New York Catches Up to Some of Phantom Debt Vigilante's Targets

(Bloomberg) -- After a debt collector threatened his wife, Rhode Island salesman Andrew Therrien spent years hunting for payback. Now regulators may give him some satisfaction.

New York Attorney General Barbara Underwood sued debt broker Hylan Asset Management LLC and collection agency Worldwide Processing Group LLC, alleging they were involved in a phantom debt scheme in which people across the country were harassed into making payments on made-up loans.

The lawsuit, filed together with the Federal Trade Commission on June 26, says the fake loans were cooked up by Joel Tucker, a one-time payday loan mogul from Kansas City, who sold at least $3 billion of bad paper, according to regulators.

Therrien is just one of millions of people across the country who have been harassed over phantom debt. The scheme is profitable because some people make payments, either in a futile attempt to stop the calls, or because they are tricked into thinking they owe money. Bloomberg Businessweek chronicled Therrien’s quest in December. He turned vigilante, used the collectors’ tactics against them, unraveled the scam, traced it back to Tucker and reported what he learned to the authorities.

Hylan was one of Therrien’s targets. He says the Amherst, New York-based firm played a key role in the scheme, buying and selling fake loan portfolios that included his name four times.

“I’ve been talking about Hylan for the past three years,” Therrien said in an interview Thursday. “The FTC and the AG’s office is really taking the appropriate steps to stop the ringleaders.”

‘Exotic Claims’

According to the lawsuit, Hylan, owned by Andrew Shaevel, knew many consumers were complaining that the debts were invalid but kept buying and selling them anyway. His lawyer, Dennis Vacco, told the Buffalo News that the regulators’ lawsuit was filled with “all kinds of exotic claims” and said the evidence will show that the FTC gave Hylan the thumbs-up to deal in the debt. Vacco said he wasn’t available for further comment.

The case includes affidavits from people who said they were harassed by collectors who acquired made-up debts from Hylan. One person said collectors repeatedly called her boss and coworkers and said she would be arrested. Another said collectors harassed his mother-in-law. One 52-year-old woman from Florida said she was threatened with “foul language” and told that the police were coming to her house.

Worldwide, based in Hamburg, New York, and owned by Frank Ungaro Jr., generated the most Better Business Bureau complaints of any collection agency in the Buffalo area, which is home to many debt collectors with regulatory problems, according to the lawsuit. The lawsuit said Worldwide collected on phantom debts it received from Hylan, even though the company was aware the people it was calling didn’t actually owe money.

David Peltan, a lawyer for Worldwide, told the Buffalo News that the “allegations are shocking considering the government’s previous involvement with these accounts.” He didn’t respond to a message seeking comment.

Tucker Brothers

Tucker, the alleged mastermind of the scheme, was ordered to pay $4.2 million in September after being sued by the FTC for making up debts. He said in an email last year that any debt he’d sold was legitimate. The FBI had been asking questions about Tucker’s debt sales, people familiar with the matter said in December, but Tucker hasn’t faced any criminal charges.

Tucker’s brother Scott was the subject of a recent Netflix documentary. He made so much money in the payday lending business that he funded his own professional Ferrari racing team. In January, Scott was sentenced to more than 16 years in prison for systematically evading state laws by charging as much as 1,000 percent a year in interest.

Therrien said he’s still being harassed by debt collectors over the fake debts, three years after the call that started him on his quest. His information has been bought and sold so many times that it’s found its way to other scammers.

“They need to put people in jail because it’s so lucrative for them to scam people that even the fines are still worth it to them,” Therrien said.

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