Bureau goes after couple who, despite judgment, evaded law enforcement, hid money, court filing claims

Claiming they fraudulently hid money – north of $40 million – to evade law enforcement, the federal consumer financial protection agency Monday asked a court to resolve a lawsuit against a Kansas couple filed in April 2023.

The Consumer Financial Protection Bureau (CFPB) said its action against James R. Carnes and Melissa C. Carnes of Mission Hills, Kansas, for fraudulent transfers to avoid paying restitution and penalties seeks a $7 million payment to the agency.

In its lawsuit last year, the bureau alleged that the pair transferred funds to hinder, delay, or defraud the CFPB, in violation of the Federal Debt Collection Procedures Act (FDCPA).

The bureau said James Carnes was the chief executive officer of Delaware-based Integrity Advance, a short-term, online lender. CFPB, it said, sued Integrity Advance and James Carnes in 2015 for lying to consumers about the cost of short-term loans.

The bureau said the Carnes’ also withdrew money from borrowers’ accounts without their permission. “The CFPB’s lawsuit resulted in an agency order requiring Integrity Advance and James Carnes to pay $38 million to make harmed consumers whole,” the bureau noted. “The order also required Integrity Advance to pay a civil money penalty of $7.5 million and James Carnes to pay a civil money penalty of $5 million.”

Carnes appealed that decision, and lost, in the Tenth U.S. Circuit Court of Appeals in September, 2022, according to court records.

Following that, April 2023, the CFPB alleged that the Carnes’ transferred funds to “hinder, delay, or defraud the CFPB, in violation of the Federal Debt Collection Procedures Act,” CFPB said. “Between 2013 and 2015, James Carnes fraudulently transferred $12.3 million to his wife through a series of revocable trusts. James Carnes was co-trustee of the trusts, so he could access their funds for personal and business use,” the agency said.

In the Monday action, the bureau asked the court to require the Carnes’ to pay $7 million of an imposed $12.3 million judgment, with the remaining amount suspended due to demonstrated inability to pay more.

The bureau said the payment will be applied toward satisfying James Carnes’ existing $43 million judgment, which includes consumer redress and civil money penalties. The agency vowed to “continue its efforts to collect the remaining amount of the $43 million judgment.”

CFPB Takes Action Against James and Melissa Carnes for Fraudulently Hiding Money to Evade Law Enforcement