Lawsuit Over Process Server Fraud Seeks to Vacate 100,000 Credit Card Lawsuits

If you have any experience with the debt collection industry or credit card lawsuits, you’ve heard the term “gutter service.” It is a term used to describe a scenario in which a process server, who is supposed to serve a defendant with a summons and complaint in accordance with the Civil Practice Law and Rules, discards the papers (in essence, serving them on the gutter) and falsely swears in an affidavit of service that the papers were properly served.  This term is particularly attached to the debt collection industry due to the volume of papers debt collection law firms are required to serve on a daily basis.  Debt collection law firms typically cut deals with process servers, paying only $4 to $8 per paper served, in exchange for giving the process server continuous business, up to hundreds of papers a day to serve.

Common sense dictates that it won’t take a process server, especially one who is lazy or unscrupulous, long to figure out that driving 30 miles to serve a paper that will earn him or her only $4 doesn’t pay.  However, if the process server throws your papers in the gutter, and just says they were served, he or she can save a lot of time, energy and expenses.

In April 2009, William Singler, the owner of American Legal Process in Lynbrook, New York, was arrested on charges of fraud and other felonies relating to improper service of process, primarily when dealing with credit card lawsuits.  The indictment alleged process servers used by American Legal Process routinely and knowingly prepared false affidavits of service, swearing that they properly served papers, when, in fact, they didn’t.  Several of their process servers blatantly lied on their affidavits, often alleging they were in 2 or 3 different locations serving papers at the same exact time.  Their actions left thousands of New York consumers unaware that credit card lawsuits were filed, or that a default judgment had been entered against them, until their bank accounts were levied or their wages garnished.

In addition to Mr. Singler’s arrest, a lawsuit was filed in upstate New York by Chief Administrative Judge Ann Pfau asking an Erie County Supreme Court judge to vacate all default judgments obtained by debt-collection law firms filing credit card lawsuits where the defendant was served by a process server from American Legal Process in a matter entitled Pfau v Forster & Garbus, Sup Ct, Erie County, Drury, J., index No. 8236/09.  The suit was initiated under CPLR 5015 (c), which gives an administrative judge the power to initiate a proceeding to vacate default judgments under fraudulent circumstances.  The lawsuit also seeks to compel 36 law firms and two debt-collection agencies to disclose all instances in which they used process servers from American Legal Process to serve their papers.

As of October 2010, the complaint has been dismissed as against Cohen & Slamowitz, Eric M. Berman, P.C., Forster & Garbus, Hayt, Hayt & Landau, Jaffe & Asher, Kirschenbaum & Phillips, Mullen & Iannarone, Sharinn & Lipshie and the Thomas Law Offices, which means the default judgments those firms received in credit card lawsuits due to improper service still stand, until and unless the defendants in those credit card lawsuits challenge the judgments in court.  The case is still active as to the remaining defendants, and the matter is still being litigated.

Default judgments in these circumstances are relatively simple to vacate by an experienced consumer defense attorney.  Action should be taken as soon as the credit card lawsuit or judgment is discovered.  If you discover credit card lawsuits or a judgment filed against you, and you were never served with a summons and complaint, we welcome you to contact us immediately at (631) 747-0356 and speak with one of our attorneys for free.