Thank you... I feel so stupid.. I was so naive :(

They called me and told me I had an old GE debt.  I mailed and faxed the letter saying I needed validation, and they placed the collection on my credit report the day after they got my letter.  I found proof that I didnt owe the debt, they told me not to send it and said theyw ill sue me without a paid in full letter.  

I called GE and they admited it was a mistake, and said they are requesting the file back and will send me the letter.  I called the offices again and they said GE doesnt ownt he debt anymore and they are sueing me and hung up.  

I sent the letter and they ignored it.  I called and told them I will fax proof of the debt paid and they said no, I called and told them GE wants the debt back and they said to bad.  I only hope they sue at this point.

Do some research and contact a Consumer Attorney immediately. It sounds like you have the grounds for a lawsuit that will knock the foundation out from under this firm. In particular, the filing of a false credit report. The penalties for such an action can be considerable.
Many Consumer Attys. will take your case on a contingency basis. No money up front. Retain all your communications with this firm. Check your state laws regarding the recording of calls. If you are in a one-party state, there's no need to inform the caller that the call is being recorded. If you are in a two-party state, inform the caller that the call is being recorded. Either way, record all your calls. Evidence is the key to lowering the hammer on fraudulent, bogus or harassing collectors. Once it is clear that you have what you need, a domestic debt collection agency will quickly roll over and start begging for a settlement. They depend on their target to be clueless. They don't fear the meager fines imposed by the FTC. But once a good Atty. comes in to play, armed with irrefutable evidence, they know that the penalties will rapidly sky-rocket. State fines and penalties are often far more severe against rogue collectors than the federal ones. Civil penalties can be crippling. Especially concerning cases where bogus credit reports have been made.
Do not back down. This firm will, no doubt, claim a mistake was made and will offer you the gift of dropping the matter. Don't fall for it. Instruct your Atty. to pursue the matter to the full extent of the law. As the noose tightens around their neck, the settlement negotiations will get more fun to watch. You and your Atty. won't get rich, but it will be satisfying as hell.
In your case, the hardest part is done. They acknowledged the receipt of your letter. They filed a credit report. Which means..you know where they are! That is always the sticking point. Finding them! You and your Atty. have the most vital piece of information in your hands. Use it and have fun!
Be Safe. Be Aware.
Gunnar

Annoying calls. I do not answer them. From what people have been saying they are fake debt collectors that need to be slammed in jail.

A lousy online school use them try to get more money from me after I cancelled a class.