FORT WORTH, TX 04/12/2016 – Digital Recognition Network (DRN) (www.drndata.com) announced today that the company has entered into a settlement agreement to resolve the litigation accusing Four Repossession Agencies (Agents) of breaching their license agreements with DRN, misappropriating DRN’s trade secrets, and violating the Federal Computer Fraud and Abuse Act and Texas’ Harmful Access by Computer statute.
On March 8, 2016, a Federal Judge ruled that the evidence established that Agencies owned by Wes Englebrecht, Scott Fornaro, and Shane Freitas violated the terms of their License Agreements with DRN by using DRN’s proprietary car detector software in violation of their software license in an attempt to build their own LPR database. Facing between three and five million dollars in damages, these individuals and their associated companies, Accurate Adjustments, Inc., Solid Solutions 24/7, Inc., Coastline Recovery Services, Inc. and After Hours Recovery quickly entered into a settlement agreement with DRN rather than facing trial on the other claims, and a determination by the court as to the damages owed to DRN.
The settlement between DRN and Agents includes damages, restitution of data and intellectual property, and non-compete provisions designed to prevent the parties from storing or maintaining LPR data outside of a licensed LPR provider such as DRN or MVTRAC. Given the fact that the evidence in the case established that Fornaro and Englebrecht were less culpable in their conduct than Freitas, the settlement includes provisions detailing the terms for Fornaro and Englebrecht to become DRN Affiliates again as separate entities, with an agreement for them to meet DRN’s operating standards at an enhanced level. Based on the determination that he masterminded the conduct described by the court, the settlement bans Freitas from operating DRN solutions or associating himself with any function related to storing or maintaining LPR data. Additionally, Freitas was required to divest his significant ownership interest in Solid Solutions 24/7, Inc. to Fornaro and Englebrecht for one dollar.
“We’ve invested considerable time, money and energy ensuring that our DRN Recovery Network delivers superior value to both lenders and DRN Affiliates. This settlement enables DRN to reinforce and protect our intellectual property and the value we provide in the market,” said Chris Metaxas, Chief Executive Officer at DRN.
Commenting on the settlement, Shane Freitas, President of Accurate Adjustments said, “Years ago I had thoughts of building my own LPR database; I was sure it was going to make me more efficient while also making me more money. As a result of these feelings and my efforts, I breached my DRN affiliate agreement. I later found out that doing such a thing was simply not worth it. In the end, I lost money and almost lost my entire company. DRN has allowed me to stay in business and for that I am thankful. I discourage any DRN affiliates from trying to cheat or exploit the business opportunity that DRN provides. If you don’t like your affiliation with DRN, you should honestly terminate the contract rather than breach it. In hindsight, it is clearly better to be affiliated with an LPR technology provider, and follow the rules, rather than to try to do LPR alone.”
In the lawsuit, the Agents disclosed all of the participants accused of unauthorized use and extraction of DRN data, as well as the repossession agents and clients. The lawsuit also revealed DRN’s plans to take action against the agents and clients named in the lawsuit, including others violating DRN’s intellectual property rights.
“Since I created this company, we have expended tens of millions of dollars in developing proprietary software solutions related to license plate recognition and many millions more on patents and other mechanisms to protect our technology investments. Litigation such as this is extremely expensive and time consuming; however in this instance it was necessary to protect our technology and has clearly set a precedent as to the enforceability of our agreements and the extent that DRN will go to insure that our patented technology is protected,” said Todd Hodnett, DRN Founder and Executive Chairman.
“I was involved with an effort to take unfair advantage of the DRN Affiliate network. It was absolutely the wrong thing to do and does not represent the way I want to do business. I have rebuilt my relations with DRN to the point where they are giving me the chance to remain a business partner. DRN has been fair with me and I look forward to a long and profitable relationship as a DRN Affiliate, following the rules and making money,” said Scott Fornaro of Coastline Recovery Services.
Wes Englebrecht of Solid Solutions 24/7 said of the settlement, “I got caught up in the industry chatter suggesting that DRN’s network is not being fair to DRN affiliates. I can attest that having DRN’s technology support and access to pick up DRN accounts is a critical advantage for my business. I regret having taken unfair advantage of my affiliation with DRN, and now understand that I would have been much better off focusing on use of DRN’s technology to make money rather than searching for ways to operate outside the rules. DRN has handled the matter of my contract breach fairly, and I am committed to regaining DRN’s confidence as one of the best affiliates going forward.”
DRN is a leading provider of data and analytics to the Financial Services, Insurance and Asset Recovery industries. Our solutions enable our clients to more effectively optimize their portfolios, reduce losses, detect fraud, and manage risk. An industry pioneer in vehicle location data and license plate recognition technology and services, DRN covers every major metropolitan area in the United States and maintains the largest vehicle location database under strict standards of privacy, compliance, and data integrity. To find out more, contact your DRN sales representative, visit us online at www.drndata.com, or call us at (817) 877-0077.