On March 12 Robert Wise celebrated a hard-earned win in a civil suit brought by the government. That’s the day U.S. District Judge David C. Godbey of the Northern District of Texas in Dallas issued a final take-nothing judgment in Federal Trade Commission v. Financial Freedom Processing, et al., stating that the FTC had failed to establish by a preponderance of evidence that Wise’s clients — Dallas-based consumer-debt settlement companies and some of their founders — had violated the FTC Act.

According to the final judgment, the FTC initially brought two suits, which the court consolidated on April 1, 2011, as Federal Trade Commission v. Financial Freedom Processing, Inc. et al. The FTC named as defendants Financial Freedom Processing, d/b/a Financial Freedom of America, and its founders, brothers Corey and Brent Butcher, and Debt Consultants of America Inc. and Debt Professionals of America, and their founders, Robert Creel and Nikki Vrla (formerly Creel), who were previously married. Wise represented all the defendants. [See the judgment.]

According to Godbey’s March 12 findings of fact and conclusions of law, the FTC alleged that the defendants had violated Section 5(a) of the FTC Act, 15 U.S.C. §45(a) with their advertising claims about the savings prospective customers would achieve and how quickly they would achieve them. In their answers, the defendants all denied the FTC’s allegations.

In his findings and conclusions, Godbey described Wise’s clients’ services as helping consumers who have more debt than they can service by negotiating with their creditors to seek a reduced payment as settlement. Godbey wrote, “The FTC complains that the savings claims and timing claim are both false and unsubstantiated. This turns in large part on how the claims are interpreted.” He found that the promises of the savings claims and the timing claim that the defendants had made in their advertisements “were true for a majority of customers . . . who completed the program.” [See the findings of fact.]

Wise, a partner in Dallas’ Lillard Wise Szygenda, says he persuaded the judge during the seven-day bench trial last December by using a “belt and suspenders” approach: empirical and expert-opinion support for his arguments.

One of the experts he called to testify described a survey of what meaning consumers gleaned from the ads. Another expert Wise called, a former FTC official, offered his opinion about what meaning consumers would get from the ads. That doubled-down effort spared his clients big payouts. Wise points to proposed orders the FTC filed on Jan. 11, seeking $58 million.

Ann LeJeune, the lawyer who led the FTC’s team at the trial, did not return a call seeking comment. Instead, Peter Kaplan, deputy public affairs director for the FTC, emailed a statement from Jessica Rich, the director of the division of financial practices for the FTC, that reads in part, “We’re disappointed in the Judge’s ruling. . . . We are considering all our options.”

Wise says, despite the victory, his clients have begun winding down their businesses, due in large part to the costs and negative publicity stemming from litigating this case. He expects his clients to seek attorneys’ fees, regardless of whether the federal agency appeals.

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