The U.S. Attorney’s Office for the Southern District of New York filed a criminal indictment on May 7, 2013 against Mission Settlement Agency, its owner, and three of its employees. Mission Settlement Agency is a debt settlement company based in New York City. The defendants were charged with mail fraud, wire fraud, and conspiracy to commit mail and wire fraud based on alleged misstatements they made regarding Mission Settlement Agency’s fees, services, and affiliations. The indictment alleged that the fraudulent scheme started in mid-2009 and involved at least 1,200 customers and several million dollars. The defendants allegedly collected millions of dollars in fees from customers who were struggling financially, but did no or little work to manage their clients’ debt or pay their creditors.
This case marks the first time the Justice Department has brought criminal charges based on a referral from the CFPB. Preet Bharara, U.S. Attorney for the Southern District of New York, and CFPB Director Richard Cordray held a joint press conference to discuss the case. 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.