Consumer Finance Insights
November 28, 2016

United States Attorney’s Office Announces Guilty Pleas in Criminal Prosecution of Alleged $31 Million Debt Collection Scheme

On November 18, 2016, the U.S. Attorney’s Office for the Southern District of New York (“USAO”) announced that the co-owner and chief financial officer of a debt collection company, and a company manager, pleaded guilty to engaging in illegal and abusive debt collection practices.  The Court also sentenced another company employee to 70 months in prison.

The defendants allegedly orchestrated a $31 million debt collection scheme, which the USAO described as the “largest debt collection scheme ever prosecuted.”  According to the USAO, the defendants falsely inflated debt balances on consumer’s accounts, and many consumers paid more than they actually owed. The defendants allegedly developed “scripts” for debt collection calls, in which employees falsely threatened consumers that they would be arrested for nonpayment, and falsely represented that they were calling from an “arbitration firm” or a process server’s office to coerce consumers into making payments.  The USAO estimates that the company collected more than $31 million from thousands of consumers across the country.  The chief financial officer pleaded guilty to wire fraud, and faces a maximum 20-year prison sentence, in addition to potential fines and restitution payments. Consumer Finance Enforcement Watch previously covered the indictment here.