Nexus and its owners must pay $366 million in a massive civil lawsuit

By | April 2, 2024

HARRISONBURG – After taking a huge financial hit, Nexus Services Inc., once a leading local business, has been rocked by a federal judge following a $366 million verdict in a civil lawsuit against the company, its owners and a former owner.

The Consumer Financial Protection Bureau (CFPB) – along with the states of Virginia, Massachusetts and New York – filed the 17-count lawsuit in 2021 against Nexus, its subsidiary Libre by Nexus, CEO and majority owner Mike Donovan, his wife Richard Moore and Evan Ajin, a vice president at Nexus who also owns 10 percent of the company, which was previously based in Verona.

The lawsuit accused the defendants of violating several state consumer protection laws and the Consumer Financial Protection Act of 2010.

Moore, a former owner at Nexus, also faces 10 federal charges of employment tax fraud, along with two counts of aiding and abetting the preparation of a false tax return. He is accused of paying the IRS an estimated $1.5 million while working at Nexus. Donovan and Moore also face theft charges in Augusta County in a case in which more than $400,000 was allegedly stolen.

Nexus, through Libre by Nexus, helps people secure their release from U.S. Immigration and Customs Enforcement (ICE) custody and operates a nationwide business focused on immigrants held in federal detention.

“Neither Nexus nor Libre is a licensed bail bond agent or a U.S. Treasury Department-certified surety bond company,” according to an opinion filed Monday by U.S. District Judge Elizabeth K. Dillon. “Instead, Libre is a service provider that acts as an intermediary between immigration detainees and guarantors and their guarantors.”

The complaint alleged that Nexus and the defendants engaged in a “range of deceptive conduct.”

To obtain Libre’s services, court records show that the company required the detainees to sign an agreement with certain obligations and in return, Libre agreed to reimburse the sureties and their sureties for any losses associated with the immigration bonds.

The lawsuit said Libre’s claims were false and misleading. The company once used a 21-page written customer agreement that was entirely in English, except for one page in Spanish. The original contract required consumers to make upfront payments of 20% of the bond, a $420 deposit, and an activation fee of up to $460.

For a while, customers also had to wear ankle bracelets. In early 2018, Libre revised its written agreement to not include monthly lease payments for GPS. Instead, it called for monthly “program fees” and required consumers to either pay the fees on a schedule or pay additional “bond collateral payments” that totaled the full amount of the bond, according to court records.

“Contrary to these claims, Libre did not pay the immigration bonds, and the monthly payments were actually ‘rental fees’ for the GPS devices,” Dillon said in an opinion also filed Monday. In 2018, the average immigration bond was $7,500, the judge noted.

The company was accused of threatening customers with rearrest or deportation; giving the impression that it paid cash for the immigration bonds and that the consumer repayment was for the debt; the use of misleading and abusive terms in its contracts; not granting refunds; and falsely claimed the GPS devices were functional, the lawsuit said.

Dillon ordered the five defendants to pay $230,996,970 in restitution to the CFPB, the same amount Nexus collected from consumers between December 2013 and June 2022, according to court records. The judge also ordered that Nexus, Libre, Donovan, Moore and Ajin pay $111,135,620 in civil penalties to the CFPB, as well as additional civil penalties of $7,100,000 to the Commonwealth of Virginia, $3,400,000 to the Commonwealth of Massachusetts and $13,890 ,000 to New York. According to the New York State Attorney General’s Office, the verdict was more than $366 million

Virginia Attorney General Jason S. Miyares, Massachusetts Attorney General Andrea Campbell, and New York Attorney General Letitia James were also part of the lawsuit.

The defendants have 10 days to pay the civil penalties, Dillon said.

Court records show that Donovan owns 90% of Nexus and Ajin owns 10%. Until February 2022, Moore had 39% ownership before transferring his stake to Donovan.

In an unrelated criminal case, Moore has a sentencing hearing scheduled for Wednesday in Augusta County Circuit Court and could face prison time after botching a plea deal in an apparently minor perjury case.

However, both Moore and Donovan face more serious charges.

In July, the couple will be tried in Augusta County on charges that they stole $426,000 from the brother of convicted Florida school shooter Nikolas Cruz. Timothy Shipe, an executive at Nexus, is also charged in the case.

In December, Moore will be tried in federal court on tax charges. He has pleaded not guilty.

Last summer, Nexus had its Verona campus sold at public auction for $3.4 million after the property declared bankruptcy.

On Monday, Libre released a statement saying it was appropriate for the court to decide the lawsuit on April 1, adding that the company “remains committed to maintaining the highest standards of compliance and delivering essential services to immigrant communities in the United States.”

Donovan said an appeal will be filed and a motion to stay the sentence will be filed.

“This decision by Judge Dillion comes as no surprise to Libre or our team of dedicated staff. Our system of government is built on due process, and Libre and our clients were denied that by this court when it failed to allow us to present evidence regarding the allegations at trial, and even to a hearing on damages in this case, and further failed to disclose information a conflict between a clerk in the case and a disgruntled former CFPB employee and whistleblower,” Donovan said in an email to The News Leader. “While I am confident that the Fourth Circuit Court of Appeals will reverse this objectionable ruling, I am also confident that the Supreme Court will rule in favor of the Fifth Circuit’s interpretation of the constitutionality of the CFPB, rejecting this ruling will probably be pronounced against us. We remain committed to serving our clients – people who suffer and sacrifice for a better life, and who do not deserve to be political pawns in an American legislature or an American courtroom.”

Dillon noted in her opinion that the defendants “largely failed throughout this trial to produce documents and electronically stored information in response to plaintiffs’ discovery requests.”

Brad Zinn is the police, court and breaking news reporter at The News Leader. Do you have a news tip? Or something that needs to be investigated? You can email reporter Brad Zinn (he/him) at bzinn@newsleader.com. You can also follow him on X (formerly Twitter).

This article originally appeared on Staunton News Leader: Nexus and its owners ordered to pay $366 million in massive lawsuit

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