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Debt Collection Law Firm Abruptly Closes; Thousands of Cases Dismissed

By Debra Cassens Weiss

January 15, 2010, 1:10 pm CST

A debt collection law firm with 24 offices around the country has abruptly closed, resulting in dismissal of tens of thousands of cases in Maryland alone.

The Rockville, Md.-based law firm, Mann Bracken, and its clients had been accused in civil suits of using high-pressure tactics and violating debt-collection laws, the Baltimore Sun reports.

Mann Bracken collapsed after a spinoff company that provides its support services, Axiant, filed for bankruptcy in November. The bankruptcy filing showed Axiant owed Mann Bracken $10.5 million, the Maryland Daily Record reports.

The state of Maryland began investigating the law firm Jan. 4 after consumers reported that its phones were disconnected and the firm began telling court clerks that it was ceasing operations, according to a cease-and-desist order by a state licensing board cited in the Daily Record article. The firm was ordered to cease operations Monday.

“By the time the order was given, the company had practically disappeared,” according to the Baltimore Sun. “Its phone numbers had been disconnected, payment checks sent to the firm were not being cashed and its website had been taken down.”

In an interview with the Daily Record, Annapolis consumer-rights lawyer Peter Holland called the shuttering of the law firm “a great day for Maryland consumers.”

“The business model for Mann Bracken has been to file an ungodly number of lawsuits and then hope for default judgments,” he said. One of Mann Bracken’s clients, the Encore/Midland family of debt-buying companies, agreed to pay a $1 million civil penalty last month.

According to Holland, “What has happened here, with Midland Funding and with Mann Bracken, is we’re seeing come home to roost the problem of junk-debt buying, which is a multibillion-dollar-per-year industry, and … the buyers of debt, credit card debt, very often cannot prove ownership of the debt.”

Bar Counsel Melvin Hirshman told the Daily Record that Mann Bracken is on his radar screen, but did not elaborate.