County Firm Among 4 to Pursue Debts for U.S.

The federal government Wednesday chose four private law firms as the first in California empowered to file lawsuits to collect hundreds of millions of dollars in fines, judgments and penalties owed to the government.

The four law firms, one in Orange County and three in the San Fernando Valley, were selected from 18 in a seven-county area surrounding Los Angeles that submitted competitive bids to provide the service, U.S. Atty. Robert Bonner said.

Bonner said he believes that debt collection will soar with the help of the four firms, which are Jeffries Advocates Law Offices in Irvine; Hayt, Hayt & Landau in North Hollywood; Brachfelt & Sheppard in Woodland Hills, and Goldsmith & Burns in Tarzana.

Unpaid Loans

Bonner said the first chunk of debts that he hopes to dispatch to the law firms for collection are about $27.5 million worth that the U.S. attorney’s office has lacked the resources to pursue.

They include defaulted student loans, Housing and Urban Development home loans, Small Business Administration disaster home loans and overpayments to military personnel and defense contractors.

The assignment of the debt collections sprang from the Debt Recovery Act of 1986, which allows the U.S. attorney general to contract with private firms. Under a three-year pilot program, the first judicial districts to contract out for those services are Los Angeles, Brooklyn, Miami, Detroit and Houston.

Billions Owed to U.S.

Bonner said non-tax debts from civil and criminal fines, forfeitures, judgments and penalties currently total hundreds of millions of dollars in the federal court’s Central District, which includes Los Angeles, Orange, Riverside, San Bernardino, San Luis Obispo, Santa Barbara and Ventura counties.

Nationwide, such debts total about $32 billion, said Robert N. Ford, deputy attorney general for debt collection management.

Bonner said the four Southern California firms that won the contracts submitted bids saying they would perform the service for 15% to 24.5% of what they collect.

Bonner said his office collected $43.8 million in debts in 1987, nearly three times the amount it takes to run his office for a year. He said that with the help of the local firms he expects to collect more than $55 million in 1988.