Tuesday, February 16, 2016

Judgments Against Terrorist States

Under America’s Anti-Terrorism statutes, 18 USC §2331, et seq., US citizens or their survivors/heirs may bring an action in the U.S. to recover damages for an act of terror against countries designated by the State Department as having funded terrorism.

A chart from a Congressional report issued in August 2008 details 62 such judgments, 50 against the Islamic Republic of Iran which has remained on the state department’s list since 1984. The total compensatory and punitive damages for these terrorism judgments exceed a staggering 11 billion dollars. That countries with little regard for human life would be unlikely to pay court-ordered debts has not stopped victims’ attorneys from attempting to recover assets.

Historically, Congress has assisted victims by regularly amending the legislature. In 1996 the Foreign Sovereign Immunities Acts was modified to enable American victims to file suit in Federal Court for financial damages. To further assist victim litigation, Congress passed the Flatow amendment which created a cause of action for victims of terror.

A decision in 2004, however, by the DC Circuit Court of Appeals held that neither of these amendments created a private right to sue a foreign government and that plaintiffs would need to file suit against specific individuals who caused the injury. Absent a deep pocket, terrorism judgments would become infinitely more difficult to collect.

Yet another unexpected impediment to collection has not been the debtor countries but rather the Plaintiffs’ own government.

“Now I find myself in the surreal position of being opposed by the Department of State in my attempts to enforce our judgment against Iranian assets located in the United State,” laments Stephen Flatow, whose daughter died in a terrorist attack in 1995 and obtained a $247.5 million judgment against Iran. “If the administration will not help us, then at least let it get out of our way and stop sending lawyers to court at taxpayer expense to defend the interests of state sponsors of terrorism.”

President Clinton came under fire for exercising his authority to block victims with judgments from attaching diplomatic properties and blocked assets. Chair of the Senate Judiciary Committee Senator Orrin Hatch noted, “…the Administration continues to fight the victims’ efforts in court – in effect taking a seat next to the terrorist states at the defense table in defending these actions. “

So what is going on here? Why the common thread amongst victims who, having prevailed at trial, are having to fight their own government to execute on their judgments? It has to do with leverage, apparently. Freezing and seizing assets of terrorist states is one of the most powerful tools available to an administration. There is concern that the wholesale seizure of blocked assets will deplete the available pool of frozen assets, thereby weakening the leverage a President may have and may need in an emergency. Moreover, there are a finite number of frozen assets. In the case of Cuba, for instance, $96 million was paid to the prevailing Plaintiff in Alejandre v. Republic of Cuba. This represents almost half of Cuba’s frozen assets in the United States. Yet there are still hundreds of Americans who have waited decades to be compensated by Cuba for loss of property and lives and have yet to receive anything.

Of the 62 judgments totaling $11 billion, only $511 million was collected –  none with a debtor country’s cooperation. The bulk of the monies were paid from assets frozen by the United States long before entry of judgment.


Section 2002 of the Victims of Trafficking and Violence Protection Act of 2000 [“VTPVPA”] provides for payment by the Secretary of the Treasury of certain anti-terrorism judgments by managing and vesting foreign assets located in the United States. There are, of course, conditions for payment. Due to the limit of blocked funds available, only compensatory damages are paid, and victims are required to subrogate the balance of their rights to collect punitive damages to the United States.

Section 2002 further bars release of any funds to Iran from frozen assets until these judgments have been satisfied. Where do victims holding unsatisfied judgments stand in light of President Obama’s nuclear agreement with Iran which calls for the release of $100 billion in frozen Iranian assets?

Attorneys representing victims holding judgments against Iran filed suit against the state department on August 5, 2015 over that very issue.  The case, however, was withdrawn after the state department pointed out that the $100 million in blocked assets were not blocked by the United States, were not within the jurisdiction of the United States and therefore could not meet the definition of a ‘blocked asset’ as defined in §201 of the Terrorism Risk Insurance Act of 2002.

While the Obama-led Joint Comprehensive Plan of Action [JCPA] is farcical on a myriad of levels, the billions of unpaid terror judgments held by Americans should have been part and parcel of any agreement (notwithstanding that any agreement with Iran is folly at the outset).

On January 16, 2016 John Kerry announced that Iran had implemented measures described in the JCPA. Banking and financial sanctions on Iran were lifted, releasing over $100 billion of overseas monies. Not only was none of that used to compensate victims holding judgments against Iran, the release now allows Iran to more effectively finance its Islamic Revolutionary Guard Crops-Quds Force to train and support terrorist operatives. President Obama’s clever incompetence and rush to secure a legacy at any price is likely to result in more human suffering… and a wave of new terrorism judgments.

 Copyright 2016 Ramona Featherby


Saturday, January 15, 2011

The Uncollectible Judgment - Thinking outside the box

While today’s fractured economy has produced more judgments than ever before, a higher number of those judgments are uncollectible. Just when is a judgment uncollectible? That line is blurred with the right set of circumstances and some thinking ‘outside the box’.

As a case in point, several years ago I received a judgment from a physician who had been duped out of her savings by a boyfriend. A wage garnishment was served upon the boyfriend’s shell corporation. The corporation indicated the debtor was not employed. I had solid information about the debtor’s employment, so I sued the corporation. Having successfully prevailed on the creditor’s suit, judgment was now entered against the corporation.

I subsequently discovered that the corporation was entangled in federal litigation over patent rights in which it was the plaintiff. The defendant was a high-profile software company. I immediately filed a lien in the case; however a review of the case file was disappointing. I did not think the debtor would prevail. In fact, it appeared the case was frivolous. As a lien holder, I would receive monies only if the debtor was triumphant. This was not going to happen.

It soon became apparent to me that the debtor firm conducted no actual business other than frivolous litigation on its one (nearly defunct) patent.The debtor nonetheless was able to retain a major law firm on a contingency. This firm was aggressively pursuing the deep-pocket defendant, causing that firm to incur substantial legal fees. I put in a call to the attorney for the software company and inquired if the client might be interested in putting an end to the litigation. An idea was floated to him. I would go back to court and obtain an order transferring all of the debtor’s patent rights to me in order to satisfy the judgment. Once the order was obtained, the judgment was for sale – for the full amount of the judgment. As the new owner of the patent, the software company would be able to shut down the federal litigation. There was silence on the other end until it finally hit him what I was suggesting. “Oh…. I see what you’re doing….” He indicated the idea ‘had merit’ but he would need to speak with his client.

The client gave the go-ahead. I filed and successfully prevailed on the necessary motions to seize the debtor’s patent which was the core of the federal lawsuit. As it turned out, however, somebody beat the software firm to the punch. The victory in court smoked out the law firm for the debtor. To protect its interest in the case, the firm satisfied their client’s judgment.

So what was the outcome of the patent litigation? As I correctly surmised, the debtor could not prove its case in court. Moreover, it was ordered to pay the defendant’s legal fees. Unfortunately, the debtor’s law firm was out hundreds of hours on their contingency agreement….. as well as the $35,000 they paid to me.

Ramona Featherby is a judgment recovery specialist in San Diego, California and past President of the California Association of Judgment Professionals.

Copyright 2011, Ramona Featherby


Thursday, January 6, 2011

Outsourcing Your Money Judgment - Part III

While using a judgment collection specialist can be a wise choice, caution is advised. In many states, California included, there is no professional vetting system. Anybody can hang their shingle out and become a 'recovery specialist'. The industry, unfortunately, is plagued by individuals who, attracted by online 'business opportunities', view this industry as a get-rich-quick-scheme. So how can you vet a judgment collector? There are a number of questions you can ask. The least important question -- and usually the first one asked -- is "How much do you charge?" Judgment collectors do not 'charge' for their services. In fact, they are providing no legal services. A recovery specialist purchases all of your rights, title and interest in the judgment and then enforces that judgment - on his/her own behalf - not yours. The financial arrangement will depend on the judgment and the debtor's circumstances. It is usually necessary to provide a copy of the judgment for a quote.
During this time of economic downturn, there is a surplus of uncollected judgments and a shortage of (qualified) judgment recovery specialists. Don't be surprised if you find a judgment collector you 'connect' with, only to find that they have declined to accept your judgment for collection. When you speak with a judgment collector, be organized, to the point. You must not only have a copy of your judgment, you should have all relevant information from your court file, such as the complaint, proof of service, and documents evidencing steps taken to collect, such as writs of execution and motions filed.
Here are the top questions to ask a judgment recovery specialist:
1. What skiptracing databases do you subscribe to?
The collector should subscribe to at least one of the following companies: Accurint, IRB or TLO. Accurint and IRB are essentially the same product, marketed to different end users. TLO has everything its two competitors have... and then some. In my opinion, it is the best skip tracing tool on the market. [All three of these companies were the brainchild of the late Hank Asher, a legend in his own right, who created powerful databases which flagged terrorists.] While there are dozens and dozens of data suppliers, the "Asher" databases are the best. They not only lead to locating debtors and their assets, they show connections to people, companies and relationships. Accurint, IRB and TLO  tightly restrict their data to approved businesses and even conduct rigorous onsite inspections. If a collector does not subscribe to one of these companies, they either cannot qualify, do not know about the databases, or cannot afford them. In any case, these are bad signs.
2. Do you have legal access to DMV information? (In California ask, "Do you have a "Commercial Requester Account Approval" from the DMV?") The ability to have legal access to State motor vehicle records is important for service of process as well as for asset location.
3. How long have you been in business? Look for someone in business at least five years.
4. Have you, as the assignee of record, ever prevailed in a bankruptcy proceeding by obtaining an order for non-dischargability of your debt? Many judgment collectors are 'all bark and no bite' and will close a file upon the receipt of a Notice of Automatic Stay. If someone has litigated and prevailed in federal court to save a debt from a bankruptcy discharge, this is a major plus. It indicates a tenacious individual with resources.
5. Which legal databases do you subscribe to? It is essential to have 24/7 access to either Westlaw or Lexis. Without access to case law, treatises and other vital information, you are handicapped from the start. A 'warrior' must have the right 'weapons'.
6. Are you a member of a professional organization? Have you ever served as an officer of this organization? While this is not an essential, it is helpful to be 'plugged in' and network with other judgment collectors. Service as an officer indicates another level of professionalism and credibility.
7. Do you have a source to pull credit reports? If they are not authorized to pull credit, cross them off your list.
8. Are you full time? Many 'recovery specialists' hold full-time jobs and 'moonlight' on the side collecting judgments. Look for full-time professionals.
You can relax the above guidelines a bit if your judgment is a small claims case; many collectors starting out are so eager for business, they will do a competent job, even if they are 'cutting their teeth' on your case. Also, you may have trouble finding an experienced, successful recovery specialist, as they can have their pick of the lot and usually turn down smaller judgments.
The majority of court judgments go uncollected. Do not join the mass of creditors who are forced to 'write off' bad debt. Using the above guidelines, you are one step closer to determining if you should use a judgment recovery specialist. If this is your decision, use the eight questions above to narrow your list of candidates.
At times there can be a distinct advantage to letting a judgment 'age'. All too often, however, creditors wait too long to pursue collection. If a fraudulent transfer has occurred, each state has a statute of limitations. The window of opportunity to recover a transfer may have passed. If your debtor has moved outside the state, if you have waited too long, the other state may bar your efforts to 'domesticate' the judgment. [Nevada and Arizona are notoriously unfriendly to creditors and will bar domestication after a short period of time.] Bear in mind too that all civil money judgments expire if not timely renewed. Be sure to investigate your state's statutes for the expiration date.
Ramona Featherby is a judgment recovery specialist in San Diego, California and past president of the California Association of Judgment Professionals.
©2011 Ramona Featherby

Thursday, December 2, 2010

Outsourcing Your Money Judgment - Part II

When is it best to assign your judgment to a judgment recovery specialist? The more difficult a collection is expected to be, the better the case for a recovery specialist. Here are a few things, one or more of which could signify the need for assigning your judgment:

• You don't know where the debtor is. 

• You don't know if there are assets. 

• The debtor is hiding assets. 

• You think there are assets, but they have been transferred to another person or company. 

• You have spent a significant sum on legal fees fighting the debtor and getting the judgment in court. (Good indication post-judgment will be no different.) 

• You have already had an attorney or collection agency try to collect, without success. 

• The debtor has filed bankruptcy but you suspect it is fraudulent. 

• You are tired, emotionally spent and want it to be 'somebody else's' problem. 

• You have a 'default' judgment. (This type of judgment is frequently open to attack once enforcement is launched.) 

• The judgment is a complicated, convoluted 'mess' - shell companies, alter ego, successor corporations, aliases, fraudulent transfers, etc. (Exactly the sort of case that is too expensive for an attorney and too complicated for a 'general' collection agency.) 

• Your debtor has died.

Are there drawbacks to assigning your judgment to a judgment recovery specialist? There could be. If you have definite ideas about how a judgment should be collected and approached and wish to retain total control, it is probably best to handle it yourself or be represented by an attorney. Be mindful that when you assign your judgment to a judgment collector, all 'rights, title and interest' pass to the collector - otherwise known as the 'assignee'. Thus the recovery specialist becomes the 'judgment creditor'. If they 'flake out' you could be in trouble. While the vast majority of judgment collectors are honest, a few have gone out of business and still fewer have failed to pay monies due. Choose wisely. Look for someone who is established and reputable. In many cases, the decision to assign a judgment can be the only viable alternative when all the circumstances are considered. Every day, judgment collectors are filing satisfactions on difficult cases which are years - and sometimes decades old.

When should you assign your judgment to a general collection agency? In my opinion, almost never. Large general collection agencies deal in volume. If your judgment is 'easy', they will have no problem collecting. However, if the judgment is 'easy', why not collect it yourself and keep 100% of the amount? I have had too many cases land on my desk which have languished at collection agencies for years, with no results. Phone calls, threats, dunning letters are ineffective with judgment debtors and serve no purpose. Most collectors deal in volume and cannot spend the resources necessary to collect a judgment, especially a convoluted case. (And most judgments entail a wrinkle or two.)


©2010 Ramona Featherby

Wednesday, October 27, 2010

Outsourcing Your Money Judgment - Part I

As a professional judgment collector, I am contacted on a daily basis by judgment creditors holding uncollected money judgments. Some have emerged from court newly victorious. Others have been sitting on judgments for years, and in some cases decades.

When should you collect a judgment yourself, be represented by counsel, or assign your judgment to a third party? There is no hard-and-fast answer. If there are significant unencumbered assets in the name of the judgment debtor, and you are resourceful and collection is straightforward, (i.e. bank levy, garnishment) there is no reason why you can't collect the judgment on your own. Today there is a plethora of information online to help creditors. Most courts are online and allow you to download forms required for execution of a judgment. State statutes covering the enforcement of judgments are online too. Pay a visit to your local law library. Research librarians can steer you toward the appropriate treatises for your state. Be aware, though, unless your judgment is small claims, rarely will one 'execution' result in full satisfaction. And for every enforcement action, there is an action the debtor can take to thwart your efforts. For instance, in California, if you levy on a bank account, the debtor can file a claim of exemption. If you don't fight the claim by obtaining a court hearing date and filing an 'opposition', the funds you levied upon could revert back to the debtor. Thus you must be prepared to jump through a few hoops if you are to succeed collecting the judgment yourself.

Another alternative, if you wish to outsource, is to hire an attorney. If the judgment is large and you know where the assets are, you may be best to hire this attorney on an hourly, rather than contingency, basis. While there is no shortage of collection attorneys, finding a good one is another matter entirely. You will have better luck with Google than the yellow pages. You could also try calling other attorneys and ask to whom they refer their judgments. If the same name keeps popping up, chances are there must be a reason. If you hire an attorney on an hourly basis, be very clear about the tasks requested and the anticipated costs. At 200.00-350.00 an hour, you may very quickly run up a sizable bill.

This is where using a judgment recovery specialist can be advantageous. It is cost effective. You bear no out-of-pocket costs. Even a collection agency or a contingency attorney charge for costs. This can amount to a significant amount, if you factor in fees for court filings, sheriff, service of process and private investigators. Too, if there is litigation to recover a fraudulent transfer or to obtain an order of non-dischargability in bankruptcy court, these significant costs are rarely included.

Another advantage is that judgment recovery specialists usually devote more personal attention to a case. They do not typically work hundreds of cases like collection agencies and don't report to a 'manager' to make sure they aren't spending ''too much time" on one case. Also, it has been my experience that a recovery specialist is in a better position to 'act quickly' if the case requires it, due to the absence of multiple levels of management and red tape. In judgment collection, 'timing' is everything. Thus this can be a critical factor in reaching a successful result.

©2010 Ramona Featherby

Monday, October 22, 2007

The Judgment Collectors' Ten Commandments

1. Thou shall be ethical in your judgment enforcement activities.
2. Thou shall be selective in your judgment cases.
3. Thou shall not chase the ‘honest but unfortunate judgment debtor.’
4. Thou shall know the difference between the ‘honest but unfortunate judgment debtor’ and one who pretends to be.
5. Thou shall realize that knowledge allows thou to work intelligently and to be effective.
6. Thou shall become an expert in locating judgment debtors’ assets … without breaking the law.
7. Thou shall have an iron stomach and a will to match. Thou will never succeed as a judgment recovery specialist unless thou does.
8. Thou shall not be intimidated by bankruptcy because thou selects judgments which will survive bankruptcy.
9. Thou shall realize that all judgment debtors claim to be a victim.
10. Thou shall spare no expense. This is war. The one with the best weapons wins.


©2007 Ramona Featherby

Wednesday, September 12, 2007

A fall from grace: a cautionary lesson to judgment collectors

Since when has pretexting become such a hot topic? It appears to have gotten a giant kickstart last year from a most unlikely candidate, Hewlett-Packard’s (HP) Chairwoman Patricia Dunn. Fed up with leaks to the media from HP’s Board of Directors, Dunn covertly acquired the phone records from its board members to obtain a pattern of contacts and calling. Although eavesdropping was not involved, the unauthorized access of records touched off a public relations disaster for HP. Not only did Dunn become Newsweek’s cover girl, a warrant was triggered for her arrest. It was a sad chapter in the brilliant career of a cancer survivor with humble beginnings in Las Vegas. In addition to fines, the four counts in the felony complaint carried prison sentences of up to three years.

But does the punishment fit the crime? Pretexting is defined as, “the use of false pretenses, including false statements and impersonation, to obtain consumers’ personal or financial information”. Dunn did something stupid and unquestionably wrong. But was the crime so egregious in nature -- or had the world’s largest technology company -- with 150,000 employees and one billion customers in 170 countries -- become an irresistible target? This question may have been answered on December 7, 2006 when Attorney General Bill Lockyer announced that HP entered into a $14.5 million settlement to settle his civil suit and that HP will “finance a new law enforcement fund to fight violations of privacy and intellectual property rights.” With state funds drying up, a review of the past year reveals that the attorney general has indeed been scoring legal touchdowns while finding alternative ways to secure new funding.

The HP scandal pointed out the need to tighten up privacy laws, as pretexting is expressly prohibited to obtain financial information but phone records fall into a gray area. “Stealing someone’s private phone records is a criminal act, but it can’t be prosecuted,” Senator Charles Schumer has remarked. “Phone information and call logs should be protected with the same safeguards as financial data or medical records. With pretexting companies popping up across the country, law enforcement needs the tools to track down these criminals down and put this industry out of business.”

On December 11, 2006 Schumer’s TRAPP bill passed Congress. The TRAPP Act would have made it a federal offense, punishable as a felony, to obtain customer information from a telephone service provider by false pretenses or access a customer account on the Internet to obtain billing information without authorization.

But in a surprise turn, a few days earlier, Senator Debra Bowen’s SB 1666, California’s tough anti-pretexting bill, went down in flames after sailing through the Senate. The demise was due in large part to the effective lobbying by the Motion Picture Association of America. The MPAA was able to convince legislators that pretexting was necessary to discover the source of illegal downloading. It was a disappointment for the ambitious Bowen, a consumer rights advocate, who today is California’s Secretary of State.

There is a lesson here for judgment collectors. If you are purchasing data, just how clean is it? Dunn maintained that she was assured that ‘only legal means’ would be used to obtain records. Plausible deniability didn’t work. There can be little sympathy for those data companies who brazenly offered records for sale on the Internet and are now the subject of a criminal investigation. In California there is no legal way to purchase phone records from data brokers. Furthermore, there never has been.

Unlike HP’s chairwoman, judgment creditors have the legal right to personal information if properly obtained. Not only must your judgment debtor deliver phone records, you can compel the delivery of far more sensitive and revealing documents. But pretexting to get those very same records remains illegal - even when you have ‘permissible purpose’.


©2007 Ramona Featherby