Federal authorities announced a crackdown Tuesday on predatory businesses that cheat “desperate and vulnerable” people harmed by the 2008 financial crisis with phony promises to consolidate their debt.
U.S. Attorney Preet Bharara told a news conference that charges were brought against the owner and three employees of a New York company that cheated over 1,200 customers nationwide after opening its doors in 2009. They were indicted on charges of conspiracy to commit mail and wire fraud, along with separate mail and wire fraud charges.
He said Mission Settlement Agency promised to help people harmed by the economic collapse for a $49 monthly fee but instead often made them worse as it made $2.2 million in fees from customers it did not help while taking in more than $6.6 million in fees in all.
“The true mission of Mission turned out to be fraud and deceit,” he said. “And for more than a thousand consumers, the dream of debt relief turned into a nightmare of deeper debt trouble.”
Bharara said the prosecution was the first to result from a case referred by the Consumer Financial Protection Bureau. The agency was created under the 2010 financial law known as the Dodd-Frank Act. The agency is charged with reducing the risk of a credit bubble by helping to ensure that borrowers are better informed and loans are more likely to be repaid.
Richard Cordray, the bureau’s director, said similar prosecutions would be brought in the future to protect the 30 million Americans who are chased by debt collectors.
Bharara promised the prosecution would not be the last against those taking advantage of people struggling financially.
“Our concern is that predatory practices pervade the industry,” he said.
U.S. Postal Inspector in Charge Phil Bartlett said the men arrested in the case lived lavishly, buying homes, fancy cars and operating a Brooklyn nightclub with money received from victims he described as “both desperate and vulnerable.”
Jeffrey Lichtman, a lawyer for the company’s owner, Michael Levitis, said his client had cooperated with federal authorities since being approached in February.
He said Levitis, who was freed on $1 million bail, was victimized by “rogue employees who were acting like cowboys in a sense.”
“He’d gotten wind there were rogue employees making ridiculous promises. Some even started their own debt settlement companies,” Lichtman said.
Via: Fox News