New York State Attorney General Andrew Cuomo has launched a wide-ranging investigation of possible fraud in the process-serving industry, in which thousands of people may have had their financial accounts frozen or wages garnished without any knowledge of court proceedings against them, according to officials.

A spokesman for Cuomo, Richard Bamberger, confirmed the existence of the probe and said it’s an important issue in a time of increasing economic hardship. He declined to elaborate on the scope of the investigation or on firms under scrutiny.

Sources familiar with it, however, said that the investigation includes practices on Long Island and around the state. There could be as many as tens of thousands of people statewide affected, the sources said.

Two people said last week they were victims of so-called “sewer service,” a term used to indicate that a person was not served and the summons could just as well have been thrown down a sewer.

The two people said they had recently been questioned in depth by detectives from Cuomo’s office. The questions, they said, focused on their assertions that they had never been served with notice of civil actions against them despite process servers swearing in court papers that they had been.

The two said the questioning focused on American Legal Process of Lynbrook, one of the state’s biggest, which specializes in process-serving.

An attorney for the company, Corey Winograd of Manhattan, said he was aware that Cuomo was looking into his client, and possibly others in the industry. But Winograd said his client had done nothing wrong, and had itself been “victimized” by an independent process server whom the company hired to deliver summonses.

Sarah Whitten of Ossining said she was questioned about American Legal Process.

“I’m someone who considers myself a respectable person, but I felt I was being treated like a criminal,” said Whitten, when she first found her credit card would not work at a gas station because her accounts had been frozen.

Whitten, an education consultant, said she was recovering from breast cancer, was caring for a niece whose mother was being treated for breast cancer, had just undergone a divorce and had run up credit card debts and a loan totaling $25,000.

She said she had been trying to pay off her debts and was unaware that a judgment had been filed against her, freezing her finances.

To get a court to issue a judgment against a debtor without the person’s presence, a creditor has to certify to a court that several unsuccessful attempts were made to notify the debtor of the court proceedings, typically through a summons from a process server.

Victims of “sewer service,” often already in debt, face added debt, including interest, penalties, court costs and bounced check fees, not to mention the inability to pay bills by check or credit card.

The second person, Kathy Baughman, a restaurant manager in upstate Portville, said she had run up a credit card debt of $1,000 when one day she attempted to reconcile her checkbook and noted that a number of checks had bounced.

“I was shocked,” Baughman said, on calling the bank and discovering her account had been frozen because of a court judgment. Baughman said she found the $1,000 debt had ballooned into $1,800 when bounced check fees and judgment costs were added in.

There was no way she could have been served with court papers as the court records indicated, as her husband had been home all the time with a broken leg, Baughman said.

(Source: Newsday)