Financial Dispute Resolution Service and Fraud Investigations

Cendrowski Corporate Advisors were engaged by a receiver as forensic accounting experts to assist the Federal Trade Commission (FTC) with investigating a debt collection scheme. The defendants allegedly threatened and intimidated consumers to collect phantom payday loan “debts” they did not owe or did not owe to the defendants. Also, the defendants illegally provided portfolios of fake debt to other debt collectors. The FTC pursued these defendants to claim that it is illegal to harass people for debts they do not owe and sell phony debts to different debt collectors. The defendants had operated under numerous names and most recently held themselves out as a law firm, alleging they had the authority to sue consumers who did not pay. Due to threats and harassment, many consumers paid these fraudulent debts, which they did not owe. The court granted the FTC's request for a temporary restraining order, asset freeze, and the appointment of a receiver.

We were tasked with understanding the details and finances of the receivership defendant's business activities and locating and consolidating the receivership estate assets. We collected and reviewed financial records of the receivership defendants in an attempt to understand business operations and consolidate receivables under the control of the receiver.

Our investigation found that the receivership defendants did not have any records of financial statements, nor did they file any tax returns. It was decided that the best course of action was to subpoena various banks for account statements and other information needed to recreate the financial picture. We were able to locate assets and trace funds flowing to and from multiple affiliated entity accounts from our efforts. Most notably, most of the phantom debt collection funds were transferred into a shell company, used as the defendant's piggy bank.

Our investigation showed that this shell company conducted no business operations and was solely used to fund the owner's luxurious lifestyle. By tracing check deposits, it was discovered that the defendants were receiving monthly rent checks for properties they owned. Additional research on said properties found that the defendants used illicit funds from the phantom debt collection to buy these properties, as well as their own homes. The receiver was able to sell all properties and add these funds to the receivership estate to be returned to creditors. We also discovered through our analysis multiple hidden bank and brokerage accounts, as well other assets.

The operators of this fake debt collection scheme have been banned from the debt collection business and from selling debt portfolios. The FTC reached a favorable settlement against the defendants, with additional identified assets being added back to the receivership estate. The assets of the receivership estate were also used to pay back victimized consumers.