Federal judge finds Nexus Services owners in contempt over sale

A federal judge who issued an $811 million judgment in 2024 against Nexus Services Inc. said in a recent opinion that the company’s attempt to sell off its business violated a court injunction.

The March 30 opinion said Mike Donovan, a majority owner of the company, and Evan Ajin, a minority owner, were found to be in civil contempt. Richard Moore, Donovan’s spouse and a one-time minority owner who is currently serving a federal prison term, was not found to be in contempt.

The ruling orders the buyer, Libre Immigration Services, which was also found in civil contempt, to stop collecting on covered contracts and warns that additional sanctions could follow.

The opinion stems from a 2021 civil case brought forth by the Consumer Financial Protection Bureau (CFPB), along with the states of Virginia, New York and Massachusetts. The 17-count lawsuit was filed against Nexus Services, its subsidiary Libre by Nexus, Donovan, Ajin, and Moore. Formerly located in Augusta County, the company handled bond securitization for immigrants in ICE custody.

In the initial civil suit, the trio were accused in the complaint of violating the Consumer Financial Protection Act of 2010 and engaging in a “slew of deceptive conduct.” In April 2024, Chief United States District Judge Elizabeth K. Dillon ordered the five defendants to each pay more than $111 million in civil penalties.

While in operation, Nexus Services collected $230,996,970 from more than 6,000 consumers, and the judge also ordered the defendants in the case to pay restitution to the CFPB in that amount. Additional civil penalties to the three states were ordered as well. The U.S. Court of Appeals for the Fourth Circuit upheld the judgment in October.

“The Nexus defendants charged the immigrant consumers exorbitant fees for a purported array of services — only some of which the defendants actually provided — and deceived and abused those immigrant consumers, in violation of federal and state consumer protection statutes,” the appeals court said in its ruling.

In 2024, shortly after Dillon entered the massive judgment, the defendants filed a motion seeking a stay. The motion argued they were unable to comply with a court injunction that barred the use or transfer of customer data and the collection of bond payments, and said allowing a third party to acquire the company while taking on all liabilities was “the likeliest path to compliance,” the opinion said.

Days later, on April 17, the judge noted the assets were sold to Libre Immigration Services Inc., a company led by Pennsylvania resident Vincent Smith, without waiting for the court to rule on the motion.

“On entry of an $811,000,000 judgment against them, defendants belatedly realized they were in over their heads, and Mr. Smith said he could shoulder the liability, save the business, bring it into compliance, and, eventually, satisfy the judgment,” the opinion states.

Court records list the sale of Nexus Services at $3.50, but an attorney said in a filing it was equivalent to a “more realistic” price of $21 million if one were to combine assumed liabilities with the purchase price.

According to the opinion, the “very terms” of the sale documents signed by Donovan and Ajin were “clear and convincing evidence that the sale violated the court’s amended final judgment order.”

Dillon said the transaction transferred “virtually all” of the company’s assets, including customer lists, contracts, and payment rights that were at the center of the injunction. She ordered key portions of the deal unwound, effectively nullifying the sale, and barred the buyer from collecting on covered contracts. She also ordered Libre Immigration Services to destroy any covered information or contracts that it possesses or can access, and said the company must pay back any money it collected from consumers on contracts that were part of the sale. The judge warned of further sanctions if the parties fail to comply by April 17.

Nexus Services’ former office complex in Verona went into foreclosure and was sold off in 2023 at a public auction for $3.4 million.

Donovan, Moore, and Timothy Shipe, a former Nexus Services executive, are awaiting trial on charges filed against them in Augusta County. A jury trial, postponed seven times, is set to begin Oct. 20 and is scheduled for nine days.

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 [email protected]

This article originally appeared on Staunton News Leader: Federal judge finds Nexus Services owners in contempt over sale

Reporting by Brad Zinn, Staunton News Leader / Staunton News Leader