It had six offices around Buffalo, 100 to 200 debt-collection workers, and just three lawyers.

Then there's its court record. Not cases it worked on, but civil charges against it for alleged shakedown tactics.

More than 30 people across the country - including Maine's attorney general - alleged that Lenahan bullied debtors for money, even when they didn't owe a dime. One judge called its tactics "egregious."

A dozen courts gaveled down judgments totaling $800,000, but the firm's owners filed for bankruptcy in December before paying the penalties.

Collectors say they face tight regulation under debtor-protection law, but Lenahan's story raises questions about the power of watchdog agencies to stop abuses.

"There always seem to be rogue debt collectors who consider [penalties] to be a cost of doing business," said Robert J. Hobbs, deputy director of the National Consumer Law Center in Boston.

Steve Tripoli, a spokesman for the center, added, "There's a new breed of company that has figured out there's very little chance of penalty from breaking the law."

For years, the Lenahan offices collected a million dollars a month or more while leaving a trail of browbeaten people from Maine to California, regulators and court records say. Now some of the former Lenahan offices continue to operate under new names.

And instead of cracking down on the abuses, public officials might have subsidized them with taxpayer money. In 2003, agencies handed nearly $600,000 in job grants to a Buffalo company whose owners are accused of being the real operators of the collection outfit.

"Why do these guys with a dismal track record and a staff of two-bit thugs . . . deserve a half-million dollar grant?" asked one California woman who was harassed by a collector with a wrong number. Maine's attorney general says that a company called Account Management Services and its owners, Mark Bohn and Douglas MacKinnon, operated the collection business under the Lenahan name.

"What we have seen in your area are companies that are, by all appearances, simply debt collectors but have connected themselves with some law firm, said William N. Lund, director of Maine's Office of Consumer Credit Regulation.

The collectors get the leverage of a law firm's name, as well as cover, to avoid blame for abusive practices, Maine officials said.

Bohn said his company buys up bad debt and hires lawyers to collect, including 18 firms around Buffalo. Lenahan was what he described as a "pre-litigation" firm that collected debts with little courtroom work.

Bohn denied that his company ran the Lenahan operation but acknowledged that it did provide office space. He was disappointed with the firm's record of complaints, he said, and both companies agreed to part ways last summer.

"I can tell you it was a life lesson learned about attorneys and how to monitor them," he said during an interview.

Getting taxpayer money

While it squeezed money from debtors, the Lenahan operation might also have collected from taxpayers.

In the spring of 2003, Bohn and MacKinnon created a company called Account Management Services of New York LLC that quickly won approval for nearly $600,000 in public subsidies. The company was based at a building on Great Arrow Drive in Buffalo, a call center it shared with Lenahan Law Office.

Bohn's company promised to save some jobs being erased by the shutdown of a company called Telespectrum Worldwide, the former occupant of the Great Arrow Drive building.

Empire State Development Corp. awarded the company $350,000 for preserving 400 jobs at the former Telespectrum building. The Buffalo and Erie County Workforce Investment Board granted an additional $234,000 to help train 395 workers.

Bohn denied that the grant to AMS funded training of Lenahan workers, although he says he does not remember whether all 395 trainees covered by the training grant were on the AMS payroll. "I don't think we were ever sharing employees," he said.

The subsidies for AMS of New York came during a rush to replace jobs being erased at Telespectrum, officials said. James Finamore, director of the workplace training agency, said Erie County Executive Joel A. Giambra made a special appeal.

"The county executive sent us a letter [urging] to do anything we could for laid-off Telespectrum employees," Finamore said.

Empire State Development is suing the company in an Albany court to get its money back.

Who was in charge?

In court papers, the owners of the Lenahan firm, John D. Lenahan and his daughter, Danielle, painted a different picture of their links with Bohn's company. Their testimony was compelled by lawsuits in Maine and Texas.

Bohn and MacKinnon's company did more than supply accounts for collection, the Lenahans testified - it also hired the workers, provided office space, handled the money and kept the records.

The father-daughter team and one associate were the only lawyers at the firm, they said. The attorneys worked in a small office in West Seneca, separate from offices where the collectors worked.

The lawyers were supposed to train and monitor employees, but they were not even aware of all the offices that operated under their name. Danielle Lenahan said she learned of one Amherst location after seeing the address cited in a lawsuit against her.

"I was shocked," she said.

In return for supervising collectors, the Lenahan firm was supposed to receive a cut of the take, a deal that yielded $5,000 to $10,000 a month, the Lenahans said. The offices took in anywhere from $1 million to $6 million a month, they said.

Asked how many times he had been sued for collection activities, John Lenahan testified, "I couldn't even guess."

In an interview, Danielle Lenahan defended the firm's collection record. She said her offices made dunning calls on thousands of debtors, so some complaints are normal. "It's part of the business," she said.

The court penalties against her and her father lack foundation because the lawyers were not able to defend the cases, she said, leading to one-sided "default" judgments.

"Those were just allegations," she said, declining to comment on individual cases. John Daniel Lenahan did not respond to requests to comment.

But judges and regulators across the country decided that they had seen more than allegations.

Bankruptcy Judge Trish Brown in California called the firm's tactics "egregious" for threatening a woman whose debts had been erased in bankruptcy. The collector falsely said that "prosecuting attorney Lenahan" had filed a case against the woman. And the threat, implying criminal charges, was left on her mother-in-law's answering machine.

Ignoring a state's ban

Maine's consumer credit regulator banned Lenahan from calling the state in 2004 after seeing a pattern of threats, but even that did not end the calls. After the ban, someone from the firm tried to collect $1,800 from a woman who owed about $500.

"Testimony from witnesses revealed a clear and consistent pattern of illegal behavior on the part of Lenahan's collectors," Lund wrote after a hearing in 2004.

Federal Judge Julie E. Carnes in Georgia penalized the firm $135,000, including $50,000 in punitive damages, after hearing Mary Ekers' story. Ekers, a disabled factory worker who needed a wheelchair and an oxygen tank to get to court, said Lenahan took more money from her checking account than she authorized, using an account number she had provided as part of a payment plan.

When she complained, the collectors threatened that she would be hauled into court. Three other Georgia residents supported Ekers' story of being threatened by Lenahan workers.

"She slept dressed in her clothes because she was afraid the deputies would come, and she didn't want to go to jail in her nightgown," said Ekers' attorney, Kris Skaar.

How could licensed attorneys pile up a record of misdeeds in plain sight and keep going for years?

Maine regulators would like to know the answer. Lund said he filed a complaint with lawyer overseers after banning the Lenahan firm in 2004.

"We sent a complaint to them right away, because there were pretty clear violations of federal and state law," Lund said. "We were expecting a pretty quick response, and we didn't get it."

The Attorney Grievance Committee, an arm of the state appeals court, investigates allegations of attorney misconduct. Deputy Principal Counsel Vincent Scarsella said committee rules block him from discussing any particular case. This confidentiality rule protects lawyers' reputations from groundless complaints, he said.

The committee may take "a week to two years" to complete an investigation, he said, before taking action against a lawyer.

"That's the process - it sometimes takes a long time," he said, "but . . . it's the guy's livelihood."

No hard-and-fast rule defines how much involvement lawyers must have in a firm that bears their name, making it difficult to crack down on collectors that masquerade as law firms.

"Different courts have said different things - it's kind of a gray area," said Cindy White, executive director of the National Association of Retail Collection Attorneys in Washington, D.C. "We do have firms with hundreds of employees and only a few attorneys."

In April, six months after withdrawing from the collection operation, John Lenahan, age 75 and semiretired, gave up his law license, ending whatever disciplinary action he might have faced. Danielle Lenahan would not comment on whether she faces disciplinary action from the grievance committee.

The Lenahans say they have dropped their collection business, but some of their former offices continue to operate under new names.

Timothy Collins said he took over a former Lenahan office in Amherst, hired its workers and started collecting debts for Bohn and MacKinnon in the fall of 2004. Collins Law Office, with 35 collection workers at two locations, now brings in about $400,000 a month.

Collins said his offices are improving their compliance record, now that some former Lenahan workers have left. "I think its better now than it was at one point," he said. "I feel a lot better than I did a year ago."

Murky standards for firms

Lawyers have built-in advantages when it comes to getting money out of people. States frequently waive license requirements for lawyers that they impose on other collectors.

More important is the leverage that comes with being an attorney. Debtors who get a call from a law office may envision a courtroom in their future. They probably don't picture a call center. However, vague professional standards allow collection operations to wear the mantle of a law firm, whether or not they perform courtroom work.

Courts have said a lawyer needs to have "meaningful involvement" with an office, said Eric Berman, a Long Island collection attorney and a director of the collection attorneys association, but there is no specified ratio of lawyers to nonlawyers.

"The key thing is supervision," Berman said. At large firms, many clerks and paralegals pitch in with the work. He said, however, that "all this stuff is being done under auspices of lawyers."

It is not necessary for a law firm to spend much time in court to be legitimate, he added, since some firms specialize in settling cases. Lenahan collectors dunned people across the country, although the lawyers were licensed to practice only in New York and Florida.

In December, John and Danielle Lenahan filed for bankruptcy, putting claims against them on hold. Some victims of abusive collection tactics are going after Bohn's company, but it's unclear whether the penalties will be paid.

e-mail: fwilliams@buffnews.com
Tuesday: What to do if you're a target of unfair collectors.