Manager And Two Debt Collectors Plead Guilty In $31 Million Fraudulent Debt Collection Scheme

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Manager And Two Debt Collectors Plead Guilty In $31 Million Fraudulent Debt Collection Scheme

Manager And Two Debt Collectors Plead Guilty In $31 Million Fraudulent Debt Collection Scheme

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Wednesday, June 15, 2016

Manager And Two Debt Collectors Plead Guilty In $31 Million Fraudulent Debt Collection Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, announced that HEATHER GASTA, a/k/a “Heather Brez,” a former manager of a Buffalo, New York-based debt collection company (the “Company”), pled guilty today to participating in 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.  Earlier this week, COLUMBUS SIMMONS, a/k/a “Timothy Ham,” and WILLIAM CLARK, a/k/a “John Harvey,” two former debt collectors at the Company, also pled guilty for their roles in the debt collection scheme.  GASTA, SIMMONS, and CLARK each pled guilty to one count of conspiracy to commit wire fraud and one count of wire fraud before U.S. District Judge Katherine Polk Failla.  To date, nine former employees of the Company have pled guilty to participating in the scheme.

U.S. Attorney Preet Bharara said: “As they admitted in court this week, these defendants were key members of a band of predatory debt collectors, or as they called themselves, ‘the elite team.’  Armed with telephones and a litany of threatening lies, they and others at the Company coerced thousands of desperate, debt-ridden victims to send them tens of millions of dollars.  In a practice they called ‘juicing the balance,’ these defendants also falsely inflated the debt owed by the victims so they could collect even more.”

According to the allegations contained in the Indictment to which GASTA, SIMMONS, and CLARK pled guilty and statements made during their plea proceedings:

Between 2010 and February 2015, GASTA, SIMMONS, CLARK, and their co-defendants (collectively, the “defendants”) routinely 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.  The defendants, using a variety of aliases, falsely told victims, among other things, 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.

As a further part of the scheme, the defendants lied to victims by falsely inflating the balances of the debts so that they could collect more money from the victims than the victims actually owed, a practice known within the Company as “juicing” balances.

GASTA, SIMMONS, and CLARK were members of the Company’s so-called “elite team,” which used particularly aggressive and egregious tactics in attempting to trick consumers into paying debts.  GASTA also served as a Company manager.

*                *                *

GASTA, 41, SIMMONS, 46, and CLARK, 30, all of Buffalo, New York, each 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 sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

GASTA, is scheduled to be sentenced on September 30, SIMMONS on September 23, and CLARK on September 29, 2016, respectively, before Judge Failla.

In total, nine former employees of the Company have pled guilty to defrauding consumers as part of this debt collection scheme.  In addition to the pleas of GASTA, SIMMONS and CLARK, former Company mangers Mark Lavin and John Salatino and debt collectors Jessica Mann, Charles Starks, Michael Calandra, and Jennifer Sherk each pled guilty for their roles in the fraud.  The other defendants who have not pled guilty are presumed innocent unless and until proven guilty.

On or about May 20, 2016, Mann was sentenced by Judge Failla to a prison term of one year and one day.  The sentencing of the other defendants who have pled guilty is pending.

Mr. Bharara praised the efforts of the Office’s Criminal Investigators.

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Edward A. Imperatore and Jordan L. Estes are in charge of the prosecution.

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