Leonard G. Potillo III, the owner of Florida-based debt buyer United Credit Recovery LLC, was arrested Monday and charged with bribing a U.S. Bank official to get inside information on the sale of debt portfolios.
Potillo allegedly paid the bank employee $1 million for details on the sale of overdrawn checking and savings accounts it had charged off. A federal grand jury in Florida charged Potillo with seven counts of wire fraud, 10 counts of bribery of a bank official and 16 counts of money laundering in connection with the alleged $76 million scheme.
The multiple bribes paid to a U.S. Bank employee identified as "W.T." allowed Potillos company to buy portfolios of overdraft debt from U.S. Bank. Potillo paid $31 million, or less than four cents on the dollar, for the portfolios of old debt that had a combined face value of $820 million, according to the indictment.
Last year, Wilbur Tate III, a former assistant vice president of U.S. Bank in Ohio, was arrested on a federal criminal complaint charging him with conspiracy to commit bank bribery. Tate worked as the bank's assistant vice president between January 2004 and February 2011.
In that case, Tate allegedly took bribes from Oxford Collection Agency in cigar boxes stuffed with cash, which the complaint said were euphemistically described as getting Wilbur Tate III his cigars. Court documents show that Tate, who had addresses in Ohio and Georgia, talked with government officials last year about cooperating with ongoing investigations. The outcome was not immediately clear.
In October, Potillo's United Credit Recovery allegedly attempted to collect overdue debts from consumers by creating phony legal documents that included cut-and-paste bank logos, according to a lawsuit filed by Minnesota Attorney General Lori Swanson's office.
That lawsuit alleges the company created affidavits that "falsely appeared to have been sworn to and signed by officers of the original banks and notarized."
The company used the electronically robo-signed documents for years to persuade people that they actually owed the debts and try to convince courts to award judgments, as well as to hike the value of the debt for its potential resell to other debt collectors.
United Credit Recovery states on its Web site that it bought more than $10 billion in overdraft debts from banks such as U.S. Bank and Wells Fargo.