Manhattan U.S. Attorney and FBI Assistant Director Announce Charges and Arrests in Multi-Million-Dollar Debt Collection Scam That Targeted More Than 6,000 Victims in All 50 States
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a complaint charging WILLIAMS, SCOTT & ASSOCIATES (“WSA”), a debt collection company based in Norcross, Georgia, its owner JOHN TODD WILLIAMS, and six of its employees—BENITA CANNEDY, RUDY JAMES, ARTHUR COOK, CHRISTOPHER LENYSZYN, CLARK SMITH, and TITUS MCDOWELL—with conspiracy to commit wire fraud in connection with a nationwide debt collection scheme that targeted more than 6,000 victims throughout the United States. As alleged, the defendants contacted consumers whose debt WSA had purchased, and tried to trick and coerce them into making payments to WSA by making false threats and telling a host of lies. Among those lies were that WSA was part of a federal task force and that warrants would be issued for the consumers’ arrests if they failed to make immediate payment to WSA. In total, WSA obtained more than $4.1 million from its victims. Each of the individual defendants was arrested this morning in Georgia and will be presented later today in federal court in Atlanta.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, the defendants –third-party debt collectors acting under the guise of government authority– illegally and repeatedly threatened arrest, prosecution, and prison for countless Americans. Now, after years of threatening false arrest, these defendants are the ones who now find themselves in handcuffs, facing the loss of their own liberty. We are far from finished looking at the seedy side of debt collection. It affects too many people.”
FBI Assistant Director-in-Charge Venizelos said: “As alleged, this was nothing but a scam of total fabrication in order to coerce thousands into paying debts. This scheme took advantage of our poorest and most vulnerable citizens from all fifty states, including right here in New York City. The defendants were nothing more than bullies with bogus badges.”
According to the allegations contained in the Complaint unsealed today in Manhattan federal court:
Between approximately 2009 and May 2014, employees working for WSA 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. Employees of WSA typically used aliases, sometimes referring to themselves as “Detective” or “Investigator,” falsely advised consumers they had committed purported crimes such as “check fraud” or “depository check fraud,” and told consumers that if they failed to make an immediate payment to WSA to resolve the matter, a warrant would be issued for their arrest. WSA employees also falsely claimed that WSA had contracts with, or was otherwise affiliated with, certain federal or local law enforcement agencies, including the Department of Justice and the United States Marshals Service, as well as non-existent government agencies such as the “Federal Government Task Force” and the “DOJ Task Force.” To further create the appearance that it was affiliated with the federal government, WSA at times sent victims correspondence containing the seal of the United States Department of State and the following language: “Warrant Services Association, A Division of the Federal Government Task Force.”
When victims expressed doubt or sought more information, WSA employees intensified the pressure and created a heightened sense of urgency by imposing false deadlines. In one case, for example, a WSA employee told a victim he/she had 15 minutes to decide whether to make payment to WSA, and that if the victim elected not to, an arrest warrant would be issued for the victim’s spouse. In another instance, a defendant told a victim who advised that she was eight-months pregnant that she had two hours to pay WSA, or else the case would be forwarded to Los Angeles County and a warrant would be issued for her arrest.
Among other false statements, WSA employees claimed that WSA was a law firm, and that they would have the victims’ driver’s licenses suspended if those victims did not make payment to WSA. To falsely create an appearance of legitimacy, and further trick their victims into making payments, WSA employees routinely used legal terminology to invent legitimate-sounding, but completely bogus, explanations for the supposed imminent arrest of the victims, including for example, that the “statute of limitations” on the victims’ “civil legal rights” had expired and therefore the matter was now a criminal matter that could be resolved only by voluntary payment to WSA, or arrest. To frighten their victims, WSA employees warned that the arrest could take place at any time and any place, including at their homes and places of work.
In total, from approximately 2009 through approximately April 2014, WSA obtained more than $4.1 million dollars from over 6,000 victims in all 50 states.
After the FBI conducted a search of WSA’s office in Norcross, Georgia in May 2014, WILLIAMS shut down WSA and opened a new debt collection business. Based on victim complaints, employees of that debt collection business have been making the same threats and false statements to victims.
When FBI agents searched the WSA Office in May 2014, they recovered, among other things, scripts for calls with victims that contained numerous misrepresentations, including false threats of criminal charges and arrests, and false associations with the government. For example, the scripts included the following language:
“Who are we? We are a government task force set up to investigate and collect info on individuals involved in Depository Account Fraud and theft by deception.”
“This is investigator _____ I calling [sic] in reference to a complaint that has been filed through the national check fraud center were [sic] that stated that they have sent correspondents [sic] to ________ as well _______ and you have not responsed [sic] which has made your statue [sic] of limitations for your civil legal rights exhaust. That means that you are being pursued for one count of theft by deception and can be forwarded over to the local county for proceedings to start.”
“This message is for _______. My name is _______ from the investigation services of WSA. Currently there is a criminal complaint pending against you for theft of services. We are going ahead with legal proceedings today therefore we do need to speak with you immediately. Contact our office as soon as possible at [a particular telephone number] Ext ____. Thank you. Failure to respond will lead to criminal charges persude [sic] against you being forwarded over to your county.”
Recorded Calls Between The Defendants and Their Victims
During the search of WSA’s office, FBI agents also recovered computers containing recordings of thousands of calls between WSA employees and victims. Those recorded calls included the following:
- A call in which CANNEDY identified herself as “Chief Investigator Sharon Wright” and stated that she was investigating a criminal complaint against the victim for a payday loan the victim had taken out. When the victim told CANNEDY she was not currently working, CANNEDY responded that she had no choice but to forward the case to Los Angeles County and that Los Angeles County would issue a warrant for her arrest for “depository check fraud” and “theft by deception.” When the victim asked for customer service, CANNEDY responded: “Customer service? Ma’am you’re on the way to jail.” Later, the victim asked to see information to ensure that everything was legitimate, and CANNEDY responded, “Don’t take care of it, and you’ll see just how legit it is.” The victim said that she wanted to take care of the debt, was eight months pregnant, and did not want to go to jail. CANNEDY then responded, “I’m not going to go back and forth. I wouldn’t care if you were nine months pregnant. I have a job to do here.” CANNEDY told the victim she had two hours to pay WSA, and after that, the case would be forwarded to Los Angeles County for the issuance of an arrest warrant.
- A call in which JAMES told a victim he had an outstanding “restitution” of over $2,000, and when the victim said he had already paid it with a credit card, JAMES claimed the victim still had to pay WSA because “when you file for an ADR, you can’t use a debt instrument to pay a debt.” The victim said he did not have enough money to pay immediately and asked for documentation of the debt since he believed he had paid it already. JAMES told the victim that sending documentation would not stop the warrant from being processed. JAMES said that once he hung up the phone, he would put the case into “refusal status” and that the victim should have his attorney contact the office to set up an arraignment.
- A call in which COOK told a victim that her husband was being pursued for a “theft by receiving” charge to be forwarded to the local county and processed for a warrant. COOK advised that if her husband was “detained by county sheriffs, he would have to sit in reformatory” until he was tried.
- A call in which LENYSZYN told a victim that he was an investigator for “WSA” and was investigating “theft of services.” LENYSZYN explained that “what we do is we issue warrants and we do the suspension of driver’s license over here.” When the victim asked whether a warrant would be issued if he could only pay half the money, LENYSZYN said it could be a suspension of the victim’s driver’s license or a warrant and that “you don’t want any surprises either at the house or work, especially when it comes to that, your business your family and all that.
WILLIAMS, 48, of Norcross, Georgia, CANNEDY, 36, of Duluth, Georgia, JAMES, 32, of Lithonia, Georgia, COOK, 31, of Duluth, Georgia, LENYSZYN, 46, of Acworth, Georgia, SMITH, 39, of Norcross, Georgia, and MCDOWELL, 38, of Avondale Estates, Georgia, are each charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Bharara praised the outstanding investigative work of the FBI. He also thanked the Consumer Financial Protection Bureau (“CFPB”) for referring this case to this Office, and the Federal Trade Commission (“FTC”) for its assistance in this investigation. The FTC separately filed earlier this year a complaint against WSA and WILLIAMS. Mr. Bharara also acknowledged with appreciation the extraordinary partnership between this Office and both the FTC and CFPB in the Office’s ongoing effort to combat consumer fraud.
If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900. For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html.
If you wish to report a crime by another debt collector, you may contact the FTC at 1-877-FTC-HELP. For guidance on coping with debt, and information about dealing with debt collection companies in particular, consider the following link to publications issued by the Federal Trade Commission:
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Asset Forfeiture Unit. Assistant United States Attorneys Daniel Tehrani and Jennifer Gachiri are in charge of the prosecution, and Assistant United States Attorney Jonathan Cohen is in charge of the forfeiture aspects of the case.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.