Debt Settlement Company Charged With Fraud

The Consumer Financial Protection Bureau is ready to play hardball with the largely unregulated industry, and for the first time has referred a case for criminal prosecution.

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The three-year-old Consumer Financial Protection Bureau is again breaking new ground — and the target is a debt settlement company.

While the consumer protection agency has filed a civil suit against New York-based Mission Settlement Agency, federal prosecutors have filed charges against Mission in the first criminal case ever referred by the CFPB, Reuters says.

“There is nothing to get the attention of people who are dedicating their lives to committing fraud like knowing that they could end up in prison,” said CFPB director Richard Cordray, alluding to further criminal cases to come. “There will be more.”

We’ve long criticized the debt settlement industry, whose reputation has been damaged by many bad actors. Until the CFPB came along, it was a largely unregulated industry.

USA Today reports:

From mid-2009 through March 2013, about 2,200 customers paid nearly $14 million to Mission. The company took $6.6 million in fees from those customers and paid approximately $4.4 million to creditors. For more than 1,200 customers, the company allegedly took nearly $2.2 million in fees and “never paid a single penny to the customers’ creditors,” the indictment says.

The indictment also names company owner Michael Levitis and three employees. Levitis was using the money to, among other things, cover the operating costs of a Brooklyn nightclub, make lease payments on two Mercedes, and pay his mother’s credit card bills, the indictment said.

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Comments

  • jaynie mcconnell

    In may 2012 I hired freedom debt relief . I wanted to get rid of credit cards and FDR talk good story. After 1 yr FDR settled one 1.000.00 debt. American Express settled for 500.00 which FDR charged me 100.00 for fee on that. Rest never got paid. Discover sued me and now my wages are being garnished. FDR would tell me oh no worry we are negotiating. Well I end up paying 2000.00 more to discover on crop of what I owed so now I owe 7780.00 instead 5000.00. Lawyer won’t take any of my offers, it has to be full amount or garnishment is going thru.,i checked with BBB and told me they #1. Well I am in so much trouble. I fired FDR and they took 2000.00 out my account saying it was fee for settling discover. Huh?? Freedom debt financial are crooks people . You can call your creditors and settle yourself. They set there and lied, cheated and stole my money.

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