David B. Fein, United States Attorney for the District of Connecticut,
announced that Richard Pinto, 68, of Wellington, Florida, was sentenced today by
United States District Judge Stefan R. Underhill in Bridgeport to 60 months of
imprisonment, followed by five years of supervised release, for his role in a
muliti-million-dollar fraud scheme at Oxford Collection Agency, where Pinto as
chairman of the board. Judge Underhill also ordered to Pinto to serve the first
three years of his supervised release in home confinement and to pay restitution
of approximately $12.3 million.
“Over several years, this defendant orchestrated a substantial fraud through
which his company stole millions of dollars from clients, lenders, and
investors,” stated U.S. Attorney Fein. “We are committed to working with
IRS-Criminal Investigation, the FBI, SIGTARP, and the other members of the
Connecticut Securities, Commodities, and Investor Fraud Task Force to root out
financial fraud and prosecute responsible individuals.”
According to court documents and statements made in court, Oxford Collection
Agency (“Oxford”) was a private financial services company that engaged in
accounts receivables management, primarily debt collecting, with offices in New
York, Pennsylvania, and Florida. Businesses and other entities contracted with
Oxford to collect debts on their behalf. Oxford’s clients included, among
others, an educational institution, a laboratory, a computer company, and
various banks. Oxford collected debts from consumers under the pretense that it
would report all such collections to its clients and remit the appropriate
amount to the client. However, Pinto and other Oxford executives routinely
caused Oxford to collect debts that were never remitted to its clients. The
co-conspirators referred to these unremitted collections as a client’s
“backlog.” To hide the backlog, co-conspirators would make periodic fraudulent
collection reports to certain clients that under-reported the amount of funds
collected. Pinto and others diverted various funds from their client remittances
and used them for their own ends.
Certain co-conspirators also transferred money from one client trust account
to another client account, from Oxford’s operating account to a client account,
or from a client account to Oxford’s operating account to cover various
shortfalls and backlogs or to improperly use collections to directly fund
Oxford’s operations.
Starting in April 2007, Oxford secured a line from credit from
Connecticut-based Webster Bank, a bank that received funds through the Troubled
Asset Relief Program (TARP), without informing Webster Bank about its
significant client backlogs or outstanding payroll taxes. Pinto and others sent
falsified financial statements to Webster Bank, eventually increasing the credit
line to $6 million, and laundered funds from the credit line to promote the
ongoing fraud scheme against their clients. During that same period, Pinto and
others also solicited millions of dollars in investments from various investors,
without ever disclosing to their investors the existence of their backlogs. Some
of the investor funds were deposited into Pinto’s personal bank account without
investor knowledge.
Oxford’s victims lost more than $12 million as a result of this scheme.
The investigation also has revealed that Oxford sometimes obtained and
retained business with its banking clients by paying bribes and kickbacks to
bank officials.
On May 11, 2012, Pinto pleaded guilty to one count of conspiracy to commit
wire fraud, bank fraud, and money laundering and one count of wire fraud.
Four other Oxford executives including Pinto’s son, Chief Executive Officer
Peter Pinto, Vice President of Finance and Chief Financial Officer Randall
Silver, Executive Vice President Charles Harris, and Chief Operations Officer
Carlos Novelli, have pleaded guilty to charges stemming from this scheme. They
await sentencing.
This matter is being investigated by the Internal Revenue Service-Criminal
Investigation, the Federal Bureau of Investigation, the Special Inspector
General for the Troubled Asset Relief Program (SIGTARP), and the Connecticut
Securities, Commodities, and Investor Fraud Task Force. The case is being
prosecuted by Assistant U.S. Attorney Liam Brennan, Special U.S. Attorney John
McReynolds and Deputy U.S. Attorney Deirdre Daly.
In December 2010, the U.S. Attorney’s Office and several law enforcement and
regulatory partners announced the formation of the Connecticut Securities,
Commodities, and Investor Fraud Task Force, which is investigating matters
relating to insider trading, market manipulation, Ponzi schemes, investor fraud,
financial statement fraud, violations of the Foreign Corrupt Practices Act, and
embezzlement. The task force includes representatives from the U.S. Attorney’s
Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal
Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S.
Department of Justice’s Criminal Division, Fraud Section and Antitrust Division;
U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading
Commission (CFTC); Office of the Special Inspector General for the Troubled
Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of
Connecticut Department of Banking; Greenwich Police Department; and Stamford
Police Department.
Citizens are encouraged to report any financial fraud schemes by calling,
toll-free, 855-236-9740, or by sending an e-mail to
ctsecuritiesfraud@ic.fbi.gov.
Today’s announcement is part of efforts underway by President Obama’s
Financial Fraud Enforcement Task Force (FFETF) which was created in November
2009 to wage an aggressive, coordinated, and proactive effort to investigate and
prosecute financial crimes. With more than 20 federal agencies, 94 U.S.
attorneys’ offices, and state and local partners, it is the broadest coalition
of law enforcement, investigatory, and regulatory agencies ever assembled to
combat fraud. Since its formation, the task force has made great strides in
facilitating increased investigation and prosecution of financial crimes;
enhancing coordination and cooperation among federal, state, and local
authorities; addressing discrimination in the lending and financial markets and
conducting outreach to the public, victims, financial institutions, and other
organizations. Over the past three fiscal years, the Justice Department has
filed more than 10,000 financial fraud cases against nearly 15,000 defendants
including more than 2,700 mortgage fraud defendants.
To report financial fraud crimes and to learn more about the President’s
Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
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