Case 3:16-cv-01897-DMS-MDD Document 1 Filed 07/27/16 Page 1 of 40

KAZEROUNI LAW GROUP, APC BANKRUPTCY LAW CENTER, APC

Abbas Kazerounian, Esq. [SBN: 249203] Ahren A. Tiller, Esq. [SBN 250608]

ak@kazlg.com tiller@blc-sd.com

245 Fischer Avenue, Unit D1 1230 Columbia Street, Suite 1100

Costa Mesa, CA 92626 San Diego, CA 92101 Telephone: (800) 400-6808 Telephone: (619) 894-8831

4 Facsimile: (800) 520-5523 Facsimile: (866) 444-7026

HYDE & SWIGART

Joshua B. Swigart, Esq. [SBN: 225557]

2221 Camino Del Rio South, Suite 101 San Diego, CA 92108

7 Telephone: (619) 233-7770

Facsimile: (619) 297-1022

Attorneys for Plaintiffs

10 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

12 Case No.:

CLASS ACTION COMPLAINT FOR

14 DAMAGES AND RESTITUTION

FOR:

1.) VIOLATIONS OF THE

16 RACKETEER INFLUENCED AND

CORRUPT ORGANIZATIONS ACT

17 [18 U.S.C. § 1962(c)]

) CONSPIRACY TO VIOLATE

THE RACKETEER INFLUENCED

AND CORRUPT ORGANIZATIONS

ACT [18 U.S.C. § 1962(d)]

21 JURY TRIAL DEMANDED

24 INTRODUCTION

Plaintiffs, MARTIN MATANANE and BRIDGETT WOODS
(hereinafter referred to collectively as “Plaintiffs”) bring this class action
against JEFFERSON CAPITAL SYSTEMS, LLC, d/b/a Jefferson Capital
International, LLC; EDWARDS CAPITAL, LLC, d/b/a Flexpoint Ford,

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LLC; CL HOLDINGS, LLC; JONATHAN KIRBY; and DOES 1-50
(“Defendants”), with respect to the unlawful, unfair, and fraudulent business
practice of filing fraudulent proofs of claim and invalid proofs of claim for
time-barred debts en masse in Chapter 13 bankruptcy cases throughout the
United States, thereby unjustly receiving millions of dollars in payments on
said invalid proofs of
A Chapter 13 Bankruptcy case is in essence a repayment plan,
whereby an individual who files for bankruptcy (hereinafter referred to as a
“debtor”) pays back their creditors according to a court confirmed plan. The
debtor pays a monthly payment amount to the chapter 13 bankruptcy trustee,
who then in turn takes said money and disburses it to pay allowed creditors’
In a chapter 13 bankruptcy case, listed creditors are noticed by the
Bankruptcy Noticing Center (BNC) upon filing. Creditors then have until the
claims bar date to file proofs of claim that serve as the basis for the amounts
owed to each creditor. The Chapter 13 Trustee will only pay creditors who
file proofs of claim. In the bankruptcy context, state law controls whether a
particular claim is enforceable. If a particular claim is unenforceable
pursuant to the applicable statute of limitations or the creditor has no valid
right to collect upon the underlying debt that the proof of claim is based
upon, said proof of claim will be disallowed in the bankruptcy court only if
an objection is filed. A time-barred debt is not a valid claim under the
bankruptcy
The Defendants have participated in a widespread criminal conspiracy
wherein they have acted in concert with one another to file en masse
hundreds of thousands of proofs of claim in chapter 13 bankruptcy cases
where they are not the owners of the alleged debts used as the basis for the
underlying proofs of claim and/or Defendants know the underlying claims
are time-barred by the applicable statute of limitations. The Defendants have

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all engaged in a fraudulent scheme under the guise of “debt ”
Actually, the Defendants are merely buying information about a debt and not
legal Furthermore, Defendants know these claims are time-
barred and unenforceable under applicable state law. In doing so, Defendants
knowingly and fraudulently filed false proofs of claim and/or receive
material amounts of property from debtors after the filing of a bankruptcy
case, with the intent to defeat the provisions of Title 11, which constitute
violations of the Racketeer Influenced and Corrupt Organizations Act (18

9 U.S.C. § 1962 et seq.)

As Judge Schmetterer of the Northern District of Illinois bankruptcy
court wrote regarding this practice:

There is likely a tendency to deceive or mislead some debtors by filing proofs of claim for stale debt. Otherwise, there would be no
point in filing them. By definition, stale debt is debt that is no longer owed. Debt collectors may get paid by a Chapter 13 debtor despite
having no right to payment. Claimants’ own argument that creditors are “invited” to file proofs of claim shows how deception would take
Section 502(a) provides that a proof of claim is ‘deemed allowed unless a party in interest … objects.” This “clock work-
mechanism” (Claimants’ term) puts the burden on the debtor, the trustee, or another creditor to object. Otherwise the trustee must pay
pro rata on the claim out of debtors’ plan payments according to the Chapter 13 plan. 11 U.S.C. §§ 1322(a)(3), 1326(c). The very fact that
debt collectors are systematically engaged in this practice suggests that the practice succeeds in deceiving some part of the debtor
Debt buyers probably file proofs of claim in Chapter 13 cases because the usual allowance of many proofs of claim may result in
debtors in Chapter 13 bankruptcies paying them out of future income…
Because there is no good reason to allow proofs of claim for stale debt, the frequent allowance of and payment on such claims
would be enough to show deception. It would be sufficient proof to assemble a large enough representative sample of proofs of claim filed
by debt collectors, isolate the proofs of claim for stale debt, and analyze that set to determine how often those proofs of claim are
That would show the rate at which courts, trustees, and debtors are deceived into paying those claims.
Perhaps …(the Claimants)… have discoverable records analyzing their success from filing proof of claims for stale debt. It is
likely that they keep a record of the proofs of stale claims they file and the success rate of those proofs of
Avalos v. LVNV Funding, LLC (In re Avalos), 531 B.R. 748 (Bankr.

28 N.D. Ill. 2015).

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Plaintiffs make these allegations on information and belief, with the
exception of those allegations that pertain to Plaintiffs, or to Plaintiffs’
Counsel, which Plaintiffs allege on personal
Unless otherwise indicated, the use of any of Defendants’ names in
this Complaint includes all agents, employees, officers, members, directors,
heirs, successors, assigns, principals, trustees, sureties, subrogates,
representatives and insurers of the named

9 JURISDICTION AND VENUE

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 6, inclusive, as though fully set
This Court has jurisdiction over this matter pursuant to 18 U.S.C. §
1962 et
Defendant, EDWARDS CAPITAL, LLC, doing business as (“dba”)
Flexpoint Ford, LLC (hereinafter “Edwards Capital”) is a foreign limited
liability company organized and existing under the laws of the State of
Edward Capital’s principle office is located at 676 N Michigan Ave.
Suite 3300, Chicago, IL
Defendant, JEFFERSON CAPITAL SYSTEMS, LLC (hereinafter
“Jefferson Capital”) doing business as (“dba”) Jefferson Capital
International, LLC is a foreign limited liability company organized and
existing under the laws of the State of Georgia. Jefferson Capital’s principle
office is located at 16 McLeland Road, St. Cloud, MN, 56303. Jefferson is a
subsidiary of CL Holdings, LLC and Edwards Capital,
Defendant, CL HOLDINGS, LLC (hereinafter “CL Holdings”) is a
foreign limited liability company organized and existing under the laws of
the State of Georgia. CL Holdings’s principle office is located at 16

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McLeland Road, St. Cloud, MN, CL is a wholly owned subsidiary of
Edwards Capital,
Defendant, JONATHAN KIRBY (hereinafter “Mr. Kirby”) is an
Individual Defendant and Director of Bankruptcy Acquisitions and Servicing
Operations at Jefferson Capital. Kirby is an individual believed to
reside in Minnesota. Kirby manages, directs, operates, supervises, and
oversees the bankruptcy activities of Jefferson Capital, which is interrelated
in a clandestine and complex business structure with CL Holdings and
Edwards Mr. Kirby is responsible for Jefferson Capital’s
bankruptcy acquisitions, analytics, and post-acquisition performance, and has
led Jefferson Capital’s bankruptcy operations for more than five
Every fraudulent and time barred proof of claim filed by Jefferson Capital is
personally reviewed and signed by Mr. Kirby and filed at the direction of
Jefferson Capital, Edwards Capital, and CL Holdings’ Officers and
John Does 1-50 are the unknown co-conspirator actors, business
entities, and agents in the Defendants’ scheme at the time of
This Court has personal jurisdiction over Defendants, because
Defendants conduct business in the County of San Diego, State of
Therefore, Defendants have sufficient minimum contacts with this state, and
otherwise purposely avail themselves of the markets in this state through the
filing of proofs of claim in bankruptcy cases in every district in California,
including the Southern District of California. Furthermore, the conduct
alleged herein in the bankruptcy cases of the named Plaintiffs occurred in the
Southern District of California Bankruptcy Court. Jurisdiction by this Court
is permissible under traditional notions of fair play and substantial
Venue is proper in the United States District Court, Southern District
of California pursuant to 28 U.S.C. §1391 and 18 U.S.C. § 1965(a) for the
following reasons:

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(i) Named Plaintiffs all reside in the County of San Diego, State of
California which is within this judicial
(ii) The conduct complained of herein occurred within this judicial
district as all named Plaintiffs’ bankruptcy cases were filed in
the County of San Diego, State of California; and
(iii) Defendants are subject to personal jurisdiction in this district, as
they conduct business within this judicial

9 PARTIES

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 15, inclusive, as though fully set
Plaintiffs are all, and at all times mentioned herein were, individual
citizens and residents of the United States of America, State of California,
County of San
Defendants are a group of entities associated together for a common
purpose of engaging in the filing of fraudulent time-barred proofs of claim,
an act affecting interstate commerce, with the intent to knowingly and
intentionally file false proofs of claim and/or misrepresent the validity of said
claims and receive material amounts of property from a debtor after the filing
of a bankruptcy case, with the intent to defeat the provisions of title 11, and
therefore are an “Enterprise” as the term is defined by 18 U.S.C. § 1961(4).
Defendants are all persons who use an instrumentality of interstate
commerce or the mails in a business the principal purpose of which is the
collection of debts, or who regularly collect or attempt to collect, directly or
indirectly, debts owed or due or asserted to be owed or due another across
state
Defendants all in the ordinary course of business, regularly, on behalf

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of themselves, or others, engage in interstate debt
Whenever this Complaint refers to any act or acts of Defendants, the
reference shall also be deemed to mean the directors, officers, employees,
affiliates, controlling companies, or agents of the responsible Defendant who
authorized such acts while actively engaged in the management, direction or
control of the affairs of Defendants, and each of them, and/or by persons who
are the alter ego of Defendants, or while acting within the scope of their
agency, affiliation, control or employment. Whenever this Complaint refers
to any act of Defendants, the reference shall be deemed to be the act of each
Defendant, jointly and

13 STANDING FOR PLAINTIFFS TO BRING THIS ACTION

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 21, inclusive, as though fully set
The Plaintiffs have suffered an injury in fact as a result of Defendants’
As discussed below, the Defendants have unlawfully received
payments from the Plaintiffs’ bankruptcy
11 U.S.C. §1303 states, “[S]ubject to any limitations on a trustee
under this chapter, the debtor shall have, exclusive of the trustee, the rights
and powers of a trustee under sections 363(b), 363(d), 363(e), 363(f), and
363(i), of this title.” 11 U.S.C. §363 confers on the trustee the right to
exercise control over estate
Pursuant to 11 U.S.C. §1306, Plaintiffs shall remain in possession of
all estate property. In the Chapter 13 context, the Debtor has exclusive rights
to control estate property, and therefore the Plaintiffs have the right to
prosecute these claims against Defendants on behalf of themselves and other

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similarly situated individual members of the Class even if they were to be
deemed “estate ”
Furthermore, all of the Plaintiffs’ chapter 13 plans have been
Pursuant to 11 U.S.C. § 1327, confirmation of the plan vests all
of the property of the estate in the debtor. Therefore, the Plaintiffs’ claims
against the Defendants are theirs to prosecute free and clear of the chapter 13
trustee and/or Thus, Plaintiffs have standing to bring these claims.

9 GENERAL ALLEGATIONS

10 Relationships between Defendants

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 26, inclusive, as though fully
set
Edwards Capital, LLC is a private equity company that owns over 26
subsidiary entities. Jefferson Capital and CL Holdings are wholly-owned
subsidiaries of Edwards
Jefferson Capital purchases and owns delinquent debts (they are one of
the largest debt purchasers in the United States). Jefferson Capital is the
debt collector that Edwards Capital and CL Holdings uses to service and
collect on its bankruptcy debt portfolios. Edwards Capital (d/b/a FlexPoint
Ford, LLC) is the parent company overseeing this “Enterprise.” Edwards
Capital uses its subsidiaries to perpetuate their massive scheme to defraud
hundreds of thousands of bankruptcy debtors into paying on fraudulent
and/or time-barred invalid proofs of claims in bankruptcy cases throughout
the United States. This scheme to defraud individuals in bankruptcy has
created a massive windfall of ill-gotten gains for this aforementioned
Mr. Kirby manages, directs, operates, supervises, and oversees the

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bankruptcy activities of Jefferson Capital, which is interrelated in a
clandestine and complex business structure with CL Holdings and Edwards
In concert with the Directors of CL Holdings, Edwards Capital and
Jefferson Capital, Mr. Kirby and the other Defendants have met on multiple
occasions and colluded together to perpetuate this scheme to defraud
vulnerable bankruptcy debtors out of millions of dollars through this
nationwide
Edwards Capital and CL Holdings uses Jefferson Capital to service
and collect on delinquent debts purchased on behalf of the
Defendants all are engaged in the collection of delinquent debts. Their
business practices exposes them to risks of liability for failing to comply
with applicable debt collection, consumer protection, and credit reporting
statutory requirements. To insulate their risk, Defendants have colluded
together to segregate operations among multiple layers of entities that work
in conjunction with one another all being directed by the parent company
Edwards Capital. The compartmentalization of these different entities was
set up to shield the Defendants from liability, confuse investigative agencies,
and further perpetuate the Enterprise’s unlawful

Predicate Acts Involving Plaintiff Bridgett Woods

Violations of 18 U.S.C. §152(4)&(5)

22 [Fraud Connected to Bankruptcy – 18 U.S.C. 1961(1)(D)]

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 32, inclusive, as though fully
set
On March 31, 2014, Plaintiff, Bridgett Woods filed a joint (with her
spouse) Chapter 13 bankruptcy case in the United States Bankruptcy Court

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for the Southern District of California with case number 14-02497-MM13.
Plaintiff, Bridgett Woods’ Chapter 13 plan was confirmed on August

3 28, 2014.

On May 7, 2014, Defendant, Jefferson Capital Systems, LLC filed a
proof of claim, marked as Proof of Claim # 8-1 on behalf of Defendant,
Jefferson Capital, in Plaintiff, Bridgett Woods’ Chapter 13 bankruptcy case
(Case No. 14-02497-MM13). Defendant, Mr. Kirby signed and filed the
proof of claim on behalf of Defendant, Jefferson
Proof of claim # 8-1 provided for a claim in the amount of $2,986.17,
and listed the current owner and creditor as Plaintiff, Jefferson Capital
Systems, LLC, the original creditor as Citibank Visa., provided that
Defendant, Jefferson Capital was the agent where notices and payments
should be sent, and provided Defendant, Jefferson Capital and CL Holding’s
joint address in Saint Cloud, MN 56302-9617 as the address where payments
should be
The last payment on the debt used as the basis for proof of claim # 8-1
was May 18, 1992. Therefore, the last payment received on the debt used as
the basis for proof of claim # 8-1 in Bridgett Woods’ bankruptcy case was
over Twenty-One (21) years prior to the filing of her bankruptcy
From May 21, 2015, through April 21, 2016, the Chapter 13 Trustee,
Thomas Billingslea took the Debtor’s funds on hand with the Chapter 13
Trustee and distributed nine (9) installment payments to Jefferson Capital to
pay Proof of Claim # 8-1 filed in Mrs. Woods’ Bankruptcy case (Case
14-02497-MM13). The total payments made to Defendants over the period
from May 21, 2015 through June 16, 2016 was $266.20. The payments are
still ongoing, and without court intervention Defendants will continue to
receive future installment

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To date, the Defendants have unjustly received $266.20 in payments
on this extremely time-barred and fraudulent Proof of Claim filed in Bridgett
Woods’ Bankruptcy case (Case No. 14-02497-MM13).
The underlying debt supporting proof of claim # 8-1was never reduced
to judgment prior to Mrs. Woods filing her bankruptcy case, and Plaintiff
never made a payment on this alleged claim within the 4 year period prior to
filing
Further, Defendants never acquired a valid right to collect upon the
debt used to form the basis for proof of claim # 8-1, as they are not the valid
owners or assignees of said The alleged debt used to form the basis
of proof of claim 8-1 was originally a Citibank Visa credit account, which
was charged off by the original creditor on October 23, After the debt
was charged off, Mrs. Woods’ information, and not a right to collect, was
sold to multiple debt collection agencies such as Fourscore Resource
Capital, LLC, then allegedly Pinnacle Credit Services, LLC as well as many
other entities over the last 23 The Defendants never in fact acquired
any valid right to collect upon this debt, yet in fact merely filed the claim
based upon credit reporting information they obtained regarding
Woods, which included her name, social security number, payment history,
and an amount allegedly owed to Citibank Defendants filed said
proof of claim based upon information they obtained from third party
entities that contained Mrs. Woods’ identifying information, yet never in fact
acquired any right to collect upon this
The Defendants knew they were not valid owners and/or Assignees of
the underlying claim # 8-1, therefore Defendants knowingly and
intentionally presented a false claim for proof against the estate of Plaintiff,
Bridgett Woods in her Chapter 13 Bankruptcy case (Case No. 14-02497-

28 MM13).

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Furthermore, Defendants knew they were not entitled to payment on
the underlying time-barred debt, as Defendants were clearly time-barred
from collecting on Proof of Claim # 8-1 under California Civil Code section
337, therefore Defendants knowingly and intentionally received material
amounts of property from Plaintiff, Bridgett Woods’ bankruptcy estate after
the filing of her bankruptcy case, with the intent to defeat the provisions of
the bankruptcy code by filing and receiving payment on said time-barred

Predicate Acts Involving Plaintiff Martin Matanane

Violations of 18 U.S.C. §152(4)&(5)

12 [Fraud Connected to Bankruptcy – 18 U.S.C. 1961(1)(D)]

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 44, inclusive, as though fully
set
On January 31, 2013, Plaintiff Martin Matanane filed a Chapter 13
bankruptcy case in the United States Bankruptcy Court for the Southern
District of California with case number 13-00986-MM13.
On March 9, 2013, Defendant, Jefferson Capital filed a proof of claim,
marked as Proof of Claim # 10-1 in Plaintiffs, Martin Matanane and Giana
Matanane’s Chapter 13 bankruptcy case (Case No. 13-00986-MM13).
Defendant, Mr. Kirby signed the proof of claim on behalf of Defendant,
Jefferson
Proof of claim # 10-1 provided for a claim in the amount of $315.00,
and listed the current owner and creditor as Jefferson Capital, the original
creditor as Advance America, and provided that Defendant, Jefferson
Capital was the agent where notices and payments should be sent, and

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1 provided Defendant, Jefferson Capital’s address in Saint Cloud, MN 56302-

2 9617.

3 49. The last payment made on the account used as the basis for Proof of

4 claim # 10-1, was July 16, 2008.

The last payment received on these alleged debts were over 4 years
prior to the filing of Mr. Matanane’s bankruptcy case. The debt used as the
basis for proof of claim # 10-1 had been time barred from collection by
California’s statute of limitations (CCP § 337).
Defendant, Jefferson Capital is not the valid owner and/or assignee of
the underlying claim used as the basis for filing Proof of Claim # 10-1.
Defendants allegedly purchased the claim from Cascade Capital, LLC who
purchased the claim from an intermediary debt collector who purchased the
claim from Advance America, however Defendants merely obtained
identifiable information regarding the alleged debt, yet never obtained legal
ownership of said
On May 14, 2013, Defendant, Jefferson Capital filed a proof of claim,
marked as Proof of Claim # 12-1 in Plaintiff Martin Matanane’s Chapter 13
bankruptcy case (Case No. 13-00986-MM13). Defendant, Mr. Kirby signed
and filed the proof of claim on behalf of Defendant, Jefferson
Proof of claim # 12-1 provided for a claim in the amount of $118.39,
and listed the current owner and creditor as Jefferson Capital, the original
creditor as Wells Fargo Bank, and provided that Defendant, Jefferson
Capital was the agent where notices and payments should be sent, and
provided Defendant, Jefferson Capital and CL Holding’s address in Saint
Cloud, MN 56302-9617 as the address where payments should be
The last payment made on the account used as the basis for Proof of
claim # 12-1, was January 23,

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The last payment received on the alleged debt used to form the basis of
proof of claim # 12-1 was over 5 years prior to the filing of Mr. Matanane’s
bankruptcy case. Therefore, the debt used as the basis for proof of claim #
12-1 was time barred from collection pursuant to California’s statute of
limitations (CCP § 337).
Defendant, Jefferson Capital is not the valid owner and/or assignee of
the underlying claim used as the basis for filing Proof of Claim # 12-1.
Defendants allegedly purchased the claim from RJM Acquisitions, LLC who
purchased the claim from an intermediary debt collector who purchased the
claim from Wells Fargo Bank, however Defendants never purchased legal
ownership of said The Defendants never in fact acquired any valid
right to collect upon this debt, yet in fact merely obtained information from
third parties, which contained Mr. Matanane’s name, social security number,
payment history, and an amount allegedly owed to the original creditor,
Wells Fargo.
On May 21, 2013, Defendant, Jefferson Capital filed another proof of
claim, marked as Proof of Claim # 13-1 in Plaintiff Martin Matanane’s
Chapter 13 bankruptcy case (Case No. 13-00986-MM13). Defendant,
Kirby signed the proof of claim on behalf of Defendant, Jefferson
Proof of claim # 13-1 provided for a claim in the amount of $857.40,
and listed the current owner and creditor as Jefferson Capital, the original
creditor as Orchard Bank / Household Bank, and provided that Defendant,
Jefferson Capital was the agent where notices and payments should be sent,
and provided Defendant, Jefferson Capital and CL Holding’s address in
Saint Cloud, MN 56302-9617 as the location where payments should be
The last payment made on the account used as the basis for Proof of

28 claim # 13-1, was April 30, 2003.

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The last payment received on the alleged debt used to form the basis of
proof of claim # 13-1 was over nine (9) years prior to the filing of
Matanane’s bankruptcy case. The debt used as the basis for proof of claim #
13-1, was therefore time barred from collection pursuant to California’s
statute of limitations (CCP § 337).
Defendant, Jefferson Capital is not the valid owner and/or assignee of
the underlying claim used as the basis for filing Proof of Claim # 13-1.
Defendants allegedly purchased the claim from International Collection
Services who purchased the claim from an intermediary debt collector who
purchased the claim from Orchard Bank / Household Bank, however
Defendants merely acquired information regarding the alleged debts, yet
never purchased legal ownership of said The Defendants never in
fact acquired any valid right to collect upon this debt, yet in fact merely
acquired from a third party and credit reporting information containing
Matanane’s name, social security number, payment history, and an amount
allegedly owed to the original creditor, Orchard Bank / Household
On March 29, 2013, Plaintiff Martin Matanane’s Chapter 13 plan was
The confirmed Chapter 13 plan provided for payment of 100%
of all allowed general unsecured Since, Plaintiff Mr. Matanane’s
Chapter 13 plan need to pay a 100% dividend to unsecured claims, had
Defendants not filed the aforementioned invalid and fraudulent claims,
Matanane’s plan payment would have been reduced and the overall amount
he needed to pay into the chapter 13 plan would have been reduced as
From April 10, 2014, through July 12, 2016, the Chapter 13 Trustee,
David L. Skelton took the Debtor’s funds on hand with the Chapter 13
Trustee and distributed nine (9) installment payments to Jefferson Capital to
pay Proof of Claim # 10-1 filed in Mr. and Mrs. Matanane’s Bankruptcy
case (Case No. 13-00986-MM13). The total payments made to Defendants

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over the period from April 2014 to July 2016 was $172.02. The payments
are still ongoing, and without court intervention Defendants will continue to
receive future installment payments until the entire claim # 10-1 is paid in
From September 10, 2014, through July 12, 2016, the Chapter 13
Trustee, David L. Skelton took the Debtor’s funds on hand with the Chapter
13 Trustee and distributed four (4) separate installment payments to
Jefferson Capital to pay Proof of Claim # 12-1 filed in Mr. Matanane’s
Bankruptcy case (Case No. 13-00986-MM13). The total payments made to
Defendants over the period from September 10, 2014, through July 12, 2016
was $64.66. The payments are still ongoing, and without court intervention
Defendants will continue to receive future installment payments until the
entire claim # 12-1 is paid in
From March 11, 2014, through July 12, 2016, the Chapter 13 Trustee,
David L. Skelton took the Debtor’s funds on hand with the Chapter 13
Trustee and distributed twenty-three (23) monthly installment payments to
Jefferson Capital to pay Proof of Claim # 13-1 filed in Mr. Matanane’s
Bankruptcy case (Case No. 13-00986-MM13). The total payments made to
Defendants over those 23 installments was $468.16. The payments are still
ongoing, and without court intervention Defendants will continue to receive
monthly payments until the entire claim #13-1 is paid in
To date, the Defendants have unjustly received $704.84 in payments
on Proofs of Claim # 10-1; 12-1; and 13-1 filed in Plaintiff Martin
Matanane’s Bankruptcy case (Case No. 13-00986-MM13) (See ¶¶ 63-65).
The underlying debt supporting proofs of claim # 10-1, # 12-1, and #
13-1 filed in Plaintiff Martin Matanane’s bankruptcy case were never
reduced to judgment prior to the filing their bankruptcy case, and Plaintiff

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Martin Matanane never made any subsequent payments on these alleged
The Defendants knew they were not the valid owners of the underlying
debts, therefore Defendants knowingly and intentionally presented a false
claim for proof (Proofs of Claim # 10-1, 12-1 and # 13-1) against the estate
of Plaintiff Martin Matanane’s Chapter 13 Bankruptcy
Furthermore, Defendants knew they were not entitled to payment on
these time-barred debts, therefore Defendants knowingly and intentionally
received material amounts of property from Plaintiff Martin Matanane’s
bankruptcy estate, after the filing of his bankruptcy case, with the intent to
defeat the provisions of the bankruptcy code by filing and receiving
payments on proofs of claim # 10-1, # 12-1 and # 13-1.

14 General Facts Relating to Plaintiffs’ Claims

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 69, inclusive, as though fully
set
In the bankruptcy context, applicable state law controls whether a
particular underlying claim is enforceable and eligible for payment through
the Chapter 13
Pursuant to California’s Statute of Limitations, Cal. Code Civ. Proc.
337, the debt underlying the proofs of claim of Bridgett Woods and Martin
Matanane were time-barred and not valid claims pursuant to California’s
applicable statute of limitations at the time of the bankruptcy filing and at
the time the proofs of claim were
The bankruptcy code provides for Debtors to be able to object to a
proof of claim, although the costs of preparing and filing the objection are
borne by the Debtors /

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The Plaintiffs and other similarly situated bankruptcy debtors must pay
an attorney to object to these time-barred claims, otherwise they are
Therefore, the amount of these time barred claims provides a strong
disincentive to other similar situated bankruptcy debtors (including the
Plaintiffs) to object to the claims where the amount to be paid to the creditor
is less than what an attorney would charge to file an objection to said
Furthermore, since the Plaintiffs and other similarly situated
bankruptcy debtors must take the initial action to object to the time-barred
and/or false proofs of claim, and the Defendants file massive amounts of
these proofs of claim en masse, the Defendants are fully aware that a
majority of Bankruptcy Debtors and their attorneys will not discover the
fraudulent nature a majority of these proofs of claims and therefore fail to
object to a large percentage of them. This allows Defendants to be unjustly
enriched by receiving payments from hundreds of thousands of similarly
situated bankruptcy debtors on these invalid filed proofs of claim that
Plaintiffs fraudulently file en
Jefferson Capital, CL Holdings, and Edwards Capital are not the valid
owners of the debts used as the basis for the proofs of claim filed in the
Plaintiffs’ and other similarly situated individuals’ bankruptcy
Defendants had no right to be paid for Proof of claim # 8-1, filed in Bridgett
Woods’ bankruptcy case, and Proofs of Claim # 12-1, and 13-1 filed in
Martin Mantane’s bankruptcy The basis of these proofs of claim filed
in Plaintiffs’ bankruptcy cases were debts allegedly owed to CitiBank Visa,
Wells Fargo Bank, and Orchard Bank / Household Bank respectively. These
proofs of claim were fraudulent as neither Jefferson Capital, CL Holdings,
nor Edwards Capital are the valid owners or assignees of the underlying
Furthermore, Defendants knew they filed the aforementioned proofs of

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claim based upon time-barred debts. Defendants are some of the largest and
most sophisticated debt collectors in the nation, and hold some of the largest
portfolios of claims in bankruptcy. Therefore, the Defendants knew of the
applicable statute of limitations and intentionally attempted to be paid on
these invalid time-barred claims with the intent to defeat the provisions of
the bankruptcy
Defendants knowingly sought out and accepted payment on fraudulent
and time-barred claims through the Plaintiffs’ and other similarly situated
individuals’ Chapter 13 bankruptcy
During the “Class Period,” as defined below, Defendants continuously
over a consistent period of time filed hundreds of thousands of time-barred
proofs of claim and received payment on said time-barred claims in violation
of the applicable law in many other similarly situated consumer debtors’
Chapter 13 bankruptcy cases throughout the United
Defendants are aware that it is usually not economically feasible for
most consumer Chapter 13 bankruptcy debtors to prepare and file such
objections to these fraudulent proofs of claim, especially where the amount
to be paid to the Creditor is less than the attorney’s fees required to object to
the proof of
Defendants knew the Plaintiffs and hundreds of thousands of other
similarly situated bankruptcy debtors would not object to these fraudulent
and time-barred claims, thus Edwards Capital has worked with its
subsidiaries and Corporate Officers and personnel to form a RICO
Enterprise consisting of the named Defendants to intentionally file these
invalid proofs of claims en masse to unjustly receive material amounts of
payments from the property of thousands of bankruptcy debtors throughout
the United States, with the intent to defeat the provisions of the bankruptcy

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Defendants are aware that time-barred proofs of claim are unlikely to
be objected to as it is often not economically feasible to do so. Upon
information and belief, Edwards Capital, CL Holdings, Jefferson Capital and
Jonathan Kirby have analyzed statistics regarding the rate of payment on
time-barred claims and have concluded that although the claims are not
lawfully entitled to payment, they often will still receive payment as a result
of the economically unfeasible procedures in the bankruptcy proof of claim
Acting with this knowledge, Edwards Capital and the other named
Defendants have created an Enterprise and a system by which to work
together to file hundreds of thousands of small time-barred proofs of claim
in bankruptcy cases, and in doing so accept multi-million dollars in
payments in aggregate on these fraudulent and/or invalid time-barred
Defendants have conspired together to file in concert time-barred
proofs of claim with the intent to knowingly and intentionally misrepresent
the validity of said claims and receive material amounts of property from a
debtor after the filing of a bankruptcy case, with intent to defeat the
provisions of title 11 of the U.S.
Defendants are relying on unlawful and fraudulent business practices
to accept relatively small payments on a large scale in order to reap a
significant financial windfall on claims that Defendants would not have been
able to collect upon, but for the Enterprise’s deceptive fraudulent business
Plaintiffs suffered injuries in fact and lost money as a result of
Defendants’ unlawful and fraudulent business practices alleged

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1 CLASS ACTION ALLEGATIONS

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 85, inclusive, as though fully
set
Plaintiffs and the members of the Class have all suffered injury in fact
as a result of the Defendants’ unlawful
The “Class Period” means 48 months prior to the filing of the
Complaint in this
Plaintiffs bring this lawsuit on behalf of themselves and other Chapter
13 Debtors similarly situated under Rule 23(b)(2) and (b)(3) of the Federal
Rules of Civil Procedures. Subject to additional information obtained
through further investigation and/or discovery, the proposed nationwide class
(“Class”) seeking certification of claims for declaratory and injunctive relief,
and for damages pursuant to 18 U.S.C. § 1962(d) for conspiracy to violate 18
S.C. § 1962(c), and for violating 18 U.S.C. § 1962(c), consists of:

All persons who filed a Chapter 13 bankruptcy case in the United States, where one or more of the named defendants
filed a proof of claim for a claim that Defendants were not
the valid owners of and/or the proof of claim was time- barred at the time the case was filed, and Defendants
received payment from the Chapter 13 Trustee on that
proof of claim within 48 months prior to the filing of the Complaint in this

Excluded from the Class are the named Defendants, and any of their
respective officers, directors, employees, or agents. Plaintiffs reserve the
right to modify or amend the Class definition before the Court determines
whether certification is
Ascertainability. The members of the Class are readily ascertainable
from Defendants’ records and/or Defendants’ agents’ records regarding

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bankruptcy cases within the Class Period where Defendants have filed a
proof of claim and received payment on a fraudulent and/or time-barred
Alternatively, the members of the Class are readily ascertainable by
searching and reviewing the PACER (Public Access to Court Electronic
Records) website for publicly-available proofs of claim filed by Defendants
during the Class Period, and payment histories readily ascertainable from the
Chapter 13 Trustee’s publicly-available websites. Furthermore, the majority
of Debtors are represented by attorneys in their bankruptcy cases and/or the
Debtors’ mailing addresses are listed on the first page of their publicly
available bankruptcy
Numerosity. The members of the Class are so numerous that their
individual joinder is impracticable. Plaintiffs are informed and believe, and
on that basis allege, that the proposed class consists of over a hundred
thousand

15 93. Existence and Predominance of Common Questions of Law and

Fact. Common questions of law and fact exist as to all members of the
Class and predominate over any questions affecting only individual Class
All members of the Class have been subject to the same conduct
and their claims are based on the widespread filing of fraudulent, time-
barred and unlawful proofs of claim in Chapter 13 bankruptcy cases. The
common legal and factual questions include, but are not limited to, the
following:
Whether Defendants routinely file proofs of claim in Chapter 13
bankruptcy cases on statutorily time-barred debts;
Whether Defendants routinely file proofs of claim in Chapter 13
bankruptcy cases on debts that they have no legal right to collect upon;
Whether Defendants knowingly and intentionally filed proofs of claim
in Chapter 13 bankruptcy cases, because it is economically infeasible

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for most Debtors to object to relatively small claims on an individual
basis, and by filing said proofs of claim en masse, Defendants have
enriched themselves through willful violations of the law;
Whether Defendants acted intentionally to enrich themselves by filing
time-barred proofs of claim in Chapter 13 bankruptcy cases;
Whether Defendants, through their conduct, received money that, in
equity and good conscience, belongs to Plaintiffs and other members
of the Class;
Whether the Defendants are an “enterprise” as defined under 18 U.S.C.

10 § 1961(4);

Whether the Defendants’ filing of time-barred and fraudulent proofs of
claim in bankruptcy cases are an activity which affects interstate or
foreign commerce;
Whether the Defendants are engaged in a “pattern of racketeering
activity” as defined under 18 U.S.C. § 1961(5);
Whether the Defendants filing of time-barred and invalid proofs of
claim and receiving payments from bankruptcy trustees upon said time
barred claims in bankruptcy cases is a “racketeering activity,” as

19 defined under 18 U.S.C. § 1961(1)(D) and 18 U.S.C. § 152(5);

Whether the filings of Proofs of Claims by Defendants where they
misrepresented their ownership of the subject claim in bankruptcy
cases is a “racketeering activity,” as defined under 18 U.S.C.

23 1961(1)(D) and 18 U.S.C. § 152(4);

Whether the Defendants’ racketeering activities were a proximate
cause of the injuries to the Plaintiffs and the proposed members of the
Class; and
Whether Plaintiffs and proposed members of the Class are entitled to
actual damages, including but not limited to restitution and/or

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1 disgorgement.

Typicality. Plaintiffs’ claims are typical of the claims of the members
of the Class in that Plaintiffs are members of the Class that Plaintiffs seek to
Plaintiffs, like members of the proposed Class, had monies paid
into their Chapter 13 bankruptcy plans paid out to Defendants for proofs of
claim predicated on debts not owed to the Defendants and/or based upon
uncollectable time-barred debts. Plaintiffs are advancing the same claims
and legal theories on behalf of themselves and all absent members of the
Defendants have no defenses unique to the named Plaintiffs.
Adequacy of Representation. Plaintiffs will fairly and adequately
protect the interests of the members of the Class. Plaintiffs have retained
counsel experienced in bankruptcy law and consumer protection law,
including class actions. Plaintiffs have no adverse or antagonistic interests to
those of the Class, and will fairly and adequately protect the interests of the
Plaintiffs’ attorneys are aware of no interests adverse or antagonistic
to those of the Plaintiffs and the proposed
Superiority. A class action is superior to all other available means for
the fair and efficient adjudication of this controversy. Individualized
litigation would create the danger of inconsistent and/or contradictory
judgments arising from the same set of facts. Individualized litigation would
also increase the delay and expense to all parties and the courts and the issues
raised by this action. The damages or other financial detriment suffered by
individual Class members may be relatively small compared to the burden
and expense that would be entailed by individual litigation of the claims
against the Defendants. The injury suffered by each individual member of
the proposed class is relatively small in comparison to the burden and

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expense of individual prosecution of the complex and extensive litigation
necessitated by the Defendants’ conduct. It would be virtually impossible for
members of the proposed Class to individually redress effectively the wrongs
to them. Even if the members of the proposed Class could afford such
litigation, the Court system could not. Individualized litigation increases the
delay and expense to all parties, and to the court system presented with the
complex legal and factual issues of this case. By contrast, the class action
device presents far fewer management difficulties, and provides the benefits
of a single adjudication, economy of scale, and comprehensive supervision
by a single court. Therefore, a class action is maintainable pursuant to

11 R. Civ. P. 23(b)(3).

Unless the Class is certified, Defendants will retain monies received as
a result of Defendants’ unlawful and fraudulent conduct alleged
Unless a judgment is issued, Defendants will also likely continue to file
proofs of claim on time-barred debts and debts they do not in fact own the
rights to receive payments on, and thus continue to unjustly collect payments
on those invalid claims in violation of the
Furthermore, Defendants have acted or refused to act on grounds that
are generally applicable to the Class so that declaratory and injunctive relief
is appropriate to the Class as a whole, making class certification appropriate
pursuant to Fed R. Civ. P. 23(b)(2).

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1 FIRST CAUSE OF ACTION

VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT

3 ORGANIZATIONS (RICO) ACT [18 U.S.C. § 1962(c)]

[AS T0 JEFFERSON CAPITAL SYSTEMS, LLC; AND

5 JONATHAN KIRBY; ONLY]

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 98, inclusive, as though fully set
Jefferson Capital, and Jonathan Kirby violated the Federal RICO
statute and Plaintiffs were injured as a

Persons
Each Defendant is an entity capable of holding legal or
beneficial interest in property and therefore a “person” within the meaning of

16 18 U.S.C. § 1961(3).

Enterprise
Defendants together form an association-in-fact for the common
and continuing purpose described herein and constitute an enterprise within
the meaning of 18 S.C. § 1961(4) engaged in the conduct of their affairs
through a continuing pattern of racketeering The members of the
enterprise function as a continuing unit with an ascertainable structure separate
and distinct from that of the conduct of the pattern of racketeering
There may also be other members of the enterprise who are unknown at this

Class Action Complaint | Page 26

C 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16	ase 3:16-cv-01897-DMS-MDD Document 1 Filed 07/27/16 Page 27 of 40 103. Defendants are all part of an association-in-fact that jointly works to achieve their common purpose of filing time-barred proofs of claim and/or fraudulent proofs of claim in bankruptcy cases and obtaining payments on those claims. Edwards Capital has organized together different subsidiaries and Corporate Officers to perform different functions of the racketeering activity. Defendant, Jefferson Capital collects on behalf of Defendants, Edward Capital and CL Holdings. All the monies received from the Chapter 13 Trustees as result of the racketeering activities are sent to Defendant, Jefferson Capital’s and Defendant, CL Holdings’ office in St. Louis, Missouri for payment processing. Defendant, Jonathan Kirby with the assistance of David Burton, Chief Executive Officer of Jefferson Capital, oversees and prepares fraudulent and time-barred claims to unjustly enrich the Enterprise with property of the Plaintiffs and others similarly situated. Therefore, the Defendants’ association constitutes an enterprise as that term is defined under 18 U.S.C. § 1961(4).
17
18		Defendants Engaged in and Affected Interstate Commerce
19	104.	Defendants engaged in and affected interstate commerce by
20 21 22 23 24 25 26 27 28	electronically filing proofs of claim in bankruptcy courts throughout the United States. 105. Defendants also engaged in and affected interstate commerce by filing proofs of claim by U.S. Mail in bankruptcy courts throughout the United States. 106. Defendants engaged in and affected interstate commerce by accepting payments through the mail from bankruptcy Trustees throughout the United States. 107. Defendants engaged in and affected interstate commerce by operating Class Action Complaint \| Page 27

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portions of their enterprise in various different states and engaging in interstate
debt

Pattern of Conduct or Participation
Defendants have continuously filed hundreds of thousands of time-
barred proofs of claim in bankruptcy cases throughout the country (including
the Southern District of the State of California), and received payments for said
Proofs of Claim continuously over the last four
On May 9, 2013, Defendants, Jefferson Capital and Jonathan Kirby
filed a proof of claim, marked as Proof of Claim # 10-1 in Plaintiffs, Martin
Matanane’s Chapter 13 bankruptcy case and as a result unjustly received
$172.02 in payments on said fraudulent and time-barred claim (Case No. 13-

13 00986-MM13).

On May 14, 2013, Defendants, Jefferson Capital and Jonathan Kirby
filed a proof of claim, marked as Proof of Claim # 12-1 in Plaintiffs, Martin
Matanane’s Chapter 13 bankruptcy case and as a result unjustly received
$64.66 in payments on said fraudulent and time-barred claim (Case No. 13-

18 00986-MM13).

On May 21, 2013, Defendants, Jefferson Capital and Jonathan Kirby
filed a proof of claim, marked as Proof of Claim # 13-1 in Plaintiffs, Martin
Matanane and Giana Matanane’s Chapter 13 bankruptcy case and as a result
unjustly received $468.16 in payments on said fraudulent and time-barred

23 claim (Case No. 13-00986-MM13).

On May 7, 2014, Defendants, Jefferson Capital and Jonathan Kirby
filed Proof of Claim # 8-1 on behalf of the enterprise in Plaintiff, Bridgett
Woods’ Bankruptcy case and as a result Defendants unjustly received
$266.20 in payments on Proof of Claim # 8-1 (Case No. 14-02497-MM13).
Further, Defendants have repeatedly over a course of extended period

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of time filed hundreds of thousands of fraudulent and time-barred proofs of
claim and received payments as a result, from the Plaintiffs’ and other similarly
situated individuals’ bankruptcy
As laid out above, all proofs of claim were filed after October 15, 1970,
and the last proof of claim was filed within two years of the previous proofs of
In fact, each Defendant has committed or aided and abetted in the
commission of thousands of acts of racketeering activity over the last four
Each act of racketeering activity was related, had a similar purpose,
involved the same or similar participants and method of commission, had
similar results and impacted similar victims, including Plaintiffs and the other
similarly situated class
The majority of the proofs of claim filed by Defendants are based upon
time-barred debts and/or claims that Defendants had no right to payment
They have demonstrated a pattern of filing proofs of claims in
hundreds of thousands of chapter 13 bankruptcy cases throughout the United
States, wherein a majority of said claims are invalid and they had no right to
collect upon
The multiple acts of racketeering activity which Defendants committed
or aided and abetted in the commission of, were related to each other and
amount to and pose a threat of continued racketeering activity, and therefore
constitute a “pattern of “racketeering activity” as defined in 18 U.S.C.

23 1961(5).

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1 Racketeering Activities

2 [18 U.S.C. § 1961(1)(D)]

3 Violations of 18 U.S.C. § 152(4)

The Plaintiffs’ bankruptcy proceedings had been commenced prior to
Defendants’ filing the aforementioned proofs of
The Defendants presented or caused to be presented a proof of claim in
the bankruptcy cases of
The proofs of claim filed by Defendants in Plaintiffs’ bankruptcy cases
were false as to a material matter; and the Defendants knew the proofs of
claim were false and acted knowingly and fraudulently when they filed said
proofs of the
The Defendants were not the valid owners of the alleged debts used to
form the basis of Proofs of Claim filed in Plaintiffs’ cases, therefore
Defendants knowingly and fraudulently presented a false claim for proof
against the estate of the Plaintiffs in violation of 18 U.S.C. § 152(4).
The underlying debts used to form the basis of Defendants’ proofs of
claim filed in Plaintiffs’ bankruptcy cases were sold multiple times to debt
collectors and the Defendants never in fact purchased the legal rights to collect
upon the debts, yet rather merely filed the proofs of claim by obtaining
identifiable information regarding the underlying
But for Defendants’ violations of 18 U.S.C. §152(4) Plaintiffs and others
similarly situated would not have been deprived of the funds paid to
Therefore, Plaintiffs and the Class members have suffered compensable
injury proximately caused by the Defendants’ violations of 18 S.C. §152(4).

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1 Racketeering Activities

2 [18 U.S.C. § 1961(1)(D)]

3 Violations of 18 U.S.C. § 152(5)

The amount of funds paid to Defendants by the Bankruptcy Trustee on
behalf of the Plaintiffs were material amounts as that term is defined in 18

7 U.S.C. §152(5).

Defendants’ practice of pursuing payments en masse on time-barred
debts by filing proofs of claim in Chapter 13 bankruptcy cases where it is
financially unfeasible for Debtors to incur attorney’s fees to object to the
claims despite the claims being invalid, unjustly enriched
Defendants possessed the specific intent to defeat the provisions of title
11 (i.e. bankruptcy code), when they filed these proofs of claim causing the
Plaintiffs to pay the Defendants material amounts of
By knowingly filing claims on time-barred debts wherein they would
receive payment on claims that Defendants had no basis for payment under the
bankruptcy code, the Defendants intended to defeat the provisions of Title 11,
therefore Defendants violated 18 U.S.C. 152(5).
Furthermore, by knowingly operating a scheme to obtain payment on
claims for which the Defendants were not the valid owners of the claim under
Title 11, and then receiving payment on those claims, Defendants violated 18

22 U.S.C. §152(5).

But for Defendants’ violations of 18 U.S.C. §152(5), Plaintiffs and
others similarly situated would not have been deprived of the funds paid to
Therefore, Plaintiffs and members of the Class have suffered
compensable injury proximately caused by Defendants’ violations of 18

28 U.S.C. §152(5).

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1 Racketeering Activities

2 18 U.S.C. 1961(1)(D)

3 Fraud involving a Case under Title 11

Defendants’ violations of 18 U.S.C. § 152(4) and § 152(5) are offenses
involving fraud connected with a case under title 11 and thus “Racketeering
Activities” within the meaning of 18 U.S.C. § 1961(1)(D).
Defendants, each of whom are persons associated with the enterprise,
did knowingly, willfully and unlawfully conduct or participate, directly or
indirectly, in the affairs of the enterprise through a pattern of racketeering
activity within the meaning of 18 U.S.C. § 1961(1)(D), 1961(5), and 1962(c).
The Racketeering Activity was made possible by Defendants’ regular and
repeated use of the facilities and services of the Defendants had the
specific intent to engage in the substantive RICO violation alleged
Defendants committed multiple false misrepresentations of material
fact regarding the validity of the claims when they prepared and filed
multiple proofs of claim in Plaintiffs’ bankruptcy
The act of preparing and filing a proof of claim in Plaintiffs’
bankruptcy cases were misrepresentations that the Defendants possessed
valid claims that they had a right to collect
The proofs of claim filed by Defendants in Plaintiffs’ bankruptcy cases
were invalid as the Defendants were barred from collecting upon them under
the applicable state law statute of
Defendants were not the valid owners of the underlying debts that
were represented as the basis for the Proofs of Claim filed in the Plaintiffs’
bankruptcy cases. By placing Jefferson Capital’s name on the proof of claim
as the “Creditor” or “Person whom Debtor owes money or property” this was

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a material misrepresentation, as the Plaintiffs were not the valid owner or
assignee of the underlying
Defendants knew or reasonably should have known that there was no
legal basis for payment on their unlawful time-barred
Defendants knew or reasonably should have known that they were not
the valid owners or assignees of the debts underlying their fraudulent proofs
of
Defendants possessed the intent to deceive the bankruptcy court, the
Plaintiffs, and the Chapter 13 Bankruptcy Trustees by filing these small
proofs of claim en masse as they knew at the time of filing that the
Defendants were not lawfully entitled to payment on said proofs of claim, but
would likely not be objected to, and therefore filed the proofs of claim with
the specific intent to deceive the Plaintiffs in order to receive payment by
defeating the provisions of the bankruptcy
The Plaintiffs and thousands of other similarly situated individuals
have justifiably relied upon the fraudulent misrepresentations made by the
Defendants regarding the validity of the Defendants’ proofs of
Plaintiffs were justified in relying on the proofs of claim, because
Defendants filed the claims and represented themselves as the valid owners
with a legal right to collect upon these
But for the Defendants misrepresentations regarding the validity and
legal status of the proofs of claim, the Plaintiffs and others similarly situated
would not have been deprived of the funds paid to
Therefore, Plaintiffs and the other members of the Class have suffered
compensable injury proximately caused by the commission of the Defendants’

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Injury to Plaintiffs in their Business or Property
Plaintiffs and others similarly situated have been injured and continue
to be injured in their business and property as a direct result of Defendants’
violations of 18 U.S.C. 1962(c). The unlawful action of Defendants have
directly and proximately caused and continues to cause injuries to Plaintiffs
and other similarly situated individuals in their business and/or property in an
amount to be determined according to proof at

10 SECOND CAUSE OF ACTION

12 CONSPIRACY TO VIOLATE THE RACKETEER INFLUENCED AND

CORRUPT ORGANIZATIONS (RICO) ACT

14 [CONSPIRACY – 18 U.S.C. § 1962(d)]

15 [AS TO ALL DEFENDANTS]

Plaintiffs reallege and incorporate by reference each and every
allegation contained in Paragraphs 1 through 145, inclusive, as though fully
set
In violation of 18 U.S.C. 1962(d), the Defendants Edwards Capital, CL
Holdings, Jefferson Capital, and Jonathan Kirby knowingly, willfully, and
unlawfully conspired to facilitate a scheme which included the operation and
management of a RICO enterprise through a pattern of racketeering activity
as alleged in paragraphs 1-145
The conspiracy commenced as early as 2012 and is ongoing.
The conspiracy’s purpose was to divert money from the Plaintiffs’
Chapter 13 bankruptcy estate for their own benefit and to facilitate the filing
of time-barred and invalid claims en masse to defraud Bankruptcy Debtors,

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the Chapter 13 Trustees, and the Bankruptcy courts into paying the
Defendants on fraudulent and/or time-barred proofs of
Each Defendant committed at least one overt act in furtherance of such
These acts in furtherance of the conspiracy included, misleading
Plaintiffs as to the true validity of the proofs of claim filed in the
aforementioned bankruptcy cases, preparing the invalid proofs of claim,
filing the invalid proofs of claim in the Plaintiffs’ bankruptcy cases,
analyzing statistics regarding the rate of objections, meeting with the other
Defendants to plan out the organizational structure of the enterprise,
structure the different subsidiary entities of Edwards Capital together to most
efficiently mislead the Plaintiffs and other similarly situated bankruptcy
debtors, and accepting payments upon said invalid proofs of claim on behalf
of the
Defendants have colluded together to file claims en masse in the
Plaintiffs’ Bankruptcy cases and other bankruptcy courts throughout the
United States, for claims that they would not be entitled to collect upon
under applicable
Defendants have colluded together to create and implement a
nationwide system to use the proof of claim system in Chapter 13 cases to
fraudulently enrich themselves by seeking out payment on claims they know
they are not lawfully entitled to payment upon. Edwards Capital executives
have met with the Chief Executive Officer of Jefferson Capital, David
Burton, and officers of CL Holdings, as well as the Director of Jefferson
Capital’s Bankruptcy Department, Jonathan Kirby and reviewed statistics
and rates of objections by bankruptcy debtors regarding time-barred and
invalid proofs of claim. Defendants’ executives through multiple
communications and meetings with all of the other Defendants have
conspired to knowingly file proofs of claim that they do not have a valid

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claim to payment upon and/or know are time barred by the non-bankruptcy
law applicable statute of
Upon information and belief, Defendants have prepared and analyzed
statistics regarding the rate of objection to these time barred proofs of claim,
and through said analysis Defendants know that Debtors and Chapter 13
Trustees rarely object to such claims as it is often not economically feasible
given the costs of paying a lawyer to file objections to said proofs of
Therefore, based upon the low rate of objections by bankruptcy debtors,
Defendants have knowingly colluded together to file time barred a proofs of
claim, in order to unjustly receive payment on said claims regardless of the
claims’ actual
Defendants have no lawful, good faith reason to file claims en masse
other than to unjustly enrich themselves via this fraudulent conduct, thus they
possess the specific intent to file these invalid proofs of claims in order to
acquire multi-million dollars in payments from Chapter 13 bankruptcy
debtors throughout the United
Defendants have colluded together as part of an enterprise whose
purpose is to perpetuate a massive fraud upon thousands of similarly situated
bankruptcy debtors throughout the United States, in order to unjustly enrich
the Defendants with hundreds of millions of dollars in unlawful claims that
Defendants would not have received payment upon but for said conspiracy to
knowingly and fraudulently receive material amounts of property from
Debtors after the filing of a bankruptcy case, with intent to defeat the
provisions of the bankruptcy
Even if one of the Defendants did not agree to harm the Plaintiffs
specifically, the purpose of the acts they engaged in was to advance the
overall object of the conspiracy, and the harm to Plaintiffs was a reasonably
foreseeable consequence of Defendants’

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Plaintiffs and others similarly situated have been injured and continue
to be injured in their business and property by Defendants’ conspiracy in
violation of 18 U.S.C. 1962(d). The unlawful action of Defendants have
directly, illegally, and proximately caused and continues to cause injuries to
Plaintiffs and others similarly situated in their business or

8 PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray that judgment be entered against Defendants,
and each of them, and that Plaintiffs and the Class members be awarded as follows:
The action be certified as a Class Action, Plaintiffs be appointed as the
representatives of the Class, and Plaintiffs’ attorneys be appointed Class
counsel;
Compensatory damages, for a sum duly trebled, plus interest to the Class
pursuant to 18 U.S.C. § 1964(c);
Attorney’s fees, together with all costs and expenses pursuant to 18

17 U.S.C. § 1964(c);

A temporary, preliminary and/or permanent order for injunctive relief
requiring Defendants to: (i) discontinue filing proofs of claim in Chapter
13 bankruptcy cases on time-barred debts or debts they have no interest
in; (ii) withdraw all proofs of claim already filed in Chapter 13
bankruptcy cases on time-barred debts or debts they have no interest in;
(iii) refuse any payments already processed by Chapter 13 trustees but not
yet deposited by Defendants on proofs of claim for time-barred debts or
debts they have no interest in;

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Distribution of any monies recovered on behalf of members of the Class
via fluid recovery or cy pres recovery where necessary and as applicable
to prevent Defendants from retaining the benefits of their wrongful
conduct;
Prejudgment and post-judgment interest; and,
Any and all other relief that this Court deems necessary or appropriate.

8 Dated: July 26, 2016 Respectfully submitted,

HYDE & SWIGART
By: /s/ Joshua B. Swigart
Joshua B. Swigart,

Attorneys for Plaintiffs

TRIAL BY JURY

Pursuant to the Seventh Amendment to the Constitution of the United States

of America, Plaintiffs are entitled to, and demand, a trial by jury.

Dated: July 26, 2016 Respectfully submitted,

HYDE & SWIGART

By: /s/ Joshua B. Swigart

Joshua B. Swigart,
Attorneys for Plaintiffs

Class Action Complaint | Page 38

JS 44 (Rev. 12/12)

Case 3:16-cv-01897-DMSC–IMVDIDL CDOocVuEmRenSt H1 EFEilTed 07/27/16 Page 39 of 40

The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)

I. (a) PLAINTIFFS

Martin Matanane; and Bridgett Woods, individually and on behalf of all

others similarly situated

(b) County of Residence of First Listed Plaintiff San Diego

(EXCEPT IN U.S. PLAINTIFF CASES)

(c) Attorneys (Firm Name, Address, and Telephone Number)

Joshua B. Swigart, Esq. (SBN: 225557)

Hyde & Swigart (619) 233-7770

2221 Camino Del Rio South, Suite 101, San Diego, CA 92108

DEFENDANTS

Jefferson Capital Systems, LLC, d/b/a Jefferson Capital International,

LLC; Edwards Capital, LLC d/b/a Flexpoint Ford, LLC; CL Holdings, LLC; Jonathan Kirby; and Does 1-50

County of Residence of First Listed Defendant

(IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND INVOLVED.

Attorneys (If Known)

’16CV1897 DMS MDD

II. BASIS OF JURISDICTION (Place an “X” in One Box Only)

❒ 1 U.S. Government ’ 3 Federal Question

Plaintiff (U.S. Government Not a Party)

❒ 2 U.S. Government ’ 4 Diversity

Defendant (Indicate Citizenship of Parties in Item III)

III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintif (For Diversity Cases Only) and One Box for Defendant)

PTF DEF PTF DEF

Citizen of This State ’ 1 ’ 1 Incorporated or Principal Place ’ 4 ’ 4

of Business In This State

Citizen of Another State ’ 2 ’ 2 Incorporated and Principal Place ’ 5 ’ 5

of Business In Another State

Citizen or Subject of a ’ 3 ’ 3 Foreign Nation ’ 6 ’ 6 Foreign Country

NATURE OF SUIT (Place an “X” in One Box Only)

CONTRACT

TORTS

FORFEITURE/PENALTY

BANKRUPTCY

OTHER STATUTES

❒ 110 Insurance

❒ 120 Marine

❒ 130 Miller Act

❒ 140 Negotiable Instrument

❒ 150 Recovery of Overpayment & Enforcement of Judgment

❒ 151 Medicare Act

❒ 152 Recovery of Defaulted Student Loans (Excludes Veterans)

❒ 153 Recovery of Overpayment of Veteran’s Benefits

❒ 160 Stockholders’ Suits

❒ 190 Other Contract

❒ 195 Contract Product Liability

❒ 196 Franchise

’

PERSONAL INJURY

310 Airplane

315 Airplane Product Liability

320 Assault, Libel & Slander

330 Federal Employers’ Liability

340 Marine

345 Marine Product Liability

350 Motor Vehicle

355 Motor Vehicle Product Liability

360 Other Personal Injury

362 Personal Injury – Medical Malpractice

PERSONAL INJURY

❒ 365 Personal Injury –

Product Liability

❒ 367 Health Care/

Pharmaceutical Personal Injury Product Liability

❒ 368 Asbestos Personal

Injury Product Liability

PERSONAL PROPERTY

❒ 370 Other Fraud

❒ 371 Truth in Lending

❒ 380 Other Personal

Property Damage

❒ 385 Property Damage Product Liability

❒ 625 Drug Related Seizure

of Property 21 USC 881

❒ 690 Other

’

422 Appeal 28 USC 158

423 Withdrawal

28 USC 157

’

375 False Claims Act

400 State Reapportionment

410 Antitrust

430 Banks and Banking 450 Commerce

460 Deportation

470 Racketeer Influenced and Corrupt Organizations

480 Consumer Credit

490 Cable/Sat TV

850 Securities/Commodities/ Exchange

890 Other Statutory Actions 891 Agricultural Acts

893 Environmental Matters 895 Freedom of Information

Act

896 Arbitration

899 Administrative Procedure Act/Review or Appeal of Agency Decision

950 Constitutionality of State Statutes

PROPERTY RIGHTS

’

820 Copyrights

830 Patent

840 Trademark

LABOR

SOCIAL SECURITY

❒ 710 Fair Labor Standards Act

❒ 720 Labor/Management Relations

❒ 740 Railway Labor Act

❒ 751 Family and Medical Leave Act

❒ 790 Other Labor Litigation

❒ 791 Employee Retirement Income Security Act

’

861 HIA (1395ff)

862 Black Lung (923)

863 DIWC/DIWW (405(g))

864 SSID Title XVI

865 RSI (405(g))

REAL PROPERTY

CIVIL RIGHTS

PRISONER PETITIONS

FEDERAL TAX SUITS

❒ 210 Land Condemnation

❒ 220 Foreclosure

❒ 230 Rent Lease & Ejectment

❒ 240 Torts to Land

❒ 245 Tort Product Liability

❒ 290 All Other Real Property

❒ 440 Other Civil Rights

❒ 441 Voting

❒ 442 Employment

❒ 443 Housing/

Accommodations

❒ 445 Amer. w/Disabilities –

Employment

❒ 446 Amer. w/Disabilities –

Other

❒ 448 Education

Habeas Corpus:

❒ 463 Alien Detainee

❒ 510 Motions to Vacate Sentence

❒ 530 General

❒ 535 Death Penalty

Other:

❒ 540 Mandamus & Other

❒ 550 Civil Rights

❒ 555 Prison Condition

❒ 560 Civil Detainee –

Conditions of Confinement

❒ 870 Taxes (U.S. Plaintiff or Defendant)

❒ 871 IRS—Third Party

26 USC 7609

IMMIGRATION

❒ 462 Naturalization Application

❒ 465 Other Immigration Actions

ORIGIN (Place an “X” in One Box Only)

’ 1	Original	❒ 2 Removed from	❒ 3 Remanded from	❒ 4 Reinstated or	❒ 5 Transferred from	❒ 6 Multidistrict
	Proceeding	State Court	Appellate Court	Reopened	Another District	Litigation
					(specify)
Cite the U.S. Civil Statute under which you are filing *(Do not cite jurisdictional statutes unless diversity): 18 U.S.C. § 1962(c), 18 U.S.C. § 1962(d) VI. CAUSE OF ACTION* Brief description of cause: Violations of the Racketeer Influenced and Corrupt Organizations Act

REQUESTED IN

CHECK IF THIS IS A CLASS ACTION

DEMAND $ CHECK YES only if demanded in complaint:

COMPLAINT:

RELATED CASE(S)

UNDER RULE 23, F.R.Cv.P.

5,000,000.00

JURY DEMAND: ’ Yes ’ No

IF ANY (See instructions): JUDGE DOCKET NUMBER

DATE SIGNATURE OF ATTORNEY OF RECORD

07/27/2016 s/Joshua B. Swigart

FOR OFFICE USE ONLY

RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE

JS 44 Reverse (Rev. 12/12)Case 3:16-cv-01897-DMS-MDD Document 1 Filed 07/27/16 Page 40 of 40

INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44

Authority For Civil Cover Sheet

The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk 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 filed. The attorney filing a case should complete the form as follows:

I.(a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title.

County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides 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 filing. (NOTE: In land condemnation cases, the county of residence of the “defendant” is the location of the tract of land involved.)
Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section “(see attachment)”.

The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., 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, precedence is given in the order shown below.

United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here. United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an “X” in this box.

Federal question. (3) This refers to suits under 28 U.S.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 1 or 2 should be marked.

Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity cases.)

Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this section for each principal

Nature of Suit. Place an “X” in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient to enable the deputy clerk or the statistical clerk(s) in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most

Place an “X” in one of the six boxes.

Original Proceedings. (1) Cases which originate in the United States district courts.

Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petition for removal is granted, check this box.

Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date.

Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date. Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers.

Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this box is checked, do not check (5) above.

Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service

Requested in Complaint. Class Action. Place an “X” in this box if you are filing a class action under Rule 23, F.R.Cv.P. Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction. Jury Demand. Check the appropriate box to indicate whether or not a jury is being

Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases.

Date and Attorney Signature. Date and sign the civil cover sheet.

Jefferson Capital Systems, LLC et al – RICO Complaint

10 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

24 INTRODUCTION

9 JURISDICTION AND VENUE

13 STANDING FOR PLAINTIFFS TO BRING THIS ACTION

9 GENERAL ALLEGATIONS

10 Relationships between Defendants

Predicate Acts Involving Plaintiff Bridgett Woods

Predicate Acts Involving Plaintiff Martin Matanane

14 General Facts Relating to Plaintiffs’ Claims

1 CLASS ACTION ALLEGATIONS

15 93. Existence and Predominance of Common Questions of Law and

1 FIRST CAUSE OF ACTION

VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT

10 SECOND CAUSE OF ACTION

12 CONSPIRACY TO VIOLATE THE RACKETEER INFLUENCED AND

8 PRAYER FOR RELIEF

TRIAL BY JURY

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