A judge has rejected arguments from an Amherst company challenging a federal agency’s lawsuit accusing it of illegal debt-collection practices.

The Consumer Financial Protection Bureau last year sued United Holding Group and its owners, saying they placed and sold consumer debt with collection companies that made false threats to consumers behind on payday loans, sub-prime credit cards, online installment loans and auto loans.

The Amherst company and two entities it had absorbed placed more than 6.5 million accounts with a face value of more than $8 billion from September 2017 through April 2020. The companies bought the consumer debt for pennies on the dollar and then sold or placed the debt with other companies, according to the lawsuit.

The consumer bureau said that since 2015, the companies received complaints from more than 500 consumers that debt collectors threatened or implied they would be arrested, jailed or face criminal charges if they did not pay their debts.

One consumer, for example, complained that a collector “threatened me with arrest if I didn’t pay $500. I didn’t have the money, as I’m on Social Security. I went and got a car title loan of $400 to send the money to avoid jail.”

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The operation was comprised of five companies, all owned by chiropractor Dr. Scott A. Croce and his wife, Susan, and by sales professional Christopher L. Di Re, who co-owns a Williamsville water filtration business. The entities were managed by Brian J. Koziel and Marc D. Gracie.

Another complained that her daughter, a high school student, received a calls at her school saying, “Your mommy’s going to be in jail. You can visit your mother in jail.”

The Amherst company asked a federal judge to dismiss the lawsuit, saying the bureau lacked standing to file it and also that the statute of limitations had expired on some of the claims. The company also contended it had no notice that it could be held liable for any unlawful conduct by the debt collectors it placed the debt with.

But U.S. District Judge Lawrence Vilardo ruled against their request on Aug. 22.

“The court’s ruling merely determined that the Consumer Financial Protection Bureau’s lawsuit against the defendants can proceed forward,” said attorney Brendan H. Little, who represents the Amherst company and its owners. “The defendants believe that the allegations in the lawsuit are without merit and intend to vigorously defend the claims that have been asserted.”

On Friday, the defendants asked Vilardo for a stay to the litigation until the U.S. Supreme Court rules on another case involving the CFPB.


“The threshold issue of whether the Consumer Financial Protection Bureau is constitutional in its present form will be argued at the U.S. Supreme Court in October 2023,” Little said.

The National Association of Consumer Advocates praised Vilardo’s decision allowing the local case to proceed.

“What I really like about the case is the complaint the CFPB filed,” said Ira Rheingold, the association’s executive director. “What they did was say, ‘Look, we’ve got this company that’s buying all this debt. They then control these (other) companies, and they know that these companies are hiring debt collectors engaged in bad practices. And not only are they not doing anything about it, but they’re helping them achieve that.’ “

Rheingold called Vilardo’s analysis “absolutely correct.”

“I don’t think it’s novel,” Rheingold said. “I think the judge just took existing case law and applied it appropriately. I think the CFPB is being more aggressive when it comes to holding parties liable for the behavior of the folks that they contract with.”

The lawsuit seeks damages, restitution, refunds, civil penalties and seizure of “ill-gotten gains.”

United Holding Group was founded by Craig Manseth and Darren Turco, both of Parker, Colo., and Jacob Adamo of Pendleton in May 2017, according to the lawsuit. Before co-founding the company, Manseth owned United Debt Holding, Turco worked there as a manager, and Adamo owned JTM Capital Management. All three companies bought debt from creditors or debt sellers and then placed or sold the debt to other collection companies. After it was founded, United Holding Group managed ongoing business for the other two entities.

Little pushed back on the bureau’s lawsuit during a court hearing earlier this year.

“What’s missing is there’s no claim that a consumer paid a debt that he or she didn’t owe, or that the consumer paid more than he or she should have, or there was a junk fee or interest or some kind of fee where the consumer was harmed,” Little said.

During the hearing, Vilardo cited the consumer threatened with arrest and the other whose high school daughter was called by a debt collector.

“Why aren’t those two pretty good examples of concrete harm?” Vilardo asked.

One was “scared stiff” of going to jail, Vilardo said. “Didn’t one of them say their child took the call? Holy cow, that seems to me to be a pretty serious injury.”

The government called those specific examples of wrongful conduct.

“But there still has to be harm coming back the other way,” Little replied to the judge. “What is that harm? Are they claiming emotional damages? Are they claiming they lost their job? It doesn’t necessarily have to be economic, it can be emotional. But there has to be some cognizable concrete harm. And while they’ve alleged the wrongful conduct, they haven’t alleged that any of these consumers were harmed either financially, economically or otherwise.”

What’s more, given the size of the defendants’ business, a few hundred complaints does not support the conclusion they knew of any pattern or practice of illegal activity, according to a court filing by the company’s legal team.

The three entities named in the suit collectively placed more than 6.5 million accounts from September 2017 through April 2020, according to a defense filing.

During the 32 months, if call centers made seven calls per account on average, the court can reasonably infer about 45.5 million calls, according to the filing. The CFPB claims that the defendants received hundreds of complaints. To read more, go to BuffaloNews.com.

That means, roughly, the chance of a call center employee causing a complaint is “less than 0.0022%,” according to the defense team. To read more go to BuffaloNews.com.