Even the threats – pay up or go to jail – sounded legitimate.
So did the official-sounding names of the companies demanding payment – names like Federal Check Processing, American Check Processing and US Check Processing.
Sometimes, the caller issuing the ultimatum even posed as a government official with the authority to garnish wages and seize property.
In reality, investigators say, the people behind the threats and fake identities were call-center employees from collection companies in Amherst, Cheektowaga, Lockport and Niagara Falls.
The companies – 13 in all – have been shut down and their assets seized as part of a new lawsuit by the Federal Trade Commission.
“Their conduct was very egregious,” said Chris Koegel, assistant director of the FTC’s Division of Financial Practices in Washington, D.C. “Unfortunately, it’s not unique to these companies. It’s kind of a plague in debt collection.”
The suit, filed in Buffalo federal court, claims the companies used “abusive, unfair and deceptive tactics” in order to force consumers to make payments on their alleged debts.
The companies employed about 30 people and, according to court papers, collected and processed millions of dollars over the past three years.
The suit also names two individual defendants, Mark Briandi and William Moses, which it identifies as principals in some of the companies.
The FTC says company representatives often hid their true identity as debt collectors and instead posed as local, state or federal officials when calling consumers.
The lawsuit says callers often threatened consumers with dire consequences, including arrest, a lawsuit or the arrival of a process server or sheriff at their home or workplace.
They also threatened to garnish people’s wages, levy bank accounts and seize property, according to the suit.
“We understand the serious nature of the allegations,” said Mark D. Grossman, a Niagara Falls attorney who represented the defendants in court last week. “Mr. Briandi and Mr. Moses did attempt to operate within the law, but we understand there are allegations that employees may have violated the Fair Debt Collection Practices Act.”
Koegel said the companies’ conduct was serious enough to warrant a court-approved restraining order that essentially put a halt to their operations.
“At this point, they’re pretty much shut down,” he said of the 12 companies here and one in Colorado.
Court papers in the two-week-old lawsuit contain several firsthand accounts of consumers who said they felt threatened by company representatives.
They include a 43-year-old North Carolina woman who detailed in an affidavit her confrontational encounter with a “Mr. Wolfe” of Federal Check Processing over what she said was a fictitious $5,000 debt.
“Mr. Wolfe told me that I was the target of an investigation,” the woman said. “He claimed I had committed bank fraud and I would be arrested if I did not pay the debt.”
Another woman, this one a 68-year-old retired school teacher in Alabama, told authorities about a call she received from U.S. Processing regarding her son, a war veteran.
She said the caller indicated her son had written a bad check on an old bank account and could go to jail unless she helped pay it off.
“My son has memory problems due to injuries sustained in Iraq,” she said, “and I thought it might be possible that there might be a separate problem with checks that he had forgotten he had written.”
Eventually, she paid $169 toward the fake debt, and says she later cried when she told her husband what she had done.
The victims seemed to have ranged in age and geography, but their stories are similar in one respect: They all felt threatened.
One victim, a 50-year-old man in Austin, Texas, said the calls from Central Processing started coming to his house in February of last year and continued – five or six a week – for three to four months.
He said the collection calls came as late as 10 p.m. and eventually started coming to his wife at her workplace and eventually to one of her co-workers.
By the end, the calls were coming to his parents, both in their 80s.
“My parents said the caller told them Central Processing was going to file fraud charges against me and that I could go to jail,” he said in his affidavit.
At the FTC’s request, Chief U.S. District Judge William M. Skretny issued a temporary restraining order against the companies that is set to expire later this month.
He also appointed a receiver, Buffalo attorney William J. Brown, who recently took control of the company’s operations.
Brown, in a report to the court last week, said locks to the company’s main operation on Transit Road in East Amherst have been changed, and the contents of the office inventoried and secured with the help of U.S. marshals.
He said the company’s employees are cooperating and have been told to stay home until a decision is made on the future of the companies here and in Colorado.
“He has to make a decision as to whether the companies can be operated lawfully and profitably,” Koegel said of Brown.
Koegel said the companies operated as one common enterprise and out of the same call center on Transit Road.
He said the suit is similar to the nine debt collection suits the FTC filed last year.
The debt collection industry, more than any other, has become a major source of consumer complaints.
Last year alone, the FTC received 200,000 complaints about collections practices.