Debt Collector to Prison for Financial Fraud
Richard Pinto has been sentenced to 60 months of imprisonment, followed by five years of supervised release, for his role in a multimillion dollar fraud scheme at Oxford Collection Agency, where he served as Chairman of the Board. He also was ordered to serve the first three years of his supervised release in home confinement and to pay restitution of approximately $12.3 million.
According to court documents and statements made in court, Oxford Collection Agency was a private financial services company that engaged in accounts receivables management, primarily debt collecting, with offices in New York, Pennsylvania, and Florida. Businesses and other entities contracted with Oxford to collect debts on their behalf. Oxford’s clients included, among others, an educational institution, a laboratory, a computer company, and various banks. Oxford 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, according to prosecutors, Pinto and other Oxford executives routinely caused Oxford to collect debts that were never remitted to its clients. The government asserted that the co-conspirators referred to these unremitted collections as a client’s “backlog.” Then, the government alleged, to hide the backlog, co-conspirators would make periodic fraudulent collection reports to certain clients that under-reported the amount of funds collected; Pinto and others diverted various funds from their client remittances and used them for their own ends, according to the government.
Certain co-conspirators also transferred money from one client trust account to another client account, from Oxford’s operating account to a client account, or from a client account to Oxford’s operating account to cover various shortfalls and backlogs or to improperly use collections to directly fund Oxford’s operations, the government alleged.
Starting in April 2007, Oxford secured a line from credit from Connecticut-based Webster Bank, a bank that received funds through the Troubled Asset Relief Program (TARP), without informing Webster Bank about its significant client backlogs or outstanding payroll taxes, according to the charges. Pinto and others sent falsified financial statements to Webster Bank, eventually increasing the credit line to $6 million, and laundered funds from the credit line to promote the ongoing fraud scheme against their clients, the government alleged. During that same period, Pinto and others also allegedly 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 deposited into Pinto’s personal bank account without investor knowledge, the government contended.
According to the government, Oxford’s victims lost more than $12 million as a result of this scheme.