The Florida attorney general has reached a settlement with a Florida lawyer accused of defrauding thousands of consumers in a debt relief scheme, according to a report by NBC 6 (“Judge Bars Lawyer From Doing Debt Consolidation Work,” Nov. 25, 2008).

Lawyer Laura Hess, owner of Florida-based firms Laura Hess & Associates P.A., Hess Kennedy Chartered LLC, and the Consumer Law Center LLC, has been barred from engaging in any further debt settlement services and will lose her law license for five years.

Attorney General Bill McCollum filed claims against Hess suggesting that she defrauded 18,000 Floridians out of millions of dollars after promising to settle their debts for “pennies on the dollar.” In recent months, McCollum has aggressively sought legal action against debt settlement companies accused of defrauding consumers.

In Hess’s case, McCollum said consumers were falsely told that they did not have to pay creditors, which led to lawsuits and other actions against numerous debtors. Other consumers were told that their creditors would be paid off and that the amount of their debt would be reduced once they started making monthly direct deposit payments. Hess’s customers told NBC 6 that their bills were never paid off, and that in some cases, their credit scores dropped by hundreds of points.

Shortly after McCollum’s office filed the lawsuit, a judge ordered that Hess’ companies be liquidated in order to provide restitution to affected consumers. Some banks have reached settlements with McCollum’s office to help customers who may have been duped by Hess’ companies: Capital One will forgive $1.8 million in debts for 18,000 affected customers, and HSBC will erase the debt of 6,000 of its affected customers.

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