Federal authorities have permanently banned Blackstone Legal from the debt collection industry after the company extorted millions from consumers for non-existent “phantom debts” using threats of arrest and legal action.
Key Takeaways
- The FTC has permanently banned Blackstone Legal and its owners from the debt collection industry for coercing consumers into paying debts they did not owe
- The company collected over $8.2 million from consumers through deceptive practices including false threats of arrest, lawsuits, credit damage, and wage garnishment
- A monetary judgment of $8,254,368 has been imposed, partially suspended pending surrender of the defendants’ assets
- The court order requires destruction of all consumer data obtained during the scheme and imposes a 20-year compliance obligation
- Multiple federal regulations were violated, including the FTC Act, Fair Debt Collection Practices Act, and the FTC’s Impersonation Rule
Phantom Debt Collection Scheme Dismantled
In a decisive blow against predatory debt collection practices, the Federal Trade Commission has secured a court order to permanently ban Blackstone Legal and its owners from the debt collection industry. The lawsuit, filed in February 2025 and recently resolved with a stipulated final order, exposed a massive scheme that preyed on vulnerable consumers across the country. Blackstone Legal systematically coerced Americans into paying debts they never actually owed, employing harassment and deception to extract millions from unsuspecting victims. The FTC’s action reinforces President Trump’s commitment to protecting American consumers from financial predators.
“This operation collected on false debt and harassed consumers with fake threats of lawsuits and damaged credit if they refused to pay,” said Christopher Mufarrige.
Deceptive Tactics and Violations
The FTC’s investigation revealed a litany of illegal practices employed by Blackstone Legal to intimidate consumers. The company routinely impersonated legitimate businesses and made false threats of arrest and legal action against consumers who refused to pay debts they didn’t owe. The operation used fictitious business names to conceal their true identity while making these threats, violating multiple federal regulations designed to protect consumers from such predatory practices. Many victims, fearing the consequences threatened by these debt collectors, paid money they didn’t actually owe.
“On April 30, 2025, the FTC filed an amended complaint and final order in the U.S. District Court for the Northern District of Georgia against a debt collection company in connection with allegations that the company engaged in deception and coercion to pressure consumers into paying debts they did not owe, in violation of the FTC Act, the Fair Debt Collection Practices Act (FDCPA), Regulation F, the Gramm-Leach-Bliley Act (GLBA), and the FTC’s Impersonation Rule,” stated FTC .
Monetary Judgment and Asset Surrender
The court’s final order includes a substantial monetary judgment of $8,254,368 against Blackstone Legal, reflecting the total amount fraudulently collected from consumers. This judgment has been partially suspended due to the defendants’ claimed inability to pay the full amount. However, the defendants must surrender all their assets to satisfy a portion of this judgment. The FTC has built in safeguards to ensure compliance – if the defendants are found to have misrepresented their financial situation, the full judgment immediately becomes due and payable.
“Last year, the Federal Trade Commission (FTC) filed suit in the U.S. District Court for the Northern District of Georgia, alleging Global Circulation, Inc. (GCI) and its owner, Kenneth Redon III, violated the FTC Act, Fair Debt Collection Practices Act and its associated Regulation F, § 521 of the Gramm-Leach-Bliley Act, and the FTC’s Trade Regulation Rule on Impersonation of Government and Businesses,” stated Federal Trade Commission (FTC).
Long-Term Consequences for Violators
Beyond the immediate financial penalties and industry ban, the court order imposes significant long-term restrictions on the defendants. They are required to permanently destroy all consumer data obtained during their fraudulent operations, effectively wiping out their customer database. Additionally, the order mandates a 20-year compliance and recordkeeping obligation, ensuring the FTC can monitor their activities for decades to come. This comprehensive approach demonstrates the government’s commitment to not just stopping current violations but preventing future predatory practices.
Victory for Consumer Protection
The FTC’s successful action against Blackstone Legal represents a significant victory in the ongoing battle against predatory debt collection practices. The unanimous 3-0 vote by the FTC commissioners to approve the final order demonstrates the bipartisan recognition of the need to protect American consumers from such financial exploitation. The case serves as a warning to other companies that might consider similar deceptive practices. For consumers who have fallen victim to such schemes, the FTC continues to provide resources for reporting fraud and scams through their ReportFraud.ftc.gov website.
