(AP) — More than 1,000 Virginia families should soon be seeing their share of a $913,866 settlement between the state and a child-support collection company.
Attorneys for the state filed a motion in Richmond Circuit Court this week seeking an order to allow the Virginia Division of Child Support Enforcement to begin cutting checks to victims.
A judge must sign an order authorizing distribution of the funds. Thomas M. Wolf, a private attorney who represented the state in the case against Texas-based Supportkids Inc., said Friday that he expects the unopposed motion to be granted soon.
According to court papers, victims will recoup 55 percent of the money that Supportkids was accused of illegally siphoning from their child-support checks. Individual payments will range from $1.53 for a family in Norfolk to $12,637 for a family in Scottsville, Ky., according to an exhibit attached to the motion.
“I think it’s a great outcome,” Wolf said.
The lawsuit, filed in 2008, claimed Supportkids illegally used misleading “withholding orders” that appeared to be government-issued to get child support payments withheld from noncustodial parents’ paychecks. The company allegedly extracted fees often exceeding 35 percent.
“They were getting the custodial parent to assign child support payments to the company, and that’s not legal or enforceable in Virginia,” Wolf said. “Child support belongs to the child, not the custodial parent, so the custodial parent can’t assign it to someone else.”
Supportkinds filed for bankruptcy soon after the lawsuit was filed. Fortress Value Recovery Fund, a New York-based hedge fund that had invested money in Supportkids, seized many of the company’s collection contracts and accounts on the eve of the bankruptcy. Fortress later entered a consent decree with Virginia, and the company and the law firm representing it returned $913,866 to the state.
John A. Burlingame, an attorney for Fortress, declined to comment on resolution of the case.
Another private child support collection company from Texas bought Supportkids’ remaining assets and assumed the name Supportkids Services Inc. The successor company signed a legal agreement not to engage in illegal collection activities in Virginia.
Wolf praised the state attorney general’s office and the Division of Child Support Enforcement for pursuing the case, saying it will deter other companies from engaging in similar conduct.
By Larry O’Dell