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California Sues 'Credit Repair' Firm

Company allegedly ignored repeated warnings to register with state

October 1, 2009
California Attorney General Jerry Brown has sued two California businessmen -- Todd Swick and Michael Sardo, owners of Los Angeles based Executive Financial Credit Services -- for ignoring "repeated warnings" to register with his office and post a $100,000 bond with the Secretary of State.

"Swick and Sardo violated California law by refusing to register their credit repair business with the Attorney General's office and post a $100,000 bond, even after repeated warnings," Brown said. "So today, attorneys from my office are filing suit, sending a clear signal to credit repair firms operating in California that they must register with the Attorney General's office and follow the law."

Executive Financial Credit Services offers to help repair their customers' credit by challenging negative or inaccurate items on credit reports directly with the three credit report bureaus-Experian, TransUnion, and Equifax. Under California's 1984 Credit Services Act, companies providing credit repair services in California are required to register with the Attorney General's office and post a $100,000 surety bond with the Secretary of State.

In late 2008, Brown's office sent a letter directing the business to register and provided information to assist in the process. Brown says the business did not respond. Despite repeated warnings, Executive Financial Credit Services did not register and obtain a bond.

Swick informed the state the business was no longer conducting credit repair services and didn't need to register. Brown's office, however, said it discovered the business was continuing to operate as a credit repair firm.

In early 2009, Sardo informed Brown's office that the business was moving from California to Arizona and would not complete the registration process. Brown's office informed Sardo that if the business continued offering credit repair services in California, it was bound by California law to register.

• California Civil Code section 1789.18 for not posting a $100,000 surety bond with the Secretary of State's office;

• California Civil Code section 1789.25 for conducting a business without first obtaining a certificate of registration from the Attorney General's Office; and

• California Civil Code section 1789.13(a) for charging consumers money before completely performing the services they promised.

The suit seeks a permanent injunction to keep Executive Financial Credit Services and its principals from operating illegally, civil penalties of not less than $200,000 and restitution for victims.

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