Case cv TC Document Filed Page of FILED S

Case 2:06-cv- 00041- TC Document Filed 01/12/2006 Page 1 of 8 FILED S DISTRICT COURT Paul M. Warner , United States Attorney Carlie Christensen , Assistant United States Attorney (#0633) Attorney for United States of America 185 South State Street , Suite 400 lDOb JAN I 2 P $ DISTRICT OF UTAH Salt Lake City, Utah 84111 (801) 524- 5682 BY: DEPUTY CLERK IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION UNITED STATES OF AMERICA Civil Action No. Plaintiff COMPLAINT FOR CIVIL PENAL TIES, INJUCTIVE, AND OTHER RELIEF FAR WEST CREDIT , Inc. Defendant. Judge Tena Cambell DECK TYE: Civil DAI STAM: CASE IUER: 2:06CV0041 IC 01/12/2006 15:48:46 Plaintiff, the United States of America , acting upon notification and authorization to the Attorney General by the Federal Trade Commission (" Commission ), for its complaint alleges as follows: Plaintiff brings this action under Sections 5(a), 13(b), and 16(a) ofthe Federal Trade Commission Act (" FTC Act"), 15 U. Act (" FCRA" ), 15 U.S. C. c. 45(a), 53(b), and 56(a), and the Fair Credit Reporting 9 1681- 1681x , to obtain monetary civil penalties and injunctive or other relieffoT defendant' s violations of the FTC Act and the FCRA. JURISDICTION AND VENUE This Court hasjurisdiction over this matter under 28 U.S. C. and 1355 , and under 15 U.S. c. g 1331 , 1337(a), 1345, 45(a), 53(b), 56(a), 57b , and 16815. Page 1 of 6 Case 2:06-cv- 00041- TC Document Filed 01/12/2006 Page 2 of 8 Venue is proper in the United States Distrct Court for the Distrct of Utah under 28 C. ~ 1391 (b) - (c) and 1395(a), and 15 U.S. C. Section 53(b). DEFENDANT Defendant Far West Credit, Inc., is a for- profit corporation organized, existing, and doing business under the laws ofthe State of Utah. Its principal place of business is located at 1214 Wilmington Avenue, Suite 101 , Salt Lake City, Uta 84106. At all times relevant to this complaint defendant Far West Credit , Inc. , has transacted business in this district. Defendant Far West Credit , Inc. , is a " consumer reporting agency" as that term is defined in Section 603(f) of the FCRA, 15 U. C. 1681a(f). As part of its consumer reporting activities , Defendant assembles or evaluates consumer credit information or other information on consumers for the purose of fuishing consumer reports to third paries. As such , Defendant is subject to Section 607 of the FCRA , 15 U.S. C. procedures upon consumer reportng agencies. ~ 1681e , which imposes a series of compliance THE FAIR CREDIT REPORTING ACT TheFCRA was enacted in 1970 and became effective on April 25 , 1971, and has been in force since that date. Section 621 ofthe FCRA , 15 C. 9 1681s, authorizes the Commission to use all of its functions and powers under the FTC Act to enforce compliance with the FCRA by all persons subject thereto except to the extent that enforcement specifically is committed to some other governmental agency, irrespective of whether the person is engaged in commerce or meets any other jurisdictional tests set forth by the FTC Act. Page 2 of 6 ," Case 2 :06-cv- 00041- TC Document Filed 01/12/2006 Page 3 of 8 VIOLATIONS OF THE FAIR CREDIT REPORTING ACT Section 607(b) of the FCRA , 15 U.S. C. 1681e(b), requires consumer reporting agencies to follow reasonable procedures to assure maximum possible accuracy of the information contained in consumer reports that they disseminate. In the course of its business , Defendant creates consumer reports for use in the mortgage industr in evaluating consumers for loans. 10. Defendant creates consumer report Inc. by purchasing information about each consumer from Equifax Credit Information Services , Solutions , Inc. , TransUnion, LLC, and Experan Inormation ) with extensive , which are nationwide consumer reporting agencies (" CRAs databases on consumers, and merging this information to create a report that shows all of the information about the consumer available at the agencies. Each line of information showing credit status is known as a " trade line. 11. Where there is insuffcient information about a consumer , or no information , at the CRAs, Defendant wil accept documentation ITom the consumer or other interested par on behalf of the consumer, such as a mortgage broker or mortgage originator, purorting to show sources of credit and credit status with businesses that do not report to the nationwide credit bureaus (e. landlords , cable companies, utility companes rent- to-own " businesses and insurace In many instances , Defendant adds this information as a "trade line " companies). to the report it prepares for the consumer. 12. In the course of its business , Defendant provided consumer reports to Keystone Mortgage and Investment Company, Inc. (" Keystone ), an Arizona originator of home loans. In the Page 3 of 6 Case 2:06-cv- 00041- Document Filed 01/12/2006 Page 4 of 8 course of Defendant's dealings with Keystone , Keystone s employees provided Defendat with documentation of credit accounts to be used in creating consumer reports for consumers who had insuffcient credit histories at the nationwide CRAs. Keystone had a financial interest in the completion of loans to these consumers. 13. The credit information provided by Keystone was not adequately reviewed fact and verified by Defendant in many instances before being added to reports. In , the documentation provided by Keystone for many ofthese consumers was false and presented information that called for more careful review or inquir. For example , in many intaces the documentation related to accounts with utility and cable companies that did not servce the areas where the consumers lived and the same document was used to create records for multiple individuals. 14. The resulting consumer reports provided by Defendant to Keystone were used in connection with mortgages insured by the Fair Housing Administration ("FHA") of the Department of Housing and Urban Development ("BU"). Subsequently, some of the mortgagees defaulted resulting in losses to the FHA home loan program and , ultimately, to taxpayers. 15. Through the acts and practices alleged in Paragraphs 9 through 13, Defendant did information in not follow reasonable procedures to assure the maximum possible accuracy ofthe reports that it prepared in violation of Section 607(b) of the FCRA, 15 C. 1681e(b). Pursuant to Section 621(a)(I) of the FCRA, 15 V. C. g 1681s(a)(1), the acts and practices alleged above also constitute unfair or deceptive acts or practices in violation of Section 5(a) ofthe FTC Act , 15 D. g 45(a). Page 4 of 6 Case 2:06-cv- 00041- TC Document Filed 01/12/2006 Page 5 of 8 CIVIL PENALTIES AND INJUNCTIVE RELIEF FOR VIOLATIONS OF THE FAIR CREDIT REPORTING ACT 16. Section 621(a)(2) of the FCRA , 15 U.S. C. 9 1681s(a)(2), authorizes the Cour to award monetar civil penalties of not more than $2, 500 per violation of Section 607(b). 17. Each instance in which Defendant produced a consumer report complained of herein 1681e(b), constitutes a separate violation in violation of Section 607(b) of the FCRA, 15 U.S. C. of the FCRA for which plaintiff seeks monetar civil penalties under Section 621 ofthe FCRA , 15 c. 1681s. Defendant has engaged in knowing violations of the FCRA as described above, which constitutes a pattern or practice of violations. 18. Under Section 13(b) of the FTC Act , 15 C. 9 53(b), this Cour is authorized to issue a permanent injunction prohibiting Defendant from violating the FTC Act and the FCRA including violations of Section 607(b). PRAYER FOR RELIEF WHEREFORE , plaintiffrespectfullyrequests that the Court , pursuant to 15 45(m)(1)(A), 53(b), and 16815 , and pursuant to this Cour' s own powers: C. 45(a), Enter judgment agaist Defendant and in favor ofplaintifIfor each law violation alleged in this Complaint; Award plaintiff monetar civil penalties for each violation ofthe FCRA as alleged in this complaint; Enjoin Defendant from violating Section 607 of the FCRA; and Award plaintiff such additional relief as the Court deems just and proper. Page 5 of 6 Case 2:06-cv- 00041- Document Filed 01/12/2006 Page 6 of 8 Dated: / - /2 , 20 Of Counsel: FOR THE UNTED STATES OF AMERICA JOEL WISTON Associate Director for Financial Practices PEGGY TWOHIG Assistant Director for Financial Practices PETER D. KEISLER Assistant Attorney General Civil Division United States Departent of Justice WILIA L. HAYNS Attorney PAUL M. WARR United States Attorney Distrct of Utah By: JAM E. HIN Attorney Division of Financial Practices Bureau of Consumer Protection Federal Trade Commission 600 Pennsylvania Avenue, N. Washington, D. C. 20580 (202) 326- 3224 Assistant United States Attorney Unites States Attorney s Offce 185 South State Street , Suite 400 Salt Lake City, Utah 84111 (801) 524- 5682 EUGENE M. THIOLF Director Offce of Consumer Litigation ELIZAB H STEIN bFau Trial Attorney United States Deparment of Justice O. Box 386 Washington , D. C. 20044 (202) 307-0066 (VOICE) (202) 514- 8742 (FACSIMILE) Page 6 of 6 ~~~ . . :g Case 2:06-cv- 00041- TC 'lJS 44 (Rev. 11/04) Document Filed 01/12/2006 Page 7 of 8 CIVIL COVER SHEET The JS 44 civil cover sheet and the informtion contained herein neither replace nor supplement the tiing and service of pleadings or other papers as required by law, except as provide by local rules of court. This fonn, approved by the ludicial Conference ofthe United States in September 1974, is reuIred for the use ofthe Clerk of Cour for the purpse ofmitiating th civil docket sheet (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM. I. (a) PLAINTIFFS United States of America (b) County of Residence of First Listed Plaintiff (EXCEPT IN U. S. PLAINTIFF CASES) 200b JAN I 2 County of Residence of First Listed Defendat Salt Lake County (IN u. s. PLAINTFF CASES ONL N LAND CONDEMNATION CASES, USE THE lOCA nON OFTHE AND INVOLVED. J: DI S T R C T OF J6 BY: (c) Attorney s (Finn Name, Addres., and Telephone Number) Carlie Christensen , Assistant United States Attorney 185 South State Street, Suite #400, Salt Lake City, Utah 8411 II. BASIS OF JURISDICTION (Place an "X" in One Box Only) III S. Government Plamtiff LJ 3 Federal Question II. CITIZENSHIP OF PRINCIPAL PARTIE5(Placean (U. S. Governnt Not a Par) (For Diversity Caes Only) PTF LJ J LJ I LJ 2 Incorporate or Incorprated Citi of This Srate DEF of Busine.. 10 This Slale Foreign Nation inOneBoxforPlaintilf an One Box for Defendant) Principal Place PTF DEF 040 S. Governmeol Defendant LJ 4 Diversity Citize of Another Slate (Jndicate Citizip of Parie. in Iteolll) Citizen or Subjec of a F orci 'R Count ami Prinipal Place of Business In Anoter State LJ 6 IV. A TURE OF SUIT (Place an X" in Box Onlv) TORTS o 110 Insuance o 120 Marine PERSONAL INJURY 310 Airlane 315 Airlane Product PERSONAL INJURY 0 610 FO..rEITURrJENAL TY Agrioultu 625 BANKRUPTCY 0 422 Appeal 28 OTER STATtIT 400 State Reapportionmnt 410 Antitr 362 Persnal Injur . Med. Malpractice LJ 620 130MillerAct o 140 Negotible Instnni o 150 Recover of Overayent LiabliLy 365 & Enforcement of Judent Slander 151 Medicae Act LJ 330 Federal Employen 320 Assul libel & LiabliLy 340 Marine 345 Marine Prouct LiabiliLy Pruct Liability 368 Asbe.tos Persal Injur Product Pclnjury - Ot foo & Drg Dr Relate Seizu of Prope 21 USC 881 USC 158 0 423 Withdrawal 28 use 157 LJ 430 Banks and Banking 0 450 o 152 Recovery of Defaulred Liaility PERSONAL. PROPERTY 370 Other Fraud 37\ Trutb in Lending LJ 380 Oter Personal 630 liquor Law. 640 R. R. & Truk LJ 650 Airline Reg 0 66 Occlionl Sarety/Health LJ 690 Other PROPER rv RIGHTS 0 820 C.oyrgbts 0 830 Patent 0 840 Trademark CoretCe 0 46 Depotion 470 Racketeer Influenced and COt Orizations Studeat Loas (Excl. Velerans) 0 480 Con.ume dit 0 490 Cale/Sat TV LJ 153 Recover ofOverpaymeat ofVeteran s Benefits LJ t60 Stockholders ' Suits o L I.Ann.. LJ 710 Fai Labor Stadard. 90 Oter Cnntr 350 Motor Vehicle 355 Motor Vehicle Produc LiabiliLy Prope Daage 385 Propeny Damge Act o 195 Contract o L96 frachise Pruct Liability 360 Other Persal IniulV 720 LabolMgm Relaton LJ 730 LaboIMgm. Reping & Disclosu Act LJ 740 Railway Labor Act Pruct Liabilty PRISONER PETITIONS 510 Moti to Vacale Sentence SOCIAL ITY LJ 86t HIA (1395ft LJ 862 Black Lun (923) LJ 863 DlWCIDIWW (405(g)) 0 864 ssm Tille XVI 0 865 RSI 1405(0)) 810 Selective Serce 850 SetisiConunoities Exchange 875 CustolUr Challenge 12 USC 3410 Ii 890 Other Statuory Actins LJ 89 t REAL PROPERTY o 2\0 Land Condemnation o 220 F CIVIL RIGHTS LJ 441 Voting Agrultul Act nreclosre LJ 442 o 230 Rent Lee & Ejccnnent Employt LJ 790 Other Labor Litigation LJ 791 Empl. Rct Inc. FEDERL TAX SUITS LJ 870 Taxes (U. S. Plamlif or Defendat) LJ 871 IRS 892 Ecnomic Staili D Act 893 Enviromenta Maner 894 Energy Allocon Act LJ 895 fredom oflnfortion Aet 443 Housing! LJ 444 Wclfate o 240 Tor to Land o 245 Tort o 290 All Pruc Liabilty Otr Real Propert Accontions Habe Corpus: 530 Gener 535 Death Penalty Serity Act Third Par 26 use 7609 LJ 445 Amer. wlDisbilities Employment 446 Amer. wlDisalities - 540 Mandamu & Oter 550 Civil Rights 555 Codition 9OAppelofFecDeteinlion Under Equal Access to Justice Othr LJ 440 Oter Civil Rights Prn LJ 950 ColIilUionalit of Stae StalDtes V. ORIGIN gJ I Original Procdin in LJ 0 6 LJ X" from IlateOne 4Box trom Multidistrct Jud 2Cour 3Court Reo ned s Only) LJ Removed State i Uti ion (Plaee an " LJ 5 another Remanded from Reinstated or Transferr district hJe LJ 7 Judge frm Magistte ent Appel to Distrct VI. CAUSE OF ACTION Briefdescri VII. REQUESTED COMPLAINT: cp:d minursiro J:r tJHPnrAct, 15 D. C. 168 I - 168 I X t,o (i): ionoftause: Award 0 CIVil monetary penalties and injunctive rei let tor violations ot the toregolng acts. Ptr CHECK IF THIS IS A CLAS UNDER F. R.C. (See inStlctKms): VII. RELATED CASE(S) IF ANY DATE P. 23 ACTION JUDGE SIGNATURE OF AITORNEY OF RECORD APPLYING IFP fff r#a DEMAND S CHECK YES only if dernded in tomplaint: JURY DEMAND: 0 Yes 0 DOCKET NUMBER Lll.)If) AMOUNT FOROFFlCE tJSEONLY RECEIPT # L.v12rv1 Judge Tena Cambell DECK TYE: CAE IiER: 2: 06CV00041 IC Civil stAM: 01/12/2006 e 15:48:46 Case 2:06-cv- 00041- TC JS 44 Reverse (Rev. 11104) Document Filed 01/12/2006 Page 8 of 8 INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44 Authority For Civil Cover Sheet The JS 44 civil cover sheet and the infonnation contained herein neither replaces nor supplements the fiings and service of pleading or other papers as required by law, except as provided by local rules of court. This fonn, approved by the Judicial Conference of the United States in September 1974, is require for the us of the Oerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint (last, first, middle initial) of plain tilT and defendant If the plaintilTor defendant is a government agency, use only the full name or standard abbreviations. IftheplaintilT or defendant is an offcial within a government agency, identify first the agency and then the offcial, giving both name and title. (a) Plaintiffs-Defendants. Enter names I. fied. The attorney tiing a case should complete the fonn as follows: (b) County of Residence. For each civil case filed , except U. S. plaintiff cases, enter the name of the county where the first listed plaintiff reides at the time of filing. In U. S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of fiing. (NOTE: In land condemnation cases, the county ofresidence of the "defendant" is the loction of the tract ofland involved. (c) Attrneys. Enter the finn name, addres , telephone number, and attorney of record. If there ar in this section "(see attchment)". several attorneys, list them on an attchment, noting Jurisdiction. The basis of jurisdiction is set fort under Rule 8(a), F . , which requires that jurisdictions be shown in pleadings. Place an " X" in one of the boxes. If there is more than one basis of jurisdiction, precdence is given in the order shown below. II. United States plaintiff. (I) Jurisdiction based on 28 U. c. 1345 and 1348. Suits by agencies and offcers of the United States are included here. United States defendant. (2) When the plaintiff is suing the United States, its offcers or agencies , place an "X" in this box. Federal question. (3) This refers to suits under 28 U. C. 1331 , where jurisdiction arises under the Constitution of the United States , an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U. S. is a party, the U. S. plaintiff or defendant code takes precedence. and box I or 2 should be marked. Diversity of citienship. (4) This refers to suits under 28 U. C. 1332, where parties are citizen of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section II below; federl question actions take precedence over diversity cass. for each principal pary. II I. Residence (citizenship) of Principal Partes This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this section NatureorSuit Place an " X" in the appropriate box. If the nature ofsuit cannot bedetennined. be sure the cause of action, in Section VI below , is suffcient to enable the deputy clerk or the statistical clerks in the Administrative Offce to detennine the nature of suit. If the cause fits more than one nature of suit, select the most definitive. IV. V. Origin. Place an " X" in one of the seven boxes. Original Proceedings. (I) Cases which originate in the United States district court. Removed from State Court (2) Proceedings initiate in state court may be removed to the distct court under Title 28 U. c., Section 1441. When the petition for removal is granted, check this box. action. Use the date of remand as the fiing date. Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the distrct com. Use the repening date as the tiing date. Transferred from Another District. (5) For cases trnsferr under Title 28 U. C. Section 1404(a). Do not use this for within distrct trnsfers or multidistct litigation trnsfers. Remanded from Appellate Coun. (3) Check this box for cases remanded to the distrct court for furter Multidistrict Litigation. (6) Check this box when a multidisuict case is transferrd into the district under authority of Title 28 U. C. Section 1407. When this box is checked, do not check (5) above. VI. Cause of Action. Report the civil statute unless diversity. Appal to Distrct Judge from Magistrate Judgment. (7) Check this box for an appel from a magistrte judge s decision. diretly related to the Brief Description: Example: U. S. Civil Statute: 47 USC 553 VII. Requested in Complaint Clas Action. Place an "X" in this box if you are tiling a class acton under Rule 23 , F. Jury Demand. Check the appropriate box to indicate whether or not ajury is being demanded. tJ cause of action and give a brief description of the cause. Do Dot cite jurisdictional statutes recetion of cable selVice Cv. Demand. In this space enter the doUar amount (in thousands of dollars) being demanded or indicate other demand such as a preliminary injunction. VII. Related Cases. This section of the JS 44 is used to referene related pending cass if any. If there are related pending cases, insert the doket numbers and the corresponding judge names for such cases. Date and Attorney Signature. Date and sign the civil cover sheet.