Fraudulent student loan relief scammers permanently banned by FTC after swindling a staggering $24 million from desperate borrowers seeking debt relief.
Key Takeaways
- Two separate student loan debt relief operations have been permanently banned from the industry and ordered to surrender over $1 million in assets after defrauding consumers of more than $24 million combined
- The scammers falsely claimed affiliation with the U.S. Department of Education, promised fake loan forgiveness, and charged illegal upfront fees
- The FTC took decisive action with court orders against multiple entities, including Select Student Services, Start Connecting LLC, and their operators
- Victims can access legitimate, free student loan assistance through the Department of Education at StudentAid.gov
Deceptive Practices Exposed by Federal Investigation
The Federal Trade Commission has delivered a crushing blow to operators of fraudulent student loan debt relief schemes who preyed on financially vulnerable Americans. Two separate operations responsible for scamming borrowers out of more than $24 million combined have been permanently banned from the debt relief industry. The scammers employed similar tactics, falsely claiming affiliation with the U.S. Department of Education while promising loan forgiveness that never materialized. Instead, they collected illegal upfront fees while providing services that were either available for free or completely fabricated.
“Consumers looking to pay off their student loan debt should not have to worry about being scammed,” said Christopher Mufarrige, Bureau of Consumer Protection Director.
The first case involved Select Student Services and its operator, Eduardo Martinez, who defrauded consumers of over $16.7 million. The U.S. District Court for the Central District of California has entered both a stipulated order against these defendants and a default judgment against other entities involved in the scheme. In addition to the permanent industry ban, the court imposed a monetary judgment of nearly $16.8 million, with Martinez required to surrender substantial personal assets as part of the settlement.
Multiple Scam Operations Targeted Across State Lines
In a separate but similar case, Florida-based Start Connecting LLC and Colombia-based Start Connecting SAS operated under the name USA Student Debt Relief (USASDR). Owners Douglas Goodman, Doris Gallon-Goodman, and Juan Rojas extracted over $7.3 million in illegal fees from borrowers. Their international operation made illegal calls to consumers on the Do Not Call Registry and promoted fake testimonials on social media to lure victims. The FTC’s action in this case was filed in the U.S. District Court for the Middle District of Florida, demonstrating the commission’s nationwide enforcement capabilities.
“It is illegal for debt relief companies to make false promises and use fake reviews and testimonials to promote a business,” said Christopher Mufarrige, Bureau of Consumer Protection Director.
Both court orders include comprehensive prohibitions against the defendants. They are banned not only from the debt relief industry but also from telemarketing activities and making misrepresentations about any products or services. They cannot use false statements to collect financial information, impersonate government entities, or charge illegal upfront fees for debt relief services. These sweeping restrictions aim to protect consumers from future fraud by these operators.
Financial Penalties and Consumer Restitution
The financial consequences for the scammers are significant. In the case of USASDR, the court imposed a partially suspended monetary judgment of $7.3 million, with the defendants required to turn over more than $1 million in assets. These assets include cash, investment accounts, and real property that will be liquidated to provide restitution to victims. Similarly, the Select Student Services defendants face a judgment of nearly $16.8 million, with partial suspensions due to inability to pay the full amount.
“The FTC will continue to hold fraudsters that pocket Americans’ hard-earned money accountable,” said Christopher Mufarrige, Bureau of Consumer Protection Director.
These enforcement actions highlight the FTC’s commitment to protecting consumers during President Trump’s administration. The Commission unanimously approved both actions, demonstrating bipartisan support for cracking down on fraudulent debt relief operations. The FTC continues to advise consumers that legitimate student loan assistance is available for free through the Department of Education at StudentAid.gov, and that any company demanding payment before actually reducing or eliminating debt is likely operating illegally.
