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Mark Hjelle and CSC Coin Laundry Agreement Violations RICO Act Class Action

This class action focuses on Mark Hjelle, the new CEO of CSC ServiceWorks, Inc. The complaint alleges that Hjelle is defrauding customers by subtracting an “administrative fee” of 9.75% from their gross collections. Rather than make claims under state law, the complaint has reasons for bringing a nationwide suit under the Racketeer Influenced and Corrupt Organizations (RICO) Act.

The class for this action is all customers of CSC who have been charged a 9.75% “administrative fee.”

CSC is a laundry machine leasing company with the largest share of the US market, under subsidiaries with names like Coinmach, MacGray, SDi Laundry Solutions, Sparkle Solutions, and ASI Campus Laundry. The company leases space in multi-family residential properties, apartment buildings, commercial spaces, and campus residences where it installs machines and offers them for coin or card use. 

In return for the lease of the space, it pays “rent” of a portion of the money collected from the use of the machines. The rent agreements are structured in a number of different ways—as a straight percentage of monthly fees, as a flat fee plus a percentage of gross receipts, or as a minimum rent per machine, or the like. The most common is a portion of gross receipts, often fifty percent.

The agreements also set out terms for routine and emergency maintenance, coverage in case of theft or vandalism, and so on. The agreements also state that they are the entire agreement between the parties and may not be modified except by a writing signed by both. 

In May 2017, however, Hjelle sent out what the complaint calls “the May 2017 Fraud Letter” telling customers that it was taking 9.75% of their gross collections as an administrative fee. 

The complaint quotes a person at a competitor of CSC’s as saying the letter was “like a bomb went off in the industry. No one was doing anything like this. I ran it by our corporate counsel and he said, ‘they can’t do this.’” 

According to the complaint, the fraud was designed to evade the law because the amounts in question were too low to make the cases worthwhile at a state-law level; and fifty such actions would be required to successfully fight the problem. 

The complaint therefore brings a nationwide case by claiming violations of the RICO Act. Among other things, it cites the use of the mails and/or wires with the May 2017 letter and other aspects of the scheme.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Mark Hjelle and CSC Coin Laundry Agreement Violations RICO Act Complaint

December 29, 2018

This class action focuses on Mark Hjelle, the new CEO of CSC ServiceWorks, Inc. The complaint alleges that Hjelle is defrauding customers by subtracting an “administrative fee” of 9.75% from their gross collections. Rather than make claims under state law, the complaint has reasons for bringing a nationwide suit under the Racketeer Influenced and Corrupt Organizations (RICO) Act.

hjelle_csc_laundry_machines_compl.pdf

Case Event History

Mark Hjelle and CSC Coin Laundry Agreement Violations RICO Act Complaint

December 29, 2018

This class action focuses on Mark Hjelle, the new CEO of CSC ServiceWorks, Inc. The complaint alleges that Hjelle is defrauding customers by subtracting an “administrative fee” of 9.75% from their gross collections. Rather than make claims under state law, the complaint has reasons for bringing a nationwide suit under the Racketeer Influenced and Corrupt Organizations (RICO) Act.

hjelle_csc_laundry_machines_compl.pdf
Tags: Additional charges in breach of contract, RICO laws