Case Summary

The U.S. Department of Education and its business partner are demanding payments for student loans that I did not receive as a student. The U.S. Department of Education is basing its demands on student loan applications and on its internal documents. However, student loan applications and an agency’s internal documents do not mean that student loan borrowing and lending have taken place. Accordingly, people from the U.S. Department of Education have failed to validate the non-existing loans, but so far that has not stopped them from making demands, that have been accompanied by threats.

This is an open, so far unresolved case. This case evolves further slowly, but surely. At this point I have invoiced Mr. Arne Duncan, U.S. Secretary of Education for extortion – for the services rendered in self defense in involuntary servitude conditions. So, let’s see, where this will take us.

Contents

• What Makes This an Anti-Extortion Case?
• What is Demanded From the Suspected Extortionist?
• Case Background
• Next Steps
• Public Investigation of Extortionist Suspects
• Legal Scrutiny of Student Loan Application Promissory Notes
• Who Actually Owns My Student Loan?
• If There Is Fraud and Extortion, Can We Hold the Leaders Responsible For It?

What Makes This an Anti-Extortion Case?

The U.S. Department of Education and its business partner are demanding payments for student loans without offering debt validation. The amounts demanded are not based on the amounts of money I received. Instead, the amounts demanded are based on loan applications and database records that the U.S. Department of Education received from a state agency over 12 years after I graduated from college. The U.S. Department of Education demands money based on the database records

• without offering loan contracts that would prove these amounts to be correct,
• without offering proof that I actually borrowed these amounts, and
• without offering proof that I agreed to the loan terms that The U.S. Department of Education and its business partner are applying.

The U.S. Department of Education and its business partner are demanding payments for unverified student loans through usage of special governmental powers granted to the U.S. Department of Education and through usage of threats.

What is Demanded From the Suspected Extortionist?

The demand made here is to STOP EXTORTION. The U.S. Department of Education, acting as a lender, must provide copies of (1) the loan disbursement documents and (2) loan contracts that apply to the loans that I as borrower did actually receive, and contain all the terms and conditions of the loan agreements of the loans that I actually received. Further, the U.S. Department of Education and its business partners must then also abide by the actual loan contract terms and conditions.

If the U.S. Department of Education fails to validate the debt by providing copies of the actual loan contracts, the U.S. Department of Education and its business partner must

• stop the collection of unverified amounts,
• delete and completely remove from their collection records all references to unverified accounts and amounts,
• send me copies of such deletion requests, stating that all collection activities on the specified accounts have been halted, and no collection activities on the specified accounts will be taken up any time in the future.

Case Background

My name is Thomas Eklund. I came to the U.S. in 1989 from the former Soviet Union, a totally different country. I attended Rhode Island College in the first half of 1990s, when this state owned school was relatively inexpensive.

I was very happy that I was able to go to college, but I had little idea how the student loan process worked. I filled in all the loan applications that I was told to fill in. As a refugee who was in the U.S. on a Green Card, without any income, work experience in the U.S., credit history, co-signer or collateral, I did not qualify for many of the student loans that I applied for. I did qualify for the Pell Grant and for Rhode Island College Honors Grant, which helped to pay for my education.

I had diverse interests, but majored in economics. After graduating from college in 1996, I lived in Europe for a while. In the late 1990-s I decided to learn IT and database development on my own. For the last decade I have worked in the U.S. as database developer.

In 2008 I received collection notices from the U.S. Department of Education business partner, FMS Investment Corp. (dba FMS Services, aka Financial Management Systems, http://www.fmsdc.com), a private collection agency. FMS Services business name is deceptively similar to the Financial Management Service (or FMS, http://www.fiscal.treasury.gov/), a bureau of the United States Department of the Treasury, which used to have Web address http://www.fms.treas.gov. However, these are two different entities.

I made a settlement offer of $3,000, but did not received any response to it. The settlement offer that I made was lower than was the amount that I borrowed, but closer to it than was the amount that was demanded from me.

In December of 2011 I received another collection letter from FMS Services. I responded on 12/16/2011, disputed the amount demanded from me and requested debt validation. I also made the same settlement offer that I had made before.

I then received more collection letters and collection phone calls, but no response to my debt validation request. In response, on 01/16/12, 01/23/12 and 04/14/12 I sent additional requests for validation of the debt. I also wrote to the U.S. Department of Education on 01/16/12 and on 04/14/12.

I sent each letter via U.S. post Certified Mail with Return Receipt for positive verification of receipt.

Because I did not receive any response to my debt validation requests, on 04/14/12 I sent a letter to Martha Coakley, Attorney General of Massachusetts. Attorney General’s office was very helpful and offered to mediate the situation, but was unable to do so, because FMS Services did not respond to phone messages left and mail sent to them.

Next, on 05/14/12 I sent a letter to Mr. Arne Duncan, U.S. Secretary of Education.

I received a response together with 1 page copies of student loan application paperwork, mixed with paperwork that did not carry my signature and had timestamps from a year after I had graduated from college, but no actual loan verification.

I responded on 06/23/12, sending a letter to Mr. Arne Duncan, U.S. Secretary of Education, and to Mr. Anthony Miller, U.S. Deputy Secretary of Education. In my response I pointed out that in the student loan application promissory notes I agreed to paying the loans that I will actually receive. However, neither a loan application nor a promissory note is a loan contract. These are legally distinct documents. What is needed, are copies of the loan contracts, that contain all the terms and conditions of the loan agreements of the loans that I actually received. Further, we need legal documents that clearly prove the actual amounts that were distributed to me, that is, the debt that actually exists.

The U.S. Secretary of Education representative responded, stating that certain laws that apply to debt collection do not apply to the U.S. Department of Education, and that the U.S. Department of Education business partners can continue their debt collection activities regardless of my correspondence with the U.S. Department of Education.

Further, the U.S. Secretary of Education representative made continued threats of forceful collection of the amounts that the U.S. Department of Education deems appropriate, without validating the actual debt.

At this point, The U.S. Department of Education and its business partner are making the following demands:

• Payment of principal of $56,073.83.
• Payment of accrued interest of $52,358.58 (and growing).
• Collection costs of $26,392.44 (and growing).
• Total of $134,824.85 (and growing).

The U.S. Department of Education provides the following justification for their demands:

• The principal that the U.S. Department of Education demands seems to be calculated based on student loan applications and, as the U.S. Secretary of Education representative stated in the correspondence, whatever was “entered our database on August 13, 2008,” which is over 12 years after I graduated.
• The amount of interest accrued and the interest rates applied seem to be calculated based on whatever is in the U.S. Department of Education database records, or whatever the U.S. Department of Education deems appropriate.
• The U.S. Secretary of Education representative’s justification for the collection costs is that they apply 24.34% to the total principal and the accrued interest. Thus, the higher the U.S. Department of Education can make the total principal and the accrued interest, the more money they can promise to their business partners for the collection costs, whether they do anything for that money or not.

The U.S. Secretary of Education representative insists, that the U.S. Department of Education does not have to validate the amounts they demand beyond providing loan applications with their standard promissory notes. The loan application promissory notes are short statements that do not contain any actual terms and conditions of the loan, and are not proofs of loan disbursement.

Further, the U.S. Secretary of Education representative insists, that the U.S. Department of Education can forcefully collect the amounts that they deem appropriate without providing debt validation in the form of loan contracts.
As a student I filled in many loan applications, and I did receive some student loans, but not nearly for all the applications that I filled in and all the amounts that I applied for.

Loan amounts applied for and the amounts actually received may differ substantially. Further, student loan application is not a contract that states that the student must repay the loan even if the student does not receive the loan. However, that is how the U.S. Department of Education chooses to interpret these applications.

Based on my experience, I do believe that the U.S. Department of Education and the people who lead this institution are using extortion to collect money, and it must stop.

Next Steps

I am looking for other people who have experienced mishandling of their student loans by the U.S. Department of Education, or by any of its representative entities, or by any of its business partners who collect loans on its behalf. Together we can combat the considerable powers that the U.S. Department of Education has.

Through this website people, who have similar claims against the U.S. Department of Education, can find each other, consider pooling funds and filing class action lawsuits against the U.S. Department of Education. These claims and lawsuits do not have to be similar to my case. Different people, who have similar claims, can form their own groups, be represented by the same or different lawyers, and choose how to proceed. Of course, the same people can proceed with their claims independently as well.

Even simple sharing of ideas and experiences can be useful.

Public Investigation of Extortionist Suspects

At this point the U.S. Department of Education, Mr. Arne Duncan, U.S. Secretary of Education, and Mr. Anthony Miller, U.S. Deputy Secretary of Education, together with their business partners from FMS Investment Corp., a private collection agency, Balaji Rajan, Tim Adelman and Maureen Peterson are Extortionist Suspects Under Public Investigation.

The Extortionist Suspects Under Public Investigation, the U.S. Department of Education, FMS Investment Corp., and their executives, in addition to other people who will be considered to be part of this Investigation, will be featured on this website on an ongoing bases. The Public Investigation of Extortionist Suspects process will be made personal for the individuals who, based on the available evidence, are using extortion.

More information on the Investigation process will be available on this website over the coming months.

However, the primary objective of the Investigation in this case is to find out, whether or not there is an organized pattern of behavior, where the U.S. Department of Education and its business partners:

• Demand payments based on loan applications that apply to money that the borrower may not have received, without providing debt validation in the form of loan disbursement documents and loan contracts that apply to loans that the borrower did receive.
• Inflate the principal and the interest, so that the U.S. Department of Education can promise higher collection costs to its business partners, and can also inflate its own balance sheets in the process.
• Apply 24.34% collection costs to the inflated principal and the accrued interest, and then force individual borrowers to pay the moneys through making threats and using special powers granted to the U.S. Department of Education, without providing debt validation in the form of loan disbursement documents and loan contracts.

However, if you have experienced other types of mishandling of your student loans by the U.S. Department of Education, or by any of its representative entities, or by any of its business partners who either purchase loans from it or collect loans on its behalf, please become this website member as well. Your describing your experiences can help other people to come forward with claims that may be similar to yours. Further, all such descriptions can provide valuable information about how the U.S. Department of Education and its business partners conduct their business affairs and handle student loans.

Legal Scrutiny of Student Loan Application Promissory Notes

Because the lender is the party that demands money, it is the lenders obligation to prove that it has the legal right to demand the specific amounts and to take specific actions.

Does the U.S. Department of Education have the legal rights in this specific case to do what it is doing?

I intend to investigate every aspect of my situation. I will rather spend time on research and on learning about the relevant topics, and will spend my money on legal expertise, than will pay it voluntarily to entities and people who make unjust claims in an inflexible manner. This way, I will learn potentially useful material and have more hope of finding a realistic solution to this case.

Here’s one area that requires close scrutiny: is the student loan application promissory note alone, without any loan specific information and other documentation, actually legally binding?

The U.S. Department of Education claims that is has the right to my money because it is holding the promissory notes. However, is the couple of paragraphs long standard text on the loan application, labeled “Promissory Note,” really legally binding without the actual approved and borrowed loan amounts and any other documentation, or is simply a portion of the application that the U.S. Department of Education wishes the borrowers to believe is legally binding?

I am not a legal expert. I will start contacting legal experts and will also learn about the relevant material myself. However, it seems to me, that the student loan application promissory notes do not contain most of the information that is required of a document that is a promissory note, such as:

• The exact principal amount that has to be paid. As the statement below shows, the principal can be the amount printed in the loan application, or less.
• Due date, and when and at what frequencies any money has to be paid.
• Interest rate, which is supposed to be specified in the Notice of Loan Guarantee and Disclosure Statement.

The student loan application promissory notes are couple of paragraphs long standard text that refers to loan application parts (Paragraphs) and to other documents. One of the promissory note paragraphs is this:

• I, the undersigned borrower promise to pay you or your order when this note becomes due a sum certain equal to the loan amount I have requested in Section 1, Item 10 of this Application or any lesser amount which will be disclosed to me in the Notice of Loan Guarantee and Disclosure Statement or the amount advanced to me, plus interest and any other charges which may become due as provided in Paragraph VI.

The above statement makes it quite clear, that the amount disbursed may be the loan amount requested, or a lesser amount. Zero, or nothing, of course, is also a lesser amount – if I don’t receive a loan, it still falls under the above statement.

Further, where are the Notice of Loan Guarantee and Disclosure Statements referenced in the above statement?

The loan applications also refer to the other side of the application. I should have two-sided copies, that contain both sides of the application, but I don’t. The U.S. Department of Education sent me copies that could be other sides of the loan applications. However, these could equally well be copies of somebody else’s loan application. They don’t have my name or signature, and they carry a time stamp that is over a year after I graduated.

Additionally, the 1-page applications have a small TO BE COMPLETED BY THE LENDER section. For most applications, this section does contain a bank’s stamp, handwritten date, Lender Code, and Loan Amount Approved and Interest Rate boxes, both of which are all either empty or contain .00. To me, this shows that the lender received the applications, but did not approve them.

This, once again, points to the need of having the documents that show the amounts that were actually disbursed to me.

Who Actually Owns My Student Loan?

I find it rather strange that the U.S. Department of Education has no documents at all regarding my student loan, other than partial copies of the loan applications. Based on the very poor quality of the copies, these partial copies of the loan applications seem to be copies of copies – not copies of the original documents.

Years ago, as part of the student loan paperwork, the U.S. Department of Education could have kept parts of the loan applications and sold the loans. Perhaps it did make some sort of a deal with whatever company owned the loans. Who knows what actually took place in 2008, when, according to the U.S. Department of Education, my student loan data entered their database. Either way, it seems that the U.S. Department of Education is using now partial copies of loan applications to claim that it owns the loans.

Because the U.S. Department of Education doesn’t seem to have anything else but partial copies of loan applications, and the data that entered their databases 12 years after my graduation, it makes demands based on this data, bluntly insisting on my paying whatever they want me to pay, regardless of the amounts that I received as a borrower.

These and other aspects need careful analysis. Similarly, whether or not the current owner of the loans does indeed have all the ownership related documents in order, needs to be examined. The U.S. Department of Education and its collector business partners obviously are not sources of reliable and trustworthy information. So, I need to find out the relevant information myself, and by using qualified professional assistance.

Most likely it’s going to be a long process. However, the findings may affect very many people, because I’m not alone in this student loan mess, that certainly could be handled better than it is being handled now.

If There Is Fraud and Extortion, Can We Hold the Leaders Responsible For It?

In addition to listing above the facts that I consider relevant, let me now speculate a bit.

I really don’t see, how the partially filled 1-page loan applications, that do not contain all the necessary information, can be considered debt validation documents. I have to admit my ignorance – I am still learning about these matters, and I probably will have a long road ahead of me, before I will learn all that I need to know.

It seems very likely, that sooner or later this case ends up in court. Obviously, I will use the best legal assistance that I can afford. I am also hoping to find other people with similar claims, so that we can pursue a class-action lawsuit.

So, let’s say, that with the help of legal experts, and also the court ruling, it will be determined that the partially filled 1-page loan applications on their own are not legitimate and legally binding debt validation instruments.

I requested debt validation from Mr. Arne Duncan, U.S. Secretary of Education, and Mr. Anthony Miller, U.S. Deputy Secretary of Education. In response I received the partially filled loan applications with correspondence that insisted that these particular documents give the U.S. Department of Education the right to take my money and threaten me.

So, given that Mr. Duncan’s assistant, on behalf of Mr. Duncan and Mr. Miller, sent me knowingly documents that are actually not a valid proof of debt, can we hold Mr. Duncan and Mr. Miller responsible for this?

The same question applies to the private collection agency that has been involved in this case, FMS Investment Corp., and its leaders Balaji Rajan, Tim Adelman and Maureen Peterson, who benefit financially from working with the U.S. Department of Education.

If knowingly insisting that wrong documents give the holder the right to take another person’s money and make threats in the process is not fraud and extortion, then what is?

Here, the question is not whether or not the promissory note in general gives the U.S. Department of Education or any of its debt collector-business partners certain legal rights. Similarly, the question is not how much or how little money do I personally owe.

The question is, that if the leaders of an institution or a company knowingly insist that wrong documents give them certain rights, then can we hold them responsible for doing so?

If so, we have hope that we can put an end to this practice.

After reading lots of material on the Internet, I do believe that If my case doesn’t qualify as an example that is relevant here, sooner or later we will find other cases that do.