The Federal Trade Commission is mailing more than $596,000 to consumers who lost money to a fraudulent debt collection scheme that processed payments for payday loan debts they didn’t owe. More than 1,700 people will receive refund checks.
Kirit Patel, Broadway Global Master Inc. and In-Arabia Solutions Inc. were banned from the debt collection business in September 2015 under a settlement with the Federal Trade Commission. The settlement resolved charges that they illegally processed more than $5.2 million in payments from consumers for alleged payday loan debts.
The average check amount is $350.39 and consumers are instructed to deposit or cash them within 60 days of the mailing date.
The FTC filed a complaint against Patel and the two companies in 2012, alleging that callers working with the defendants harassed consumers into paying on bogus debts by often pretending to be agents of law enforcement or fake government agencies such as the "Federal Crime Unit of the Department of Justice."
A federal court subsequently halted the operation and froze the defendants' assets pending litigation. The court imposed a judgment of more than $4.3 million but because of the defendants' inability to pay the amount was suspended upon payment of the $596,000. The court noted that the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.
In a separate criminal proceeding last September, Patel pleaded guilty to mail and wire fraud charges brought by the U.S. Department of Justice based on his scheme. He was sentenced to a one-year prison term.