EXECUTIVES AT DEBT COLLECTION AGENCY ADMIT ROLES IN
$10 MILLION CLIENT, LENDER AND INVESTOR FRAUD SCHEME
David B. Fein, United States Attorney for the District of Connecticut, today announced that three more executives of Oxford Collection Agency, Inc., have pleaded guilty in Bridgeport federal court to charges stemming from a $10 million fraud scheme. Oxford Collection Agency was a private financial services company that engaged in accounts receivables management, primarily debt collecting, with offices in New York, Pennsylvania and Florida.
RANDALL SILVER, 43, of New Hyde Park, N.Y., pleaded guilty on December 13 to one count of conspiracy to commit wire fraud, bank fraud and money laundering, and one count of wire fraud. SILVER was a Vice-President of Finance and Chief Financial Officer at the Oxford Collection Agency, Inc. CHARLES HARRIS, 38, of Babylon, N.Y., and CARLOS NOVELLI, 43, of Vero Beach, Fla., pleaded guilty on December 17 and December 18, respectively, to one count of conspiracy to commit wire fraud and bank bribery. HARRIS was an Executive Vice President at the Oxford Collection Agency and NOVELLI was the company’s Chief Operations Officer.
According to court documents and statements made in court, various businesses and other entities contracted with Oxford Collection Agency (“Oxford”) to collect debts owed them by consumers. Oxford’s clients included, among others, an educational institution, a laboratory, a computer company and various banks. Oxford collected debts from consumers under the pretense that it would report all such collections to its clients and remit the appropriate amount to the client. However, SILVER, HARRIS, NOVELLI and other Oxford executives routinely caused Oxford to collect debts that were never remitted to its clients. The co-conspirators referred to these unremitted collections as a client’s “backlog.” To hide the backlog, co-conspirators would make periodic fraudulent collection reports to certain clients that under-reported the amount of funds collected.
Certain co-conspirators also transferred money from one client trust account to another client account, from Oxford’s operating account to a client account, or from a client account to Oxford’s operating account to cover various shortfalls and backlogs or to improperly use collections to directly fund Oxford’s operations.
Starting in April 2007, Oxford secured a line of credit from Connecticut-based Webster Bank, a bank that received funds through the Troubled Asset Relief Program (TARP), without informing Webster Bank about its significant client backlogs or outstanding payroll taxes. Oxford executives, including Richard Pinto, Oxford’s Chairman of the Board, and his son, Peter Pinto, Oxford’s President and Chief Executive Officer, sent falsified financial statements to Webster Bank. With SILVER’s assistance in the fraud scheme, the Webster Bank credit line was increased to $6 million. Richard Pinto, Peter Pinto, SILVER and others also laundered funds from the credit line to promote the ongoing fraud scheme against their clients. During this same period, the Pintos, SILVER and others also solicited millions of dollars in investments from various investors, without ever disclosing to their investors the existence of their backlogs. Some the investor funds were transferred into Richard Pinto’s personal bank account without investor knowledge.
Victims lost more than $10 million as a result of this scheme.
As part of the scheme, certain co-conspirators also paid kickbacks to employees of one or more financial institutions in order to compensate them for providing Oxford with the bank’s debt collection business.
In pleading guilty to a wire fraud charge unrelated to the conspiracy offenses, SILVER admitted that he embezzled $193,963 from Oxford by transferring funds from Oxford’s “Client Payables” account at Webster Bank to an account at a New York bank that he controlled.
On May 11, 2012, Richard Pinto and Peter Pinto each pleaded guilty to one count of conspiracy to commit wire fraud, bank fraud, and money laundering and one count of wire fraud stemming from this scheme.
Each of the conspiracy charges carries a maximum term of imprisonment of five years, and wire fraud carries a maximum term of imprisonment of 20 years. When they are sentenced, the defendants also face fines and orders of restitution.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation, the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Connecticut Securities, Commodities, and Investor Fraud Task Force. The case is being prosecuted by Assistant U.S. Attorney Liam Brennan, Special U.S. Attorney John McReynolds and Deputy U.S. Attorney Deirdre Daly.
In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities, and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement. The task force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department and Stamford Police Department.
Citizens are encouraged to report any financial fraud schemes by calling, toll-free, 855-236-9740 or by sending an e-mail to firstname.lastname@example.org.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
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