Two former executives at Oxford Collection Agency each pleaded guilty to one count of conspiracy to commit wire fraud, bank fraud and money laundering and one count of wire fraud stemming from a $10 million fraud scheme against Connecticut-based Webster Bank, federal officials said Tuesday.
Richard Pinto, 68, of Wellington, Fla., served as chairman of the board and was the de facto head of Oxford between January 2007 and March 2011. His son, Peter Pinto, 37, of East Quogue, N.Y., was the president and CEO, overseeing the company's daily activities.
The men face a maximum prison term of 35 years and a fine of up to approximately $20 million. Sentencing is set for September 13.
During the time that the Pintos ran the firm, Oxford collected debts for various clients - including Washington Mutual Bank, Dell Financial Services, Cogent Communications and Labcorp - under the pretense that they would report all such collections to their clients.
Instead, the Pintos and others caused Oxford to routinely withhold collected debts from certain clients, running up what was referred to internally as a client’s “backlog.” The Pintos and others then diverted various funds from their client remittances and used them for their own ends, according to the U.S. Attorney's office.
Starting in April 2007, the Pintos secured a line from credit from $18.7 billion-asset Webster Bank, a bank that received funds through the Troubled Asset Relief Program (TARP), without informing the bank about large client backlogs or outstanding payroll taxes.
The Pintos 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 Pintos defrauded clients, investors, and Tarp recipient Webster Bank in a $10 million scheme in which they collected debts on behalf of clients, concealed what they truly owed those clients in return for their work, and used Webster Bank to fund their fraud,” Christy Romero, the special inspector general for Tarp, said in a press release announcing the guilty plea. “Individuals committing fraud against TARP banks will be held accountable and brought to justice by SIGTARP and our law enforcement partners.”
The Pintos solicited millions of dollars in investments from various investors without disclosing the existence of the backlogs. They transferred some of the investor funds into Richard Pinto’s personal bank account without investor knowledge.
“These defendants carried out a significant fraud scheme through which they stole millions of dollars from their company’s clients, lenders, and investors,” said U.S. Attorney David B. Fein, who added that the victims of the scheme lost more than $10 million.
The Internal Revenue Service, 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 continue to investigate the case.
Assistant U.S. Attorney Liam Brennan, Deputy U.S. Attorney Deirdre Daly and Special U.S. Attorney Jonathan Francis are prosecuting the case.
