Kirit Patel, the owner of a company that purported to be a collection agency, has pleaded guilty to four counts of mail fraud and wire fraud after allegedly bilking consumers out of more than $5 million, according to U.S. Attorney Benjamin Wagner.
Patel, 71, of Tracy, Calif., was the owner and president of Broadway Global Master. His company's collectors operated from outside the U.S., primarily from a call center in India, and placed an estimated 2.2 million phone calls to consumers in which they pretended to be law enforcement officers and threatened to arrest consumers who did not immediately pay for online payday loans that the callers claimed were delinquent. Many of the consumers did not recall owing such debts.
In less than two years, the operation fraudulently collected more than $5.2 million, most of which was quickly transferred out of the country, according to court records.
Patel is scheduled to be sentenced in February. He faces a possible maximum statutory penalty of 20 years in prison and a $250,000 fine. He could not immediately be reached for comment.
The Federal Trade Commission in its original complaint alleged that information submitted by consumers who applied for the payday loans online found its way into the defendants hands. Because the callers had this information, which often included Social Security or bank account numbers, consumers were more easily convinced that they owed defendants the money, according to the FTC.
The defendants typically demanded several hundred dollars and, in violation of federal law, routinely used obscene language and threatened to sue or have consumers arrested, according to the FTC. They also threatened to tell the victims employers, relatives, and neighbors about the bogus debt, and sometimes followed through on those threats, the FTC alleged.
Once victims were pressured into paying, the callers instructed them to use a pre-paid debit card such as a Walmart MoneyCard, another debit card, a credit card, or Western Union so the money could be deposited into one of the defendants merchant processing accounts, the FTC alleged.
Even after victims made a payment, the harassing calls often continued, forcing them to change their phone numbers, or close their credit cards or bank accounts in an effort to get the calls to stop, according to documents filed with the court.
The FTC stated that of the $5.2 million the defendants collected, almost $1 million was returned or charged back by their merchant processor, resulting in consumer injury totaling more than $4.2 million.