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Attorney faces 2-year suspension for role in debt refinancing scheme

By: Erika Strebel, [email protected]//July 10, 2015//

Attorney faces 2-year suspension for role in debt refinancing scheme

By: Erika Strebel, [email protected]//July 10, 2015//

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A Chicago attorney could lose his license for two years for operating a debt refinancing company that allegedly engaged in illegal business practices in Illinois.

Jeffrey Aleman, who practices in Chicago, graduated from Marquette University Law School in 1996. He has no history of professional discipline in Wisconsin. Aleman used to be licensed to practice in Illinois, where he started in 1997.

Aleman could not immediately be reached Friday.

His Wisconsin license has been administratively suspended for not reporting continuing education requirements, and the Wisconsin Lawyers’ Fund for Client Protection has approved a claim against Aleman, according to the State Bar website.

The Office of Lawyer Regulation, in a complaint filed Monday, is asking the Wisconsin Supreme Court to suspend Aleman’s license for two years, reciprocal to discipline Aleman received June 4 in Illinois for co-founding and working with a national debt-settlement firm, Chicago-based Legal Helpers Debt Resolution LLC.

Debtors in Legal Helpers’ debt refinancing program were enrolled by employees of non-attorney debt settlement companies that had contracts with Legal Helpers, according to court records. Clients were initially charged a $500 retainer fee, which was later changed to $900, took upfront service fees that were 15 percent of a client’s total debt and charged a $50 maintenance fee each month a client was enrolled in the program.

Debtors in the program were told to stop paying their creditors and instead enroll in Legal Helpers’ monthly payment program, according to Illinois court records, because the firm couldn’t settle the debts unless the client was behind on payments. In many cases, according to the Illinois complaint, it took more than a year before any payments went toward settling the debt. Also, non-lawyers answered all calls from clients and oversaw the execution of powers of attorney and retainer agreements, according to court records.

Aleman testified in his Illinois disciplinary hearing that his 2010 income from Legal Helpers was between $800,000 and $900,000, and that Legal Helpers had at least 2,200 Illinois clients from which the firm had received $6.9 million. Legal Helpers had more than 30,000 clients nationwide. As of the December 2014 hearing, it only had about 300 clients left, according to court records.

The Illinois Supreme Court ruled May 15 that Aleman, along with his business partner, violated Illinois Rules of Professional Conduct by failing to consult with clients, failing to explain matters to clients so that they could make informed decisions, failing to supervise non-lawyers to ensure the firm operated within the rules of professional conduct, and assisting in an unauthorized practice of law.

The Illinois complaint against Aleman stemmed from a lawsuit filed against Legal Helpers by the Illinois Attorney General’s Office in March 2011. The parties settled the suit in July 2012, with Legal Helpers agreeing to stop enrolling Illinois customers, stop advertising in the state and stop collecting additional fees from Illinois clients. Legal Helpers paid $2.1 million in partial restitution to Illinois customers and $150,000 to the state.

Legal Helpers has entered agreements with attorneys general in six other states, including Wisconsin. Aleman and Legal Helpers are defendants in a lawsuit pending in Dane County Circuit Court. The state Department of Justice, under J.B. Van Hollen, filed the suit in June 2013.

The DOJ alleges Aleman and Legal Helpers operated under the guise of a company offering legal services when it in fact provided debt refinancing services offered by non-lawyers. The DOJ also alleges Aleman and Legal Helpers illegally charged excessive fees and that clients were not allowed to speak with an attorney.

According to the complaint, at least 1,900 Wisconsin residents were enrolled in Legal Helpers’ services from December 2009 to April 2012, and collected millions in illegal fees.

The DOJ is seeking civil forfeitures, penalties and the cost of investigation and prosecution.

A 10-day jury trial is scheduled to start in late November.


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