Consumers who can't pay their bills often complain of aggressive tactics used by debt collection agencies. But as if those woes weren't enough, now comes a further misery: a debt collection agency that allegedly outright stole the money consumers sent them in an effort to make good on their outstanding obligations.
The upside, though it might seem small potatoes, is that two of these scammers recently pleaded guilty to federal crimes in a U.S. district court in Connecticut, according to a press statement.
The two, Richard Pinto, 68, of Wellington, Fla., and his son Peter Pinto, 37, of East Quogue, N.Y., formerly were executive officers at Oxford Collection Agency, a debt collection outfit that had offices in New York, Pennsylvania and Florida.
How the scam operated, according to police: Oxford collected debts on behalf of various clients under the pretense they would report the collections to their clients, which included Washington Mutual Bank, Dell Financial Services, Cogent Communications and Labcorp. Instead, the Pintos and others withheld the amounts, running up what they referred among themselves as a client's "backlog." The funds were then diverted and used for the Pintos' own ends, the statement said.
The Pintos also secured a credit line from a bank that received funds through the federal Troubled Asset Relief Program, or TARP, without informing the bank about the "backlogs" or outstanding payroll taxes. The Pintos and others sent falsified financial statements to the bank, eventually increasing the credit line to $6 million, and laundered funds from the credit line to promote the fraud scheme against their clients, the statement said.
The Pintos also solicited millions of dollars in investments from various investors without disclosing the existence of the "backlogs" and transferred some of those funds into Richard Pinto's personal bank account without the investors' knowledge.
David B. Fine, U.S. attorney for the district of Connecticut, said in the statement that the Pintos "carried out a significant fraud scheme through which they stole millions of dollars from their company's clients, lenders and investors."
Total losses amounted to more than $10 million.
The Pintos face maximum terms of 35 years in prison and a fine up to approximately $20 million.
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