NEW YORK – Debt collection agency Williams, Scott & Associates cracked down far more than the law would allow when the Georgia-based company asked federal authorities to pay calculated Tuesday.
When company employees called debtors, investigators said the workers claimed ties to the US Marshals Service — as well as nonexistent agencies like the Federal Government Task Force or the DOJ Task Force.
When consumers questioned the calls or refused to pay, they allegedly gave false warnings of arrest warrants for “check fraud,” “deposit check fraud,” or other alleged crimes.
And when debtors raised doubts or sought more information, investigators said staffers upped the ante by issuing jail threats to spouses or other relatives.
Federal prosecutors announced the arrest of company operator John Todd Williams and six employees for conspiracy to wire fraud, alleging the illegal debt collection program targeted more than 6,000 victims nationwide between 2009 and May 2014 and stole more than $4.1 million from victims taken.
Investigators revealed that an FBI search of WSA’s Norcross, Georgia offices in May found computer files containing recordings of calls between company employees and victims. The raid also uncovered phone scripts that provided detailed insight into how the company and its employees attempted to deceive, harass and threaten debtors.
“WSA employees told lie after lie. And they were ruthlessly persistent. When questioned by frightened and skeptical consumers, the defendants responded with more lies and more false threats,” said Manhattan U.S. Attorney Preet Bharara.
He characterizes the alleged fraud as part of “an absolute epidemic of abusive debt collection practices” in the United States, Bharara said Criminal Complaint in the case reads “like a story from Dickens’ days, when people could be sent to debtor’s prison.
Arrested in Georgia along with Williams, 48, were employees Benita Cannesy, 36; Rudy James, 32; Arthur Koch, 31; Christopher Lenyszyn, 46; Clark Smith, 39; and Titus McDowell, 38. They were scheduled to make their first appearance in federal court in Atlanta later Tuesday. Details of the defendants’ lawyers were not immediately available.
The defendants were named in a 32-page lawsuit filed in a criminal court in New York that also indicted Williams, Scott & Associates. The US Attorney’s Office in Manhattan has jurisdiction because some consumers who are suspected of being victims of the program live in the southern district of New York.
Separately filed the Federal Trade Commission civil action in July, he called for consumer refunds, repayment of ill-gotten gains and a freeze on company assets.
Third-party debt collectors typically buy debtor lists and contact them to request payment. Companies are prohibited by law from harassing or threatening alleged debtors.
But the taped conversations with consumers, numerous complaints from victims and the phone transcripts support the criminal allegations, prosecutors said.
A recorded call showed that Cannesy allegedly identified herself as “Chief Investigator Sharon Wright” and said she was investigating a criminal complaint regarding a consumer-borrowed payday loan. When the woman responded that she was unemployed, investigators said the footage showed Cannesy saying she would refer the case to Los Angeles County for a warrant.
When the woman asked about customer service, Cannesy reportedly replied, “Customer service? Ma’am, you’re going to jail.”
Later in the recording, investigators said the woman said she wanted to pay off the debt but was eight months pregnant and did not want to go to jail.
“I wouldn’t care if you were nine months pregnant. I have a job to do here,” said investigators who showed the footage, Cannesy replied.
Similarly, investigators said a consumer complained that “Jan Smith” from the WSA called and claimed to be investigating a check fraud case.
The court complaint alleged that when the consumer asked for corroborating information, “Smith responded that faxing the information would not make any difference,” and then stated that if the victim did not pay $2,000 immediately, the ” Spouse of victim arrested’.
“There was no warrant squad. They didn’t work for the government,” said Richard Frankel, senior FBI special agent in charge of the agency’s New York office. “This was nothing more than a total fake scam to force thousands into paying debts – some real and many others fabricated.”