CFPB Investigation Leads to Criminal Charges Against Settlement Agency

For the first time since its inception, a referral made by the Consumer Financial Protection Bureau has led to criminal charges brought against a financial services provider.

The U.S. Attorney for the Southern District of New York today filed a criminal indictment against New York City-based Mission Settlement Agency, its owner and three employees of the company.

“Through the joint efforts of the Consumer Bureau and the Department of Justice, we are putting an end to unfair and deceptive practices by certain players in the market for debt-relief services,” said CFPB Director Richard Cordray in announcing the enforcement action. “Our actions will also help ensure competitive markets that give honest businesses a fair shot at financial success.”

The defendants in the case were charged with mail fraud, wire fraud and conspiracy to commit mail fraud and wire fraud, with allegations detailing a fraud scheme beginning in 2009 and spanning more than 1,000 customers. The Bureau alleges the company and its principal, Michael Levitis, violated the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Federal Trade Commissions Telemarketing Sales Rule. The allegations assert the company charged fees in violation of the TSR totaling more than $1.3 million. 

The Bureau referred the information to the Department of Justice, leading to the charges. 

“During our investigation, we found evidence of criminal conduct and, accordingly, we referred this information to the United States Attorney for the Southern District of New York while we continued to pursue the civil law violations,” Cordray said. 

The action marks the first time in the bureau’s history that a civil investigation has led to criminal charges, noted K&L Gates attorneys Melanie Brody and Nathan Pysno in a notice Tuesday. 

“This first-ever criminal referral serves as a reminder that the CFPB not only has enforcement powers of its own, but also functions as an industry observer that can, and will, make referrals to other federal and state enforcement agencies,” the lawyers wrote

Written by Elizabeth Ecker

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