Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—DMd: Couple Violated FTC Act by Offering Unauthorized Immigration Services, (Jun 6, 2013)

By Jeffrey May, J.D.

Following a bench trial, the federal district court in Baltimore has concluded that a husband and wife who operated a business offering immigration-related services to Spanish-speaking customers violated the FTC Act by misrepresenting to consumers that they were legally authorized to provide such services. Additional proceedings were necessary, however, to determine the appropriate remedy against the couple, their company—Loma International Business Group Inc., and their son, who did not participate in the trial but whose motion for summary judgment was denied in a separate opinion (FTC v. Loma International Business Group Inc., June 5, 2013, Garbis, M.).

The couple represented themselves and their company Loma International Business Group, both expressly and impliedly, as qualified immigration consultants legally authorized to provide the immigration services they rendered, the court found. To be properly accredited, an immigration services business generally had to be operated by a licensed attorney, a law student acting under an attorney’s supervision, or a person formerly authorized to practice before the U.S. Bureau of Citizenship and Immigration Services (USCIS). The court noted that, at times, the defendants falsely represented the husband to be an attorney.

The court rejected the defendants' contentions that they made no express representation of being authorized to provide immigration services and that their operation of the business did not serve as an implied representation that they were authorized to do so. Lack of proper licensing was a material fact, which if not disclosed, deceived and was an unfair or deceptive trade practice.

The defendants’ representations were likely to mislead a reasonable consumer of the services provided to believe that the defendants were competent, qualified, and legally authorized to provide such services, according to the court. The fact that some of the customers were satisfied with the services they received did not provide a defense. The representations also were found to be material. Some of the customers testified that had they known that the husband was not authorized to provide immigration services, they would neither have sought nor paid for the services.

The FTC did not prove its case against one of the defendants’ other businesses—Servicios Latino Americanos De Maryland, Inc. Servicios was formed to provide drug and alcohol counseling to members of the Hispanic community. Servicios was never held out as providing immigration services and did no more than provide–without compensation—a checking account conduit for the transmission of customer funds to the USCIS, the court explained.

Remedy. As a remedy for the FTC Action violations, the FTC sought a permanent injunction prohibiting the defendants from engaging in unauthorized immigration services or any similar deceptive practice and restitution in the amount of $750,000. While the court found that the FTC established the need for injunctive relief, further proceedings were necessary to resolve remaining issues relating to the equitable relief to be provided, including the amount to be disgorged.

The defendants had unsuccessfully argued that an injunction was not necessary because they had ceased operating in June 2011 and did not intend to restart the immigration services business. Absent an injunction, there was a realistic danger that the defendants would find and take another opportunity to mislead consumers, the court concluded.

Liability of couple’s son. In a separate opinion, the court found that the couple's son, who had helped his parents during busy periods in the first few years of the operation of their immigration services business, violated Sec. 5 of the FTC Act. The court denied motions for summary judgment from both sides, however, because there were disputed issues of fact regarding the remedial aspect of the case against him.

The son had helped his parents by entering information into immigration forms, which he signed as the preparer, and by translating documents, such as birth certificates, in connection with immigration applications.

The son contended that he was merely providing voluntary clerical assistance to his parents, and did not provide advice, or hold himself out as an immigration consultant, or make any misrepresentations to the public. The court, however, found that he son's signing immigration forms as preparer would mislead a reasonable consumer into believing that they were receiving services from a legally authorized provider. Moreover, these misleading representations were material, in the court's view.

Because questions regarding the son’s intent, knowledge, and extent of involvement in the operation remained outstanding, additional proceedings were necessary to determine the remedy against the son.

The case is Civil Action No. MJG-11-1483.

Attorneys: Eliseo N. Padilla for FTC. Andrew Jay Graham (Kramon and Graham PA) for Loma International Business Group, Inc.

Companies: Loma International Business Group, Inc.; Servicios Latino Americanos De Maryland, Inc.

Cases: ConsumerProtection MarylandNews