Debt Relief Company And Its Owner Plead Guilty In Manhattan Federal Court To Multimillion-Dollar Scheme That Victimized Over 1,200 Financially Struggling Consumers
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that MISSION SETTLEMENT AGENCY (“MISSION”) and its owner, MICHAEL LEVITIS, pled guilty in Manhattan federal court to fraud charges in connection with a multimillion-dollar scheme that victimized more than 1,200 financially struggling people across the country. LEVITIS and MISSION were charged in May 2013, and both pled guilty today before U.S. District Judge Paul G. Gardephe. Four other defendants previously pled guilty for their roles in the scheme.
Manhattan U.S. Attorney Preet Bharara said: “Michael Levitis and his company, Mission Settlement Agency, preyed on the desperation of financially struggling people across the country. Today’s guilty pleas ensure that the defendants who falsely offer debt relief, telling their victims a pack of lies in order to line their own pockets, will be held to account.”
According to the allegations contained in the Indictment and Superseding Information, other documents filed in Manhattan federal court, and statements made at today’s plea proceeding:
Beginning in 2009, MISSION offered “debt settlement” services to financially disadvantaged people who were struggling or unable to pay their credit card debts. Like other purported debt settlement providers, MISSION held itself out as a company that could successfully negotiate to lower the overall debt its customers owed to credit card companies and banks. MISSION solicited prospective customers through telemarketing and mail solicitations. Thereafter, MISSION’s sales representatives typically spoke to the prospective customers on the phone, describing MISSION’s work and its supposed ability to renegotiate debt.
LEVITIS was MISSION’s beneficial owner, and was responsible for managing MISSION’s day-to-day operations, its finances, its hiring and termination of employees, and its advertising and solicitation of customers.
From 2009 through May 2013, at LEVITIS’s direction, the defendants systematically exploited and defrauded over 1,200 customers, who were financially disadvantaged people across the country struggling to pay their credit card debts. They tricked people into paying MISSION for purported debt settlement services by lying to prospective customers about MISSION’s ability to help settle their debts, the fees that MISSION charged, and MISSION’s purported affiliation with the federal government. Among other things, the defendants: (1) lied about and/or concealed MISSION’s fees, falsely assuring customers that MISSION would charge a mere $49 per month when, in truth, MISSION took thousands of dollars in fees from funds that its customers believed would be used to pay creditors, (2) deceived customers by fraudulently and falsely promising that MISSION could slash their debts – typically, by 45% -- when, in fact, for the majority of its customers, MISSION did little or no work and failed to achieve any reduction in debt, and (3) sent prospective customers solicitation letters that falsely suggested that the agency was acting on behalf of or in connection with a federal governmental program, which letters included an image of the Great Seal of the United States and indicated that they were coming from the “Reduction Plan Administrator” of the purported “Office of Disbursement.” As a result of the defendants’ scheme, in addition to losing money, most of MISSION’s customers failed to achieve the reduction in debt that the defendants had promised them, and some of them suffered further declines in their credit ratings, were sued by their creditors, and/or fell into bankruptcy.
In connection with the scheme, MISSION received over $6.6 million in fees. For more than 1,200 of its customers, MISSION took fees totaling nearly $2.2 million but never paid a penny to the customers’ creditors. LEVITIS used the money that MISSION took from its customers to pay for, among other things, the operating expenses of a restaurant/nightclub he controlled, lease payments for two different luxury Mercedes cars, and credit card bills for his mother.
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LEVITIS, 37, of Brooklyn, New York, pled guilty to one count of conspiracy to commit mail and wire fraud, and one count of conspiracy to commit wire fraud, and faces a maximum sentence of 10 years in prison. MISSION pled guilty to one count of conspiracy to commit mail and wire fraud, and faces a fine of up to twice the gross pecuniary gain derived from the offense, and up to five years' probation. The defendants are scheduled to be sentenced by Judge Gardephe on August 21, 2014. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
In addition to entering their guilty pleas, LEVITIS and MISSION entered into a stipulation of settlement of the civil forfeiture action filed by the United States Attorney’s Office for the Southern District of New York entitled United States v. All Right, Title, and Interest in Rasputin Restaurant, 13 Civ. 3069 (GHW). As part of that stipulation of settlement, LEVITIS and MISSION consented to the entry of a permanent injunction barring them from providing, directly or indirectly, any debt relief or mortgage relief services in the future.
Four other defendants, Denis Kurlyand, Boris Shulman, Felix Lemberskiy, and Zakhir Shirinov, previously pled guilty for their roles in the fraudulent scheme. The charges against Manuel Cruz remain pending and he is presumed innocent unless and until he is proven guilty.
Mr. Bharara praised the investigative work of the United State Postal Inspection Service. He also thanked the Consumer Financial Protection Bureau for referring this case to this Office and for their assistance in this matter.
The prosecution of this case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorneys Nicole W. Friedlander and Edward A. Imperatore are in charge of the prosecution. Assistant United States Attorney Carolina A. Fornos of the Office’s Asset Forfeiture Unit is responsible for the forfeiture aspects of the case.