checks and “attempt[ing] to distribute” funds from those checks “to himself, Hopkins, and [defendant] RJR Org. LLC” (“RJRO”). Id. at ¶ 7.

“The business filings, Paycheck Protection Program applications, criminal prosecutions, and civil forfeiture actions involving [Hopkins, Richards, Williams,] and their relatives reveal that [the individual defendants] have registered at least eight separate business entities to use as vehicles for their pseudonymous collection activities.” Id. at ¶ 10 (1). These entities-several of which are defendants in this case-include two holding companies (the “holding company defendants”), at least seven collection entities (the “collection entity defendants”), and one “football training camp.” Id. at ¶¶ 8-18.

The two holding company defendants are G.L. Hopkins Enterprises, LLC (“GLHE”), and RJRO. Id. at ¶¶ 8-9. Weitlauf alleges that Hopkins is the “sole member and sole employee” of GLHE; that Richards is the “sole member and sole employee” of RJRO; that Hopkins and Richards “freely and continuously comingle[]” their personal funds with their respective companies' funds; and that both Hopkins and Richards “disregard[] corporate formalities.” Id.

The seven named collection entity defendants are GPG; SSM; Standard Management Associates, LLC (“SMA”); Quality Resolution Services LLC (“QRS”); 4CIS; Asset Retention Group, LLC (“ARG”); and Premier Asset Management Group, Inc. (“PAMG”). Id. at ¶¶ 10-16. Each collection entity defendant “holds itself out as a third-party debt collector.”^[3] Id. “GPG lists [] Hopkins as its owner and GLHE as its manager in public filings.” Id. at ¶ 10. “SSM lists Hopkins, Richards, GLHE, and RJRO as its officers in public filings.” Id. at ¶ 11. SMA and 4CIS were registered by Williams. Id. at ¶¶ 12, 14.

The amended complaint names one other business entity as a defendant: Changing the Community, Inc. (“CTC”). Id. at ¶ 18. CTC, which is owned and managed by Hopkins, “holds itself out . . . as a football training camp for the benefit of the community.” Id. But Weitlauf alleges that Hopkins “uses funds acquired via his illegal debt collection activities to fund the activities of CTC and then draws a ‘clean' salary through CTC.” Id.

Finally, the amended complaint names “John Doe Corporation #s 1-10 (“Doe Corps”) as a placeholder for “other, presently unknown business entities” owned, managed, or operated by the individual defendants. Id. at ¶ 17.

II. CONNECTIONS BETWEEN AND AMONG THE DEFENDANTS

The amended complaint identifies numerous connections between and among the defendants. Id. at ¶ 10 (1). According to Weitlauf, those links lead “to the inescapable conclusion that the [] [d]efendants' business interests are deeply interconnected.” Id.

First, Weitlauf alleges that Hopkins, Richards, GLHE, and RJRO are officers of SSM. Id. at ¶ 11.

Second, Weitlauf identifies several addresses allegedly shared by various defendants:

• 135 Holyoke Street, Apt. 2B, Rochester, NY 14615 (“135 Holyoke”), is Hopkins's home address id. at ¶ 5; GLHE's listed address for service, id. at ¶ 8; and the address that PAMG listed on its Paycheck Protection Program application, id. at ¶ 16.

• 3465 Genesee Street, Cheektowaga, NY 14225 (“3465 Genesee”), is GLHE's listed address in public filings. Id. at ¶ 8. Weitlauf alleges, “[o]n information and belief, [that] all of [the d]efendants' employees work from an office at” that address. Id. at ¶ 41.

• 40 Humboldt Street, Rochester, NY 14609 (“40 Humboldt”), is the listed address for service for RJRO, id. at ¶ 9; GPG, id. at ¶ 10; SSM, id. at ¶ 11; QRS, id. at ¶ 13; 4CIS, id. at ¶ 14; ARG, id. at ¶ 15; and PAMG, id. at ¶ 16.

• P.O. Box 246, Buffalo, NY 14225 (“P.O. Box 246”), is a publicly listed contract address for both GPG and SSM. Id. at ¶¶ 10-11.

• 620 Park Avenue,

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