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Debt Collector: Prosecuted for Threatening Arrest

On Behalf of | Jan 25, 2016 | Debt Collection

Every once in a while you see a report of Debt Collector that gets prosecuted criminally and for their misconduct. I’ve always suspected that attracting the interest of law enforcement has more to do with abusing the wrong person, rather than the abuse itself. But no matter the instigation, more Debt Collectors, like more (any) Wall Street fat cats, need to be prosecuted, so all the better.

DCs – and repo agents too – often threaten all sorts of things, including arrest and prosecution These threats are not only made to the debtor, but to family members, in order to strong-arm payment or information.

In October 2015, the Manhattan U.S. Attorney announced that it had charged 15 DCs in $31 Million Fraudulent And Coercive Debt Collection Scheme, which was believed to be the largest such scheme ever prosecuted. You can see the full press release by pointing your browser here:

The government alleges that the “defendants tried to trick and coerce victims into making payments to the Company by making false threats and telling a host of lies, including that the Company was a law office and that warrants would be issued for the victims’ arrests if they failed to repay debts.”

Manhattan U.S. Attorney Preet Bharara said: “As alleged, the defendants engaged in what is believed to be the largest fraudulent debt collection scheme ever to be prosecuted, falsely threatening arrest and prosecution of countless Americans, including those who suffered from disabilities. The defendants charged today allegedly took ruthless advantage of the desperate situation in which their victims found themselves, using threats and lies to coerce payment and even trying to collect more money than the victims ever owed. Thanks to the tireless work of the criminal investigators in our office, those involved in this massive debt collection scheme will no longer be able to prey on vulnerable Americans burdened by debt.”

According to the allegations contained in the Indictment unsealed today in Manhattan federal court:

Between 2010 and February 2015, the defendants routinely attempted to trick and coerce thousands of victims throughout the United States into paying millions of dollars in consumer debts through a variety of false statements and false threats. The defendants, using a variety of aliases, falsely told victims, among other things, that: (1) the Company was affiliated with local government and law enforcement agencies, including the “county” and the district attorney’s office; (2) the consumers had committed criminal acts, such as “wire fraud” or “check fraud,” and if they did not pay the debt immediately, warrants or other process would be issued, at which point they would be arrested or haled into court; (3) the victims would have their driver’s licenses suspended if they did not pay their debts immediately; (4) the Company was a law firm or mediation firm and that the Company’s employees were working with lawyers, a law firm, mediators, or arbitrators; and (5) a civil lawsuit would be filed, or was pending, against the victims for failing to pay their debts.

Employees of the Company at times prepared and sent correspondence to victims that made it falsely appear that the Company was affiliated with the government or courts. The defendants also routinely used legal-sounding terminology to invent legitimate-sounding but bogus explanations for the supposed criminal or legal action that had been or would be initiated against the victims for failure to repay purported debts, including that the victim had “breached a contractual agreement,” committed “theft of goods and services,” and engaged in “malicious intent to defraud a financial institution.” The defendants used these quasi-legal terms to frighten and coerce victims into paying actual or purported debts.

In total, from about January 2010 through November 2014, the Company collected more than approximately $31 million from thousands of victims across the United States.

Collection Scripts

The defendants disseminated to Company employees and used collection “scripts” to solicit consumers by phone. The scripts contained various misrepresentations designed to trick victims into paying purported debts. For example, the scripts falsely stated, among other things: “In the next 48 hours we will be handing the matter over to our fraud department who will work together with your local district attorneys [sic] office in attempting to resolve the matter”; the collector was calling “from [the] law firm of Global Management Group”; the collector was a “claims associate calling on behalf of the legal processing firm” who would “file with our affiliate litigator in _____ county, to serve you to appear to plea”; and the consumers’ voice was being recorded on a “federally recorded line” for use “as admissible evidence.”

If you have been the victim of Debt Collection Abuse, then you should contact a qualified attorney right away. 

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