Owner And CEO Of Debt Collection Company Pleads Guilty In $31 Million Fraudulent Debt Collection Scheme
Eleven Guilty Pleas to Date in Largest Debt Collection Scheme Ever Prosecuted
Preet Bharara, the United States Attorney for the Southern District of New York, announced that TRAVELL THOMAS, the owner, chief executive officer (“CEO”), and president of a Buffalo, New York-based debt collection company (the “Company”), pled guilty today before Judge Katherine Polk Failla to orchestrating a scheme to coerce thousands of victims across the country, through false threats and representations, into paying a total of more than $31 million to the Company to resolve debts these victims purportedly owed. To date, 11 individuals associated with the Company have pled guilty to participating in the scheme.
U.S. Attorney Preet Bharara said: “As he admitted today, Travell Thomas ran a massive, fraudulent debt collection scheme through which he and his cohorts stole over $31 million from his vulnerable victims. Thomas instructed his debt collectors to threaten, intimidate, and lie to their victims by overstating their debts and making false claims about what would happen to if they didn’t pay up. Today’s plea is the eleventh in this landmark consumer fraud case that victimized thousands of people across the country.”
According to the allegations contained in the Indictment to which THOMAS pled guilty and statements made during his plea proceeding and other court proceedings:
Between 2010 and February 2015, THOMAS was the co-owner, CEO, and president of the Company. In that capacity, Thomas oversaw four debt collection offices operated by the Company in Buffalo and a team of managers and debt collectors. As part of the scheme, THOMAS falsely inflated the balances of debts owed by consumers in the Company’s debt collection software so that THOMAS’s debt collectors could collect more money from the victims than the victims actually owed, a practice known within the Company as “juicing” balances. THOMAS also placed purported debts with more than one of his offices so that multiple collectors from within the Company could solicit and coerce a particular victim to repay a debt more than once.
As owner and president of the Company, THOMAS drafted, approved, and disseminated collection scripts that contained a variety of misrepresentations and instructed his collectors to make those misrepresentations to consumers over the telephone. At THOMAS’s direction and under his supervision, the Company’s debt collectors, using a variety of aliases, attempted to trick and coerce thousands of victims throughout the United States into paying millions of dollars in consumer debts through a variety of false statements and false threats, including that: (1) the Company was affiliated with local government and law enforcement agencies, including the “county” and the district attorney’s office; (2) the consumers had committed criminal acts, such as “wire fraud” or “check fraud,” and if they did not pay the debt immediately, warrants or other process would be issued, at which point they would be arrested or hauled into court; (3) the victims would have their driver’s licenses suspended if they did not pay their debts immediately; (4) the Company was a law firm or mediation firm and that the Company’s employees were working with lawyers, a law firm, mediators, or arbitrators; and (5) a civil lawsuit would be filed, or was pending, against the victims for failing to pay their debts.
In total, from about January 2010 through November 2014, the Company collected over $31 million from thousands of victims across the United States. Of the money that the Company took in from victims, approximately $1.5 million was paid in cash to THOMAS and his co-owner and co-defendant, Maurice Sessum, approximately $1.4 million was cashed from banks and ATMs, and tens of thousands of dollars were used to pay for THOMAS’s gambling expenses, tickets for professional sports games, THOMAS’s wedding reception, and jewelry, among other expenses.
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THOMAS, 38, of Orchard Park, New York, pled guilty to one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison and three years of supervised release. The maximum potential sentence in this case is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
THOMAS is scheduled to be sentenced by Judge Failla on February 10, 2017.
In total, 11 individuals associated with the Company have pled guilty to defrauding consumers as part of this debt collection scheme. In addition to THOMAS’s guilty plea, former Company mangers Tacoby Thomas, Heather Gasta, Mark Lavin, and John Salatino, and debt collectors Jessica Mann, Charles Starks, William Clark, Columbus Simmons, Michael Calandra, and Jennifer Sherk, each pled guilty to conspiracy to commit wire fraud and wire fraud for their roles in the scheme. The other defendants who have not pled guilty are presumed innocent unless and until proven guilty.
Starks, Clark, Calandra, and Mann were sentenced by Judge Failla to prison terms of 37 months, 30 months, 15 months, and one year and one day, respectively. The sentencing of the other defendants who have pled guilty is pending.
Mr. Bharara praised the efforts of the Office’s Criminal Investigators. He also thanked the Federal Trade Commission, which referred the case to the Office.
The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Edward A. Imperatore, Jennifer L. Beidel, and Jordan L. Estes are in charge of the prosecution.