Case 2:06-cv-00041- TC Document Filed 01/12/2006 Page 1 of 8

FILED

S DISTRICT COURT

Paul M. Warner, United States Attorney

Carlie Christensen, Assistant United States Attorney (#0633)

Attorney for United States of America

185 South State Street, Suite 400

Salt Lake City, Utah 84111

(801) 524-5682

lDOb JAN I 2 P $ 

DISTRICT OF UTAH

BY:

DEPUTY CLERK

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF UTAH, CENTRAL DIVISION

UNITED STATES OF AMERICA Civil Action No.

Plaintiff COMPLAINT FOR CIVIL PENAL TIES,

INJUCTIVE, AND OTHER RELIEF

FAR WEST CREDIT, Inc.

Defendant.

Judge Tena Cambell

DECK TYE: Civil

DAI STAM: 01/12/2006 15:48:46

CASE IUER: 2:06CV0041 IC

Plaintiff, the United States of America, acting upon notification and authorization to the

Attorney General by the Federal Trade Commission ("Commission ), for its complaint alleges as

follows:

Plaintiff brings this action under Sections 5(a), 13(b), and 16(a) ofthe Federal Trade

Commission Act ("FTC Act"), 15 U. c. 45(a), 53(b), and 56(a), and the Fair Credit Reporting

Act ("FCRA"), 15 U.S. C. 9 1681- 1681x, to obtain monetary civil penalties and injunctive or other

relieffoT defendant' s violations of the FTC Act and the FCRA.

JURISDICTION AND VENUE

This Court hasjurisdiction over this matter under 28 U.S. C. g 1331 , 1337(a), 1345,

and 1355, and under 15 U.S. c. 45(a), 53(b), 56(a), 57b, and 16815.

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Case 2:06-cv-00041- TC Document Filed 01/12/2006 Page 2 of 8

Venue is proper in the United States Distrct Court for the Distrct of Utah under 28

C. ~ 1391 (b) - (c) and 1395(a), and 15 U.S.C. Section 53(b).

DEFENDANT

Defendant Far West Credit, Inc., is a for-profit corporation organized, existing, and

doing business under the laws ofthe State of Utah. Its principal place of business is located at 1214

Wilmington Avenue, Suite 101 , Salt Lake City, Uta 84106. At all times relevant to this complaint

defendant Far West Credit, Inc., has transacted business in this district.

Defendant Far West Credit, Inc., is a "consumer reporting agency" as that term is

defined in Section 603(f) of the FCRA, 15 U. C. 1681a(f). As part of its consumer reporting

activities, Defendant assembles or evaluates consumer credit information or other information on

consumers for the purose of fuishing consumer reports to third paries. As such, Defendant is

subject to Section 607 of the FCRA, 15 U.S.C. ~ 1681e, which imposes a series of compliance

procedures upon consumer reportng agencies.

THE FAIR CREDIT REPORTING ACT

TheFCRA was enacted in 1970 and became effective on April 25, 1971, and has been

in force since that date.

Section 621 ofthe FCRA, 15 C. 9 1681s, authorizes the Commission to use all

of its functions and powers under the FTC Act to enforce compliance with the FCRA by all persons

subject thereto except to the extent that enforcement specifically is committed to some other

governmental agency, irrespective of whether the person is engaged in commerce or meets any other

jurisdictional tests set forth by the FTC Act.

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Case 2 :06-cv-00041- TC Document Filed 01/12/2006 Page 3 of 8

VIOLATIONS OF THE FAIR CREDIT REPORTING ACT

Section 607(b) of the FCRA, 15 U.S. C. 1681e(b), requires consumer reporting

agencies to follow reasonable procedures to assure maximum possible accuracy of the information

contained in consumer reports that they disseminate.

In the course of its business, Defendant creates consumer reports for use in the

mortgage industr in evaluating consumers for loans.

10. Defendant creates consumer report by purchasing information about each consumer

from Equifax Credit Information Services, Inc. , TransUnion, LLC, and Experan Inormation

Solutions, Inc. , which are nationwide consumer reporting agencies ("CRAs ) with extensive

databases on consumers, and merging this information to create a report that shows all of the

information about the consumer available at the agencies. Each line of information showing credit

status is known as a "trade line.

11. Where there is insuffcient information about a consumer, or no information, at the

CRAs, Defendant wil accept documentation ITom the consumer or other interested par on behalf

of the consumer, such as a mortgage broker or mortgage originator, purorting to show sources of

credit and credit status with businesses that do not report to the nationwide credit bureaus (e.

landlords, cable companies, utility companes

, 

rent-to-own" businesses and insurace companies).

In many instances, Defendant adds this information as a "trade line" to the report it prepares for the

consumer.

12. In the course of its business, Defendant provided consumer reports to Keystone

Mortgage and Investment Company, Inc. ("Keystone ), an Arizona originator of home loans. In the

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Case 2:06-cv-00041- Document Filed 01/12/2006 Page 4 of 8

course of Defendant's dealings with Keystone , Keystone s employees provided Defendat with

documentation of credit accounts to be used in creating consumer reports for consumers who had

insuffcient credit histories at the nationwide CRAs. Keystone had a financial interest in the

completion of loans to these consumers.

13. The credit information provided by Keystone was not adequately reviewed and

verified by Defendant in many instances before being added to reports. In fact, the documentation

provided by Keystone for many ofthese consumers was false and presented information that called

for more careful review or inquir. For example, in many intaces the documentation related to

accounts with utility and cable companies that did not servce the areas where the consumers lived

and the same document was used to create records for multiple individuals.

14. The resulting consumer reports provided by Defendant to Keystone were used in

connection with mortgages insured by the Fair Housing Administration ("FHA") of the Department

of Housing and Urban Development ("BU"). Subsequently, some of the mortgagees defaulted

resulting in losses to the FHA home loan program and, ultimately, to taxpayers.

15. Through the acts and practices alleged in Paragraphs 9 through 13, Defendant did

not follow reasonable procedures to assure the maximum possible accuracy ofthe information in

reports that it prepared in violation of Section 607(b) of the FCRA, 15 C. 1681e(b). Pursuant

to Section 621(a)(I) of the FCRA, 15 V. C. g 1681s(a)(1), the acts and practices alleged above also

constitute unfair or deceptive acts or practices in violation of Section 5(a) ofthe FTC Act, 15 D.

g 45(a).

Page 4 of 6
Case 2:06-cv-00041- TC Document Filed 01/12/2006 Page 5 of 8

CIVIL PENALTIES AND INJUNCTIVE RELIEF

FOR VIOLATIONS OF THE FAIR CREDIT REPORTING ACT

16. Section 621(a)(2) of the FCRA, 15 U.S.C. 9 1681s(a)(2), authorizes the Cour to

award monetar civil penalties of not more than $2,500 per violation of Section 607(b).

17. Each instance in which Defendant produced a consumer report complained of herein

in violation of Section 607(b) of the FCRA, 15 U.S. C. 1681e(b), constitutes a separate violation

of the FCRA for which plaintiff seeks monetar civil penalties under Section 621 ofthe FCRA, 15

c. 1681s. Defendant has engaged in knowing violations of the FCRA as described above,

which constitutes a pattern or practice of violations.

18. Under Section 13(b) of the FTC Act, 15 C. 9 53(b), this Cour is authorized to

issue a permanent injunction prohibiting Defendant from violating the FTC Act and the FCRA

including violations of Section 607(b).

PRAYER FOR RELIEF

WHEREFORE, plaintiffrespectfullyrequests that the Court, pursuant to 15 C. 45(a),

45(m)(1)(A), 53(b), and 16815, and pursuant to this Cour' s own powers:

Enter judgment agaist Defendant and in favor ofplaintifIfor each law violation

alleged in this Complaint;

Award plaintiff monetar civil penalties for each violation ofthe FCRA as alleged

in this complaint;

Enjoin Defendant from violating Section 607 of the FCRA; and

Award plaintiff such additional relief as the Court deems just and proper.

Page 5 of 6
Case 2:06-cv-00041-

Dated: / - /2 , 20

Of Counsel:

JOEL WISTON

Associate Director for Financial Practices

PEGGY TWOHIG

Assistant Director for Financial Practices

WILIA L. HAYNS

Attorney

JAM E. HIN

Attorney

Division of Financial Practices

Bureau of Consumer Protection

Federal Trade Commission

600 Pennsylvania Avenue, N.

Washington, D.C. 20580

(202) 326-3224

Document 

Page 6 of 6

Filed 01/12/2006 Page 6 of 8

FOR THE UNTED STATES OF AMERICA

PETER D. KEISLER

Assistant Attorney General

Civil Division

United States Departent of Justice

PAUL M. WARR

United States Attorney

Distrct of Utah

By: 

Assistant United States Attorney

Unites States Attorney s Offce

185 South State Street, Suite 400

Salt Lake City, Utah 84111

(801) 524-5682

EUGENE M. THIOLF

Director

Offce of Consumer Litigation

bFau

ELIZAB H STEIN

Trial Attorney

United States Deparment of Justice

O. Box 386

Washington, D.C. 20044

(202) 307-0066 (VOICE)

(202) 514-8742 (FACSIMILE)
Case 2:06-cv-00041- TC Document Filed 01/12/2006 Page 7 of 8

'lJS 44 (Rev. 11/04) CIVIL COVER SHEET

The JS 44 civil cover sheet and the informtion contained herein neither replace nor supplement the tiing and service of pleadings or other papers as required by law, except as provide

by local rules of court. This fonn, approved by the ludicial Conference ofthe United States in September 1974, is reuIred for the use of the Clerk of Cour for the purpse ofmitiating

th civil docket sheet (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.

. .

I. (a) PLAINTIFFS

United States of America

(b) County of Residence of First Listed Plaintiff

(EXCEPT IN U.S. PLAINTIFF CASES)

200b JAN I 2 J: 

County of Residence of First Listed Defendat Salt Lake County

(IN u.s. PLAINTFF CASES ONL 

DI S T R C T OF J6 N LAND CONDEMNATION CASES, USE THE lOCA nON OFTHE

AND INVOLVED.

BY:

(c) Attorney s (Finn Name, Addres., and Telephone Number)

Carlie Christensen, Assistant United States Attorney

185 South State Street, Suite #400, Salt Lake City, Utah 8411 

II. BASIS OF JURISDICTION (Place an "X" in One Box Only)

III S. Government

Plamtiff

LJ 3 Federal Question

(U.S. Governnt Not a Par)

II. CITIZENSHIP OF PRINCIPAL PARTIE5(Placean inOneBoxforPlaintilf (For Diversity Caes Only) an One Box for Defendant) PTF DEF PTF DEF

LJ J LJ I Incorporate or Principal Place 0 4 0 

of Busine.. 10 This Slale

Citi of This Srate

S. Governmeol

Defendant

LJ 4 Diversity

(Jndicate Citizip of Parie. in Iteolll)

Citize of Another Slate LJ 2 Incorprated ami Prinipal Place

of Business In Anoter State

Citizen or Subjec of a Foreign Nation LJ 6

F orci 'R Count

IV. A TURE OF SUIT (Place an X" in Box Onlv)

TORTS FO..rEITURrJENAL TY BANKRUPTCY OTER STATtIT

o 110 Insuance PERSONAL INJURY PERSONAL INJURY 0 610 Agrioultu 0 422 Appeal 28 USC 158 400 State Reapportionmnt

o 120 Marine 310 Airlane 362 Persnal Injur . LJ 620 Ot foo & Drg 0 423 Withdrawal 410 Antitr

130MillerAct 315 Airlane Product Med. Malpractice 625 Dr Relate Seizu 28 use 157 LJ 430 Banks and Banking

o 140 Negotible Instnni LiabliLy 365 Pclnjury - of Prope 21 USC 881 0 450 CoretCe

o 150 Recover of Overayent 320 Assul libel & Pruct Liability 630 liquor Law. PROPER rv RIGHTS 0 46 Depotion

& Enforcement of Judent Slander 368 Asbe.tos Persal 640 R.R. & Truk 0 820 C.oyrgbts 470 Racketeer Influenced and

151 Medicae Act LJ 330 Federal Employen Injur Product LJ 650 Airline Reg 0 830 Patent COt Orizations

o 152 Recovery of Defaulred LiabliLy Liaility 0 66 Occlionl 0 840 Trademark 0 480 Con.ume dit

Studeat Loas 340 Marine PERSONAL. PROPERTY Sarety/Health 0 490 Cale/Sat TV

(Excl. Velerans) 345 Marine Prouct 370 Other Fraud LJ 690 Other 810 Selective Serce

LJ 153 Recover ofOverpaymeat LiabiliLy 37\ Trutb in Lending I.Ann.. SOCIAL ITY 850 SetisiConunoities

ofVeteran s Benefits 350 Motor Vehicle LJ 380 Oter Personal LJ 710 Fai Labor Stadard. LJ 86t HIA (1395ft Exchange

LJ t60 Stockholders' Suits 355 Motor Vehicle Prope Daage Act LJ 862 Black Lun (923) 875 CustolUr Challenge

o L 90 Oter Cnntr Produc LiabiliLy 385 Propeny Damge 720 LabolMgm Relaton LJ 863 DlWCIDIWW (405(g)) 12 USC 3410

o 195 Contract Pruct Liability 360 Other Persal Pruct Liabilty LJ 730 LaboIMgm.Reping 0 864 ssm Tille XVI Ii 890 Other Statuory Actins

o L96 frachise IniulV & Disclosu Act 0 865 RSI 1405(0)) LJ 89 t Agrultul Act

REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS LJ 740 Railway Labor Act FEDERL TAX SUITS 892 Ecnomic Staili D Act

o 2\0 Land Condemnation LJ 441 Voting 510 Moti to Vacale LJ 790 Other Labor Litigation LJ 870 Taxes (U.S. Plamlif 893 Enviromenta Maner

o 220 F nreclosre LJ 442 Employt Sentence LJ 791 Empl. Rct Inc. or Defendat) 894 Energy Allocon Act

o 230 Rent Lee & Ejccnnent 443 Housing! Habe Corpus: Serity Act LJ 871 IRS Third Par LJ 895 fredom oflnfortion

o 240 Tor to Land Accontions 530 Gener 26 use 7609 Aet

o 245 Tort Pruc Liabilty LJ 444 Wclfate 535 Death Penalty 9OAppelofFecDeteinlion

o 290 All Otr Real Propert LJ 445 Amer. wlDisbilities - 540 Mandamu & Oter Under Equal Access

Employment 550 Civil Rights to Justice

446 Amer. wlDisalities - 555 Prn Codition LJ 950 ColIilUionalit of

Othr Stae StalDtes

LJ 440 Oter Civil Rights

LJ 2 (Plaee an "X" in One Box Only) LJ 3 Appel to Distrct LJ 4 LJ 5 Transferr trom 0 6 LJ 7 Judge frm State Cour Removed from Remanded from Reinstated or another district Multidistrct Magistte Ilate Court Reo ned s i Uti ion Jud ent

cp:d

Ptr minursiro hJe

t,offf

g

(i): r#a J:r tJHPnrAct, 15 D. C. 168 I - 168 I X VI. CAUSE OF ACTION Briefdescri ionoftause:

Award 0 CIVil monetary penalties and injunctive rei let tor violations ot the toregolng acts.

CHECK IF THIS IS A CLAS ACTION DEMAND S CHECK YES only if dernded in tomplaint:

UNDER F.R.C.P. 23 JURY DEMAND: 0 Yes 0 

V. ORIGIN

gJ I Original

Procdin

VII. REQUESTED 

COMPLAINT:

VII. RELATED CASE(S)

IF ANY (See inStlctKms): JUDGE DOCKET NUMBER

DATE SIGNATURE OF AITORNEY OF RECORD

L.v12rv1 Lll.)If)

FOROFFlCE tJSEONLY

RECEIPT # AMOUNT APPLYING IFP

Judge Tena Cambell

DECK TYE: Civil

stAM: 01/12/2006 e 15:48:46

CAE IiER: 2: 06CV00041 IC
Case 2:06-cv-00041- TC Document Filed 01/12/2006 Page 8 of 8

JS 44 Reverse (Rev. 11104)

INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44

Authority For Civil Cover Sheet

The JS 44 civil cover sheet and the infonnation contained herein neither replaces nor supplements the fiings and service of pleading or other papers as required

by law, except as provided by local rules of court. This fonn, approved by the Judicial Conference of the United States in September 1974, is require for the us

of the Oerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint

fied. The attorney tiing a case should complete the fonn as follows: I. (a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plain tilT and defendant If the plaintilTor defendant is a government agency, use only

the full name or standard abbreviations. IftheplaintilT or defendant is an offcial within a government agency, identify first the agency and then the offcial, giving

both name and title.

(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff reides at the time

of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of fiing. (NOTE: In land condemnation cases,

the county ofresidence of the "defendant" is the loction of the tract ofland involved.

(c) Attrneys. Enter the finn name, addres, telephone number, and attorney of record. If there ar several attorneys, list them on an attchment, noting

in this section "(see attchment)".

II. Jurisdiction. The basis of jurisdiction is set fort under Rule 8(a), F . , which requires that jurisdictions be shown in pleadings. Place an "X" in one

of the boxes. If there is more than one basis of jurisdiction, precdence is given in the order shown below.

United States plaintiff. (I) Jurisdiction based on 28 U. c. 1345 and 1348. Suits by agencies and offcers of the United States are included here.

United States defendant. (2) When the plaintiff is suing the United States, its offcers or agencies, place an "X" in this box.

Federal question. (3) This refers to suits under 28 U. C. 1331 , where jurisdiction arises under the Constitution of the United States, an amendment to the

Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence. and box

I or 2 should be marked.

Diversity of citienship. (4) This refers to suits under 28 U. C. 1332, where parties are citizen of different states. When Box 4 is checked, the citizenship of the

different parties must be checked. (See Section II below; federl question actions take precedence over diversity cass.

II I. Residence (citizenship) of Principal Partes This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this section

for each principal pary.

IV. NatureorSuit Place an "X" in the appropriate box. If the nature ofsuit cannot bedetennined. be sure the cause of action, in Section VI below, is suffcient

to enable the deputy clerk or the statistical clerks in the Administrative Offce to detennine the nature of suit. If the cause fits more than one nature of suit, select

the most definitive.

V. Origin. Place an "X" in one of the seven boxes.

Original Proceedings. (I) Cases which originate in the United States district court.

Removed from State Court (2) Proceedings initiate in state court may be removed to the distct court under Title 28 U. c., Section 1441. When the petition

for removal is granted, check this box.

Remanded from Appellate Coun. (3) Check this box for cases remanded to the distrct court for furter action. Use the date of remand as the fiing date.

Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the distrct com. Use the repening date as the tiing date.

Transferred from Another District. (5) For cases trnsferr under Title 28 U. C. Section 1404(a). Do not use this for within distrct trnsfers or multidistct

litigation trnsfers.

Multidistrict Litigation. (6) Check this box when a multidisuict case is transferrd into the district under authority of Title 28 U. C. Section 1407. When this box

is checked, do not check (5) above.

Appal to Distrct Judge from Magistrate Judgment. (7) Check this box for an appel from a magistrte judge s decision.

VI. Cause of Action. Report the civil statute diretly related to the cause of action and give a brief description of the cause. Do Dot cite jurisdictional statutes

unless diversity. Example: U.S. Civil Statute: 47 USC 553

Brief Description: tJ recetion of cable selVice

VII. Requested in Complaint Clas Action. Place an "X" in this box if you are tiling a class acton under Rule 23, F. Cv.

Demand. In this space enter the doUar amount (in thousands of dollars) being demanded or indicate other demand such as a preliminary injunction.

Jury Demand. Check the appropriate box to indicate whether or not ajury is being demanded.

VII. Related Cases. This section of the JS 44 is used to referene related pending cass if any. If there are related pending cases, insert the doket numbers

and the corresponding judge names for such cases.

Date and Attorney Signature. Date and sign the civil cover sheet.