Follow-Up Open Letter to the Default Resolution Group – If You Continue to Operate the Same Way, Why Do You Expect Different Results?

Let’s say that you consider borrowing some money and fill in an application with a financial institution. For whatever reason the application is denied.

Some time later, the financial institution asks you to start making payments on the loan.

What loan, you ask. The loan was denied, you say, and point out that the demands are unfounded.

Instead of a sensible reaction, the demands continue, and are even accompanied with threats.

What do you do? How do you respond?

Perhaps you think that this cannot happen in reality in the U.S., where financial institution are regulated. I would think the same way.

But yes, it can happen. No matter how unlikely, it can happen and especially in circumstances, where financial regulations can be ignored. While most people do not like regulations, in the financial world we truly do need them. Then again, if some financial institutions are allowed to ignore the regulations, people who are impacted are likely to pay the price. The bigger the financial institution, the bigger the price and the more people are impacted either directly or indirectly.

The U.S. Department of Education is currently one of the largest financial institutions in the United States. Unlike other financial institutions, the Department of Education can operate by using internal computer records that are created number of years after a student graduates and are based on partial copies of loan applications, and so that certain percentage of the total amount applied for is picked as “loans,” without existence of any documents and records that demonstrate that the corresponding lending and borrowing transactions ever actually happened and that the corresponding loans actually exist.

The Department of Education can also create internal records for other debt obligations, such as penalties and interest rates applied, and then enforce them, even though no documents exist that verify the existence or the accuracy of any actual debt obligations.

The Department of Education can also call partial copies of financial aid applications “original legally binding promissory notes,” even though financial aid applications and legally binding promissory notes are different documents, and the financial aid applications do not fulfill Uniform Commercial Code (UCC) requirements set for the legally binding promissory notes.

The Department of Education can also state that it has made insurance payments on behalf of a student, even though no documents or records exist demonstrating that any insurance claim was actually submitted or paid.

The Department of Education can do this and more, and apparently currently there is nobody who is both willing to admit that this is wrong and is also willing and able to change this.

At least currently this seems to be the case. Add to this very loosely regulated lending practices that benefit politicians and are built on implicit assumptions of everlasting robust economic growth and continuous growth of the value of education as an intangible asset, and you get problems on a bigger scale. And then we wonder, how did it happen that the U.S. Department of Education put into risk over trillion dollars of taxpayers money as defaulted student loans and rendered a generation of people into a debt spiral that negatively impacts the entire economy.

One financial crisis was resolved, that was built on assumptions of everlasting robust economic growth, continuous growth of value of tangible assets, the housing market, and unregulated financial institutions activities. The other one is being perpetuated, that is built on assumptions of everlasting robust economic growth, continuous growth of value of an intangible asset, education, and an unregulated financial institution, the U.S. Department of Education. And then we wonder, why the student loan debt related problems are not getting better.

This is all very relevant to Case 1 that has been documented on this website. For over 3.5 years, I have been subjected to unvalidated demands by the Department of Education and have been forced to work on resolving this case. During this time, the Department of Education has tried to serve general statements (“schools often apply…”) instead of providing verification of the alleged transactions, has made unfounded demands and repeatedly announced that their position has not changed, in addition to using extortion-like techniques, bullying and involuntary servitude. These methods are all part of the problems, not solutions. Is there any wonder then, that this case is still unresolved?

If you use government authority for enforcing unvalidated demands, and add extortion, bullying and involuntary servitude to it, you get a very potent instrument. By using it, you probably can coerce and shame many people into making you payments, but you cannot expect this to work on everybody. More importantly, you create more problems than you resolve and at the best benefit some (bill collectors) at the expense of many whom you render into undeserved misery. People who want to attain education should not be subjected to such treatment.

In the unvalidated demands resolution process, recently I sent a letter to the U.S. Department of Education Default Resolution Group and received a response that stated that the Department of Education’s position has not changed and I must call the Default Resolution Group. Below is my response.

A copy of the letter published below was delivered to the following persons and institutions:

  • - Default Resolution Group, U.S. Department of Education, USPS delivery confirmation EK635224685US
  • - The office of the Honorable Loretta Lynch, Attorney General, U.S. Department of Justice, USPS delivery confirmation EK635224708US

Default Resolution Group

U.S. Department of Education

P.O. Box 5609

Greenville, TX 75403-5609

Dear Sir or Madam,

Thank you for your letter dated 07/03/14 regarding your coercive demands for payments of a nonexistent debt that the Department of Education does not own, your purposeful usage of unqualified documents, misleading statements and threats, and your usage of my unpaid forced labor for handling debt validation case that the Department of Education should have resolved completely impartially with its own labor resources.

Please note that this is an open letter that I will publish on the Internet, on StopExtortion.org so that it is accessible to the general public and to other institutions.

It is unfortunate, that the Department of Education, once again, has chosen to prolong this dispute.

I have requested that the Department of Education validates that (1) I received the alleged student loans and that the relevant debt exists, and (2) that the Department of Education holds relevant valid legally binding promissory note debt instruments, and (3) that the Department of Education is the legal owner of the relevant alleged debt.

Throughout the over 3.5 years long debt validation dispute, the Department of Education has failed in all three areas.

The Department of Education is not exempt from debt validation, and the Department of Education does not have the legal right to force a past student loan applicant to make payments on an unvalidated debt.

Accordingly, please note, that the Department of Education and its business partners do not have any legal right whatsoever to make any kinds of demands from me, including the demand that I must call and talk to people who, as the evidence shows, act as extortionists who are abusing the special rights that years ago were granted to the Department of Education.

In addition, I have no interest in reducing this communication process to some sort of “he said, she said” type of nonsense. The latter can easily be the outcome in a situation where parties with differing views are trying to resolve complex problems through phone conversations. We have enough misrepresentations regarding this case already. We do not need any more of it. This is not negotiable.

Instead, the Department of Education must ceases and desists making any further monetary demands and must state in writing that the Department of Education will not under any circumstances take any actions and will not make any further demands regarding the specific previously claimed alleged debt, and will not authorize any individual, company, organization or institution to take any actions or to make any kinds of further demands regarding the specific previously claimed alleged debt.

Foundation for the Requests

In accordance with case law, (citing)

  • as assignees, the Guaranty Agencies and other secondary holders step into the shoes of the lender from whom they have taken the promissory notes and are subject to any defenses that the student/obligee may assert against the assignor/lender. See Jackson v. Culinary School of Washington, 788 F. Supp. 1233, 1248 n.9 (D.D.C. 1992), reversed on other grounds, 27 F.2d 573 (D.C. Cir. 1994), vacated, 515 U.S. 1139, on reconsideration, 59 F.3d 354 (D.C. Cir. 1995).

Please note, that the above citation is applicable to the time period when the alleged loans were made.

Accordingly, when the Department of Education becomes the holder of the promissory notes, it is not the original lender, nor the school involved, but the Department of Education that has to answer for actions related to originating and collecting the debt, as well as other potentially fraudulent aspects of an individual student loan cases.

In this case, legally binding promissory notes and debt either exist, or they do not exist.

If the Department of Education maintains a claim that it is the legal owner of legally binding promissory notes, I expect the Department of Education to furnish copies of the original legally binding promissory notes that are in accordance with Uniform Commercial Code (UCC) requirements for legally binding promissory notes. In that case, the Department of Education is also in the shoes of the lender. As lender, I expect the Department of Education to furnish proof, that the lending and borrowing transactions actually occurred and the corresponding debt obligations actually exist.

If the legally binding promissory notes do not exist, and there is no conclusive proof that the lending and borrowing transactions occurred, I expect the Department of Education to issue a statement clearly stating that it will end the unvalidated monetary demands.

The relevant information must be furnished in form of documents, not as phone calls. So far the Department of Education has not furnished any of it.

So, if you want to go on and on with this dispute, we will go on and on with this dispute and will involve an ever increasing number of institutions and individuals in this dispute. As you will realize sooner or later, the list of people and institutions to contact is virtually endless.

  • The total amount of the alleged loans is absurdly high and it is unknown how the money allegedly was used.
  • No documents exist showing, that I ever received the alleged loans either directly, or indirectly, as tuition support.
  • No documents exist showing, that the alleged insurance claim was ever submitted and was actually paid.
  • Strangely, the Department of Education’s record keeping on the actual financial aid that I received is very sketchy. In order to have a credible role in financial aid disputes like this one, the Department of Education should have comprehensive and accurate information on the costs of the education and the financial aid that a student received, such as aid provided by the school and work-study financial aid. The Department of Education needs a system of checks and balances, where missing and inaccurate data can be easily identified. Based on my case it seems that lack of relevant data helps you to push the notion that a former student owes money, even when it is incorrect. On the financial side, it helps you to increase the assets on the balance sheets inappropriately, by creating receivables that are not backed by actual lending transactions and by actual corresponding monetary obligations. Was this “maneuvering space” created because of negligence, lack of expertise, or by design?
  • The Department of Education has been using unqualified documents and misleading statements, attempting to give its monetary demands an appearance of legitimacy.
  • The Department of Education claimed that a contract has been violated, even though contract did not exist.
  • The Department of Education has been fabricating alleged original documents.
  • The Department of Education has been using threats and bullying in circumstances that amount to extortion.
  • The Department of Education has been forcing me to work in involuntary servitude conditions.
  • If there were original documents that existed in the first place, then the Department of Education and its business partners have been violating document retention requirements.
  • The Department of Education and its business partners maintain assets in a manner that violates accounting regulations.

So, there are plenty of Department of Education’s wrongdoings to address and obviously I have to continue to do so in order to end this case. The righteousness is on my side. Sooner or later people will stop turning the blind eye to your wrongdoings. Further, there is one potential benefit to continuing this dispute by involving more people in it – doing so can, perhaps, contribute to getting a substantially reformed Department of Education.

Either way, until you have not ended this case by issuing the requested statement, you are forcing me to continue to work in involuntary servitude conditions on resolving this case. I will continue to invoice you for having to work on this case, that is intended to benefit the U.S. Department of Education financially and its employees and business partners professionally. I do not owe you any money, but you actually do owe me a substantial amount of money for using forced labor. Money that you owe to me is a growing obligation that you must address as well.

Thomas Eklund

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