CEO of Debt Collection Agency Sentenced to Four Years for Role in Multi-Million-Dollar Fraud Scheme
|U.S. Attorney’s Office December 19, 2013|
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that Peter Pinto, 38, of East Quogue, New York, was sentenced today by U.S. District Judge Stefan R. Underhill in Bridgeport to 48 months of imprisonment, followed by five years of supervised release, for his role in a multi-million-dollar fraud scheme at Oxford Collection Agency, where Pinto served as chief executive officer.
According to court documents and statements made in court, Oxford Collection Agency (Oxford) 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, Pinto and other Oxford executives routinely caused Oxford to collect debts that were never remitted to its clients. 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. Pinto and others diverted various funds from their client remittances and used them for their own ends.
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.
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. 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. During that same period, Pinto 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 into Pinto’s personal bank account without investor knowledge.
Oxford’s victims lost more than $10 million as a result of this scheme.
The investigation also has revealed that Oxford sometimes obtained and retained business with its banking clients by paying bribes and kickbacks to bank officials.
On May 11, 2012, Pinto pleaded guilty to one count of conspiracy to commit wire fraud, bank fraud, and money laundering, and one count of wire fraud.
Five other Oxford executives have pleaded guilty, including Pinto’s father and chairman of the board, Richard Pinto; Pinto’s brother and Oxford vice president, Patrick Pinto, Vice President of Finance and Chief Financial Officer Randall Silver; Executive Vice President Charles Harris; and Chief Operations Officer Carlos Novelli. A former assistant vice president at U.S. Bank, Wilbur Tate, III, also pleaded guilty in relation to a conspiracy to accept bribes from executives at Oxford Collection Agency.
Richard Pinto was sentenced to five years of imprisonment. The other defendants await sentencing.
This matter is being investigated by the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Connecticut Securities-Commodities and Investor Fraud Task Force. The case is being prosecuted by Assistant U.S. Attorney Liam Brennan and Special U.S. Attorney John McReynolds.