On April 20, 2017, the U.S. Attorney’s Office for the Southern District of New York (USAO) announced that the president and chief executive officer of a Buffalo-based debt collection company was sentenced to 100 months in prison for engaging in illegal and abusive debt collection practices.
According to the USAO, the defendant “was the mastermind behind the largest debt collection scheme ever charged,” resulting in a total of $31 million fraudulently obtained from consumers. The USAO alleged that the defendant inflated debt balances on consumers’ accounts and would collect more from them than was actually owed. The defendant allegedly oversaw four offices and a team of debt collectors, which he used to make repeated contacts with certain consumers to coerce them to pay their “debts.” The USAO also alleged that the defendant “drafted, approved, and disseminated” phone scripts for debt collection calls that were intended to mislead and coerce consumers. The specific false representations included (i) that the company was affiliated with law enforcement; (ii) that consumers had committed criminal acts; (iii) that consumers’ drivers licenses would be suspended if they did not pay their debts; and (iv) that a lawsuit would be filed against the consumers. The company collected more than $31 million from thousands of consumers nationwide.
The defendant was sentenced to 100 months in prison, three years of supervised release, and ordered to forfeit $31 million. Ultimately, 14 individuals have been charged and pled guilty to consumer fraud for their involvement in this same debt collection scheme. Enforcement Watch has previously covered related actions here and here.