The Consumer Financial Protection Bureau alleges a company duped U.S. immigrants into wearing electronic tracking bracelets and paying thousands of dollars in fees in hopes of getting them removed.
A lawsuit announced by the agency on Monday, which was joined by the attorneys general of Massachusetts, New York and Virginia, says that the company, Libre by Nexus, for years has been "preying on" immigrants held in federal detention centers. According to the complaint, Libre's primary business is offering to put up the money detainees need — often nearly $10,000 — as a bond to gain release while they wait for a trial, which can often take as long as three years.
In return, Libre required clients to wear what it says were GPS-tracking bracelets and pay a monthly fee of $420, the CFPB claims.
In reality, the bracelets often did not have functioning GPS capabilities, the government said. The suit also alleges that Libre's clients often thought the fees they were paying were going toward the original bond, when in fact none of the payments were.
Libre's bonds, which the suit says were paid by third parties, were repaid by the government when Libre's clients returned for their trials. Libre's fees translated to an annual interest rate of about 57% for its bail bond loans, which many of its customers struggled to pay, according to the complaint.
The suit also says that Libre often threatened to "re-detain or deport consumers for non-payment," even though, as a private corporation with no connection to the government, it had no authority to do so.
"Libre ensures these vulnerable immigrants are hamstrung from achieving the American Dream right out of the gates," CFPB Acting Director Dave Uejio said Monday in a call with reporters.
Libre is acting as a middleman between immigrants and bail bondsmen — not as the actual lender — and extracting unfairly high fees for that service, he added. "Today's action should show that financial scams that target immigrants and increase the ethnic and racial divide in America will not be tolerated," Uejio said.
The CFPB and prosecutors in Massachusetts, New York and Virginia also sued Nexus CEO Mike Donovan, as well as two other of the company's executives.
In a statement to CBS MoneyWatch, Donovan said his company "categorically denies" the allegations by the CFPB and states. "Libre by Nexus is committed to fighting for immigrants scarred by the torture of 'civil' immigration detention," Donovan said. "While we have fought to release tens of thousands of immigrants from detention, especially during the last four years, the [attorneys general] have taken time and money to investigate our company."
Donovan also said his company is "proud of its work and believes sunlight is the best disinfectant. We plan to vigorously defend this suit and prevail at trial."
Nexus was founded in 2013 by Donovan and his husband Richard Moore, who is also named in the suit. Donovan and Moore have said they were inspired to launch Libre, which means free in Spanish, because of their own experiences. Both have spent time behind bars after being convicted for writing bad checks. Court filings have showed that the company's annual profits more than doubled in the last decade to $60 million, as President Donald Trump increased efforts to arrest immigrants.
In a call with reporters on Monday, Virginia Attorney General Mark Herring said the federal government's suit against Nexus was years in the making and that the company's misconduct goes back to at least 2014. In July, Nexus paid $5.5 million to settle a case with the California Insurance Commission, also agreeing to cease issuing immigration bonds in the state. The case claimed that Nexus was transacting in bail bonds without being properly licenses. Nexus paid the fine without admitting wrongdoing.
In December, Nexus settled a similar case in Virginia by paying a $425,000 fine and agreeing to lower its fees in the state. At the time, the Washington Post reported that the company was under investigation by at least nine federal and state government agencies, including the U.S. Department of Justice.
New York Attorney General Letitia James on Monday described Nexus' ankle bracelets as "shackles."
"Libre by Nexus engaged in deceptive practices that targeted our nation's most vulnerable population, placing profits above the lives of human beings," she said.