Thursday, December 20, 2012
Three more executives at Oxford Collection Agency have pleaded guilty in Connecticut federal court to charges stemming from a $10 million fraud scheme, according to the Federal Bureau of Investigation.
Charles Harris, 38, of Babylon, N.Y., and Carlos Novelli, 43, of Vero Beach, Fla., each pleaded guilty this week to one count of conspiracy to commit wire fraud and bank bribery. Harris was an executive vice president, and Novelli was the company’s chief operations officer.
Randall Silver, 43, of New Hyde Park, N.Y, pleaded guilty last week to one count of conspiracy to commit wire fraud, bank fraud and money laundering and one count of wire fraud. Silver was a vice president of finance at the agency and chief financial officer.
In pleading guilty to a wire fraud charge unrelated to the conspiracy offenses, Silver also admitted that he embezzled $193,963 from Oxford by transferring funds from a “Client Payables” account at Connecticut-based Webster Bank to an account at a New York bank that he controlled.
According to court documents and statements in court, Oxford further collected debts from consumers under the pretense that it would report all such collections to its clients and remit the appropriate amount to the client. However, Silver, Harris, Novelli, and other Oxford executives routinely caused Oxford to collect debts that were never remitted. The co-conspirators referred to these unremitted collections as a client’s “backlog.” To hide the backlog, co-conspirators would make periodic fraudulent collection reports to certain clients that under-reported the amount of funds collected.
Earlier this month, Patrick Pinto, a former vice president at Oxford, was arrested on a federal criminal complaint charging him with conspiracy to commit bank bribery during his time with the company. Pinto was released on a $50,000 bond. Between 2007 and 2011, Oxford executives allegedly engaged in a multi-year scheme to defraud its lender, Webster Bank, as well as its investors, clients and the commercial debtors that Oxford collected from, according to federal officials.
Starting in April 2007, Oxford secured a line of credit from Webster Bank, which received funds through the Troubled Asset Relief Program, without informing the bank about its large client backlogs or outstanding payroll taxes.
Oxford executives, including Richard Pinto, Oxford’s chairman of the Board, and his son, Peter Pinto, Oxford’s president and CEO, sent falsified financial statements to Webster Bank. With Silver’s assistance in the fraud scheme, the Webster Bank credit line was increased to $6 million.
Richard Pinto, Peter Pinto, Silver, and others also laundered funds from the credit line to promote the ongoing fraud scheme against their clients. During this same period, the Pintos, Silver, and others also solicited millions of dollars in investments from various investors, without ever disclosing to their investors the existence of their backlogs. Some of the investor funds were transferred into Richard Pinto’s personal bank account without investor knowledge.
Richard Pinto and Peter Pinto each pleaded guilty in May to one count of conspiracy to commit wire fraud, bank fraud and money laundering and one count of wire fraud. They have yet to be sentenced.
Each of the conspiracy charges carries a maximum term of imprisonment of five years, and wire fraud carries a maximum term of imprisonment of 20 years. When they are sentenced, the defendants also face fines and orders of restitution.
By Darren Waggoner
Three more executives at Oxford Collection Agency have pleaded guilty in Connecticut federal court to charges stemming from a $10 million fraud scheme, according to the Federal Bureau of Investigation.
Charles Harris, 38, of Babylon, N.Y., and Carlos Novelli, 43, of Vero Beach, Fla., each pleaded guilty this week to one count of conspiracy to commit wire fraud and bank bribery. Harris was an executive vice president, and Novelli was the company’s chief operations officer.
Randall Silver, 43, of New Hyde Park, N.Y, pleaded guilty last week to one count of conspiracy to commit wire fraud, bank fraud and money laundering and one count of wire fraud. Silver was a vice president of finance at the agency and chief financial officer.
In pleading guilty to a wire fraud charge unrelated to the conspiracy offenses, Silver also admitted that he embezzled $193,963 from Oxford by transferring funds from a “Client Payables” account at Connecticut-based Webster Bank to an account at a New York bank that he controlled.
According to court documents and statements in court, Oxford further collected debts from consumers under the pretense that it would report all such collections to its clients and remit the appropriate amount to the client. However, Silver, Harris, Novelli, and other Oxford executives routinely caused Oxford to collect debts that were never remitted. The co-conspirators referred to these unremitted collections as a client’s “backlog.” To hide the backlog, co-conspirators would make periodic fraudulent collection reports to certain clients that under-reported the amount of funds collected.
Earlier this month, Patrick Pinto, a former vice president at Oxford, was arrested on a federal criminal complaint charging him with conspiracy to commit bank bribery during his time with the company. Pinto was released on a $50,000 bond. Between 2007 and 2011, Oxford executives allegedly engaged in a multi-year scheme to defraud its lender, Webster Bank, as well as its investors, clients and the commercial debtors that Oxford collected from, according to federal officials.
Starting in April 2007, Oxford secured a line of credit from Webster Bank, which received funds through the Troubled Asset Relief Program, without informing the bank about its large client backlogs or outstanding payroll taxes.
Oxford executives, including Richard Pinto, Oxford’s chairman of the Board, and his son, Peter Pinto, Oxford’s president and CEO, sent falsified financial statements to Webster Bank. With Silver’s assistance in the fraud scheme, the Webster Bank credit line was increased to $6 million.
Richard Pinto, Peter Pinto, Silver, and others also laundered funds from the credit line to promote the ongoing fraud scheme against their clients. During this same period, the Pintos, Silver, and others also solicited millions of dollars in investments from various investors, without ever disclosing to their investors the existence of their backlogs. Some of the investor funds were transferred into Richard Pinto’s personal bank account without investor knowledge.
Richard Pinto and Peter Pinto each pleaded guilty in May to one count of conspiracy to commit wire fraud, bank fraud and money laundering and one count of wire fraud. They have yet to be sentenced.
Each of the conspiracy charges carries a maximum term of imprisonment of five years, and wire fraud carries a maximum term of imprisonment of 20 years. When they are sentenced, the defendants also face fines and orders of restitution.
By Darren Waggoner
Bankruptcy Wizard
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