Feds Say Debt Settlement Firm Defrauded 'Financially Desperate' | WAMU 88.5 - American University Radio

NPR : News

Filed Under:

Feds Say Debt Settlement Firm Defrauded 'Financially Desperate'

The work of the Consumer Financial Protection Bureau, the federal oversight agency established by Dodd-Frank three years ago, has resulted in its first criminal referral — a case against a debt-settlement company it says defrauded thousands of people.

According to the indictment filed in U.S. District Court in Manhattan, Mission Settlement Agency, its manager and three employees have been charged with mail and wire fraud. Prosecutors say the defendants "systematically exploited and defrauded" their clients, who were seeking to settle credit card and other debt.

The debt-collection firm preyed on the "financial desperation of individuals struggling to pay their credit card debts" by "falsely and fraudulently" tricking them, the indictment said.

On Mission Settlement's website, the company says it was "founded to help people regain control of their personal finance" and claims to take "an honest, informational approach to helping people find the best solution to their debt problems."

The indictment says that from mid-2009 to March of this year, some 2,200 customers paid about $14 million for Mission Settlement's services but that only $4.4 million went to creditors — the rest was kept by the company as fees. The company further took fees of $2.2 million from more than 1,200 customers and, according to the indictment, "never paid a single penny" to creditors.

Prosecutors say manager Michael Levitis, who was named as a defendant, used customer money to pay expenses for a restaurant-nightclub he owned and leases for two luxury Mercedes-Benzes, according to Reuters.

Bloomberg says:

"Mission and its employees lied about its fees, taking thousands of dollars from funds that its customers had set aside because they believed the money would be used to pay creditors, according to the indictment. For the majority of customers, Mission did little or no work and failed to reduce debt, prosecutors said."

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

NPR

From 'Dragon Tattoo' To The 'Spider's Web': Stieg Larsson's Heroine Returns

The late Stieg Larsson's Millennium series of novels is getting an addition, The Girl in the Spider's Web. The book, written by David Lagercrantz, just got its title and a U.S. release date: Sept. 1.
NPR

Our Food-Safety System Is A Patchwork With Big Holes, Critics Say

More than a dozen federal agencies play a part in keeping food from making Americans sick. Critics say the system has gaps, and we'd all be safer if federal food safety efforts were under one roof.
NPR

Alabama Judge Says Raising Money To Be Elected Is 'Tawdry'

Mixing judges with campaign contributions can lead to conflicts of interest. Fresh Air talks to retired Judge Sue Bell Cobb and the Center for American Progress' Billy Corriher.
NPR

If Drones Make You Nervous, Think Of Them As Flying Donkeys

In Africa, where there aren't always roads from point A to point B, drones could take critical medicines to remote spots. But the airborne vehicles make people uneasy for lots of reasons.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.