CEO Charged With Wire Fraud Arrested At SFO
Sonoma County Resident Brandon Frere Arrested While Attempting to Leave the Country
SAN FRANCISCO – Brandon Frere was charged with wire fraud on December 5, 2018, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation, Special Agent in Charge John F. Bennett.
According to the criminal complaint, Frere, 41, of Sonoma County, is alleged to have used various companies that he controlled to operate a fraudulent student loan debt relief scheme to unjustly enrich himself and his family members from 2014 to November 2018. An affidavit filed by an FBI special agent in connection with a criminal complaint alleges that Frere targeted recipients of federal student loans who were often struggling to make payments and devised a scheme to steal millions of dollars from these victims. Frere is the President, Chief Executive Officer, Secretary, and primary shareholder of American Financial Benefits Center, Ameritech Financial, and Financial Education Benefits Center (collectively “the Companies”). The Companies allegedly collected advance fees of approximately $600 to $800 per victim, purportedly to prepare and submit documents to enroll consumers in the Public Service Loan Forgiveness program, income-driven repayment program, and other alternative repayment plans with the U.S. Department of Education. Frere and the Companies also allegedly collected enrollment fees ranging from $100 to $1,200, as well as monthly fees ranging from $49 to $99 for a so-called financial education membership program.
The affidavit describes a complex, multi-faceted scheme to defraud. As part of the alleged scheme, Frere’s Companies made misrepresentations to the victims concerning their ability to obtain lower fixed payments and loan forgiveness. Employees of defendant’s companies were trained to encourage victims to misrepresent their family size so that they could be enrolled in programs for which they were not eligible. Frere’s companies are also alleged to have misrepresented the nature and purpose of the fees that consumers would be paying. Victims often were charged recurring monthly fees for the “financial education” membership program. These fees were encompassed within the program costs quoted to consumers during sales calls, but agents represented that the fee was tied to consumers’ enrollment in an alternative repayment plan and that some or all of the monthly payments under “the program” would applied to consumers’ outstanding loan balance. This was false because the monthly fees were not being applied to the victims’ loan balances. Monthly payments, however, would continue to be pulled out of the victim’s bank account for the term of consumer’s student loans, falsely making it appear that the fees were related to their loan repayment.
Frere and the Companies are believed to have collected over $28 million from 2014 to early 2018. The affidavit also alleges that bank records show the dissipation of over $128,000 to airlines, hotels, resorts, casinos, cruise lines, and similar companies; over $202,000 to automotive and motorsports companies; and over $253,000 to companies that provide building, landscaping, and related supplies and services. Frere allegedly directed payments of over $864,000 to members of his family and family-owned businesses. Frere himself allegedly transferred millions of dollars to his personal accounts, including millions of dollars transferred overseas to accounts that he controlled in Andorra and Luxembourg. As recently as last Thursday, Frere is alleged to have looted the business accounts of hundreds of thousands of dollars.
Frere was arrested last night, December 5, 2018, at SFO as he attempted to board a flight to Cancun, Mexico. He made his initial appearance in federal court in San Francisco this morning. Frere is currently being held in the custody of the United States Marshals Service. His next scheduled appearance is at 9:30 AM on December 10, 2018, for a detention hearing before the Honorable Sallie Kim, U.S. Magistrate Judge.
The criminal investigation began after the Federal Trade Commission filed a civil complaint in February 2018 against Frere and the Companies in federal court in Oakland. (Federal Trade Commission v. American Financial Benefits, et al., Case No. CV 18-00806-SBA).
A criminal complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of wire fraud under 18 U.S.C. § 1343, Frere faces a maximum sentence of 20 years in prison, and a fine of $250,000, or not more than the greater of twice the gross gain or twice the gross loss from the fraud. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Scott Joiner is prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the Internal Revenue Service and Federal Bureau of Investigation.