About $811 million being sought from Nexus Services Inc. and owners in massive lawsuit
Note: As of Sept. 20, 2023, the judge has yet to issue a ruling on the default judgements.
STAUNTON — Nexus Services Inc. and its three owners could learn Wednesday how many millions of dollars will have to be forked over in a federal lawsuit that is seeking more than $800 million from the embattled company.
Filed by the Consumer Financial Protection Bureau (CFPB), along with the states of Virginia, New York and Massachusetts, the 2021 lawsuit targets majority owner Mike Donovan, his spouse and Executive Vice President Richard Moore, Director Evan Ajin, along with Nexus Services Inc. and its subsidiary, Libre By Nexus.
The federal lawsuit claims the trio's "illegal conduct" has impacted tens of thousands of consumers, and said Nexus uses deceptive, abusive, and unfair practices to induce clients to sign contracts and pay thousands of dollars.
The company, through Libre by Nexus, helps post bond through third-party licensed bondsmen with federally-approved insurance companies for people being held in immigration detention centers while they await court cases. Court records state that despite not being certified to issue surety bonds or being licensed as a bail-bond agent in any state, Libre touts itself as an affordable way to secure release from federal custody.
The company is accused of creating the impression that it pays cash for the immigration bonds and that repayment from consumers was for the debt; presenting contracts in English for its mainly Spanish-speaking consumers; threatening clients; and using deceptive and abusive terms in its contracts, according to the lawsuit. For a few years, clients were also made to wear and pay for GPS ankle monitors.
In May, a federal judge found the three owners in civil contempt for noncompliance in the federal lawsuit, and recently ordered that default judgements be entered Wednesday, halving a previously scheduled two-day hearing that was supposed to begin Tuesday.
In a court filing Friday in the Fourth Circuit Court of Appeals, Donovan said "the entrance of a judgement of even 1% of the requested judgement would trigger the insolvency clause on the vast majority of those bonds." He said it would also affect the release of more than 10,000 "program participants" who could then be subject to detention, and said if Wednesday's federal hearing is allowed to continue it could lead to Nexus and Libre by Nexus no longer being viable companies.
In its response, the plaintiffs said the court should reject Donovan's appeal because it is procedurally improper and said the court lacks jurisdiction in the case, among other arguments.
In June, court documents revealed the three states were seeking roughly $600 million, but with some figures redacted an exact amount could not be pinned down. Since then, an unredacted filing shows the lawsuit is seeking slightly less than $811 million.
Virginia Attorney General Jason S. Miyares, Commonwealth of Massachusetts Attorney General Andrea Campbell, and New York Attorney General Letitia James are also part of the lawsuit against Nexus.
Donovan maintains the CFPB's funding method — which is being challenged in the federal courts — is illegal. The U.S. Court of Appeals for the Second Circuit and the Fifth Circuit have split on the issue, with the Second Circuit ruling the CFPB's funding is constitutional, and the Fifth Circuit ruling it's not. Donovan said in June he felt the Fifth Circuit ruling could eventually bring an end to the federal lawsuit.
Last month, Nexus had its Verona campus sold off at a public auction for $3.4 million after the property was foreclosed.
Donovan, Moore and another company vice president are also facing criminal charges.
In October, members of the Augusta County Sheriff's Office and Virginia State Police searched the Nexus campus and the Fishersville home of Moore and Donovan after they were indicted by the Augusta County grand jury on single felony charges of obtaining money by false pretenses and conspiracy to commit a felony, as well as two charges each of financial exploitation of a vulnerable adult. The couple, along with Timothy Shipe — also a vice president at the company who was indicted on two felony charges — are accused of stealing $426,000 from Zachary Cruz, the brother of the convicted Florida school shooter Nikolas Cruz, after befriending him following the 2018 mass shooting and moving him to Virginia. A five-day jury trial is set to begin Dec. 11.
Moore is already facing 10 federal counts of employment tax fraud after being accused in 2021 by government authorities of not paying the IRS more than $1.5 million during a six-year period. According to the Justice Department, Moore allegedly directed the company’s day-to-day management and was responsible for paying employment taxes to the IRS.
Facing a perjury charge in Louisa County, in July, Moore pleaded guilty to an amended felony charge of forgery, court records show. He was given no jail time. Moore still has a pending perjury charge in Augusta County, and a jury trial is set for Sept. 15.
Donovan and Moore were also recently ordered to pay $1.1 million to a Waynesboro law firm in a breach of contract lawsuit. Both skipped the court hearing in Augusta County Circuit Court.
Brad Zinn is the cops, courts and breaking news reporter at The News Leader. Have a news tip? Or something that needs investigating? You can email reporter Brad Zinn (he/him) at bzinn@newsleader.com. You can also follow him on Twitter.
This article originally appeared on Staunton News Leader: Nexus Services Inc. to learn fate Wednesday in $810 million lawsuit
