Ex-Omaha company pays out $100,000

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By HILARY KINDSCHUH / Lincoln Journal Star

Convenience was the main selling point for Dave and Bev Struebing when they signed a contract in June 1996 to have food delivered to their Brainard home over the next two years.

Consumer’s Choice Foods told the Struebings, busy school teachers with three children, they would save time and money by signing installment contracts for frozen foods, meats and dry goods.

And the company seemed to live up to its end of the bargain those first two years, Bev Struebing said.

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Attorney General Jon Bruning

Attorney General Jon Bruning

But about a year into their second contract, which was for three years, the Struebings started to notice a decline in the service, the quality of the food — even in the ability to get in contact with the Omaha company.

The couple didn’t know what to do. They wrote a letter to the Better Business Bureau out of frustration and disgust, Struebing said.

Then someone suggested they write a letter to the attorney general’s office, she said.

Turns out, they weren’t the only ones who had that idea.

The Nebraska Attorney General’s Office initiated a lawsuit against the company after receiving more than 120 complaints from consumers like the Struebings.

On Aug. 29, a California company was ordered to pay $106,000 for court fees and restitution to 34 Nebraska consumers who were hoodwinked by CCF, the now-defunct Omaha company.

The lawsuit also was based in part on a 2002 undercover Nebraska State Patrol investigation, which included a video showing a CCF representative stating the program would save time and money and that food costs would never increase.

From 1995 until 2002, CCF promised grocery delivery services and benefits to customers who signed membership contracts, often under deceptive and unfair conditions, Attorney General Jon Bruning said.

The Nebraska Supreme Court ruled in late August that Jayco Acceptance Corp., which is the company that financed Consumer’s Choice Foods and purchased the contracts sold to its customers, still was liable for the former company’s actions.

The high court was upholding a 2007 Lancaster County District Court decision requiring Jayco to pay $107,483 in restitution to consumers and fining CCF and owners Chris Johnson, Kim Johnson and Jason Johnson $10,000 each in civil penalties.

Nichole S. Bogen of Wolfe, Snowden, Hurd, Luers & Ahl, co-attorney for Jayco Acceptance Corp., said because Jayco had purchased the consumer contracts from CCF, “the court determined ... we were on the hook for the bad acts of the other defendants.

“It was a contentious issue in the case, but I believe it’s unfortunate for the business world when a business goes out of business for extenuating circumstances that they can also be charged with Consumer Protection Act claims and penalties,” Bogen said.

Attorneys for Consumer’s Choice Foods and the Johnsons did not return phone calls for comment.

The 34 customers are to receive checks from $100 to more than $5,000.

About 13 customers picked up their checks from the attorney general in person at his office Tuesday morning.

“This is money that’s going back into the pockets of affected families during tough economic times,” Bruning said.

He said in 26 cases customers signed membership contracts based upon misrepresentations by the company that they would receive a “free freezer.” Customers later discovered that the contract they signed had obligated them to buy the freezer for well over fair market value.

CCF also promised customers they would save time and money because the company bought food in bulk, but a former CCF employee testified to shopping for food at local grocery stores and paying retail prices.

The district court permanently barred the Johnsons from operating this type of business again in Nebraska and required Jayco to repair consumers’ credit, damaged by its debt collection practices.

The consumers who came to Bruning’s office for their checks on Tuesday expressed gratitude to the attorney general’s office for its persistence with the case.

“The comforting thing wasn’t so much the check today, but that when we stepped through the office, someone cared about our family,” Dave Struebing said.

Reach Hilary Kindschuh at 473-7120 or hkindschuh@journalstar.com.