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They’re the nightmare of nearly every single person who has ever contemplated or filed for bankruptcy protection. The federal Fair Debt Collection Practices Act (FDCPA) prohibits collectors from using unfair, abusive or deceptive practices to collect debts, but the things that debt collectors have gotten away with over the years never cease to depress and amaze.
In a previous recent blog post we covered John Oliver’s televised debt giveaway where he “forgave” millions in medical debt for some 9,000 individuals. The late night show host had set up a debt collection agency and bought the individuals’ debt for pennies on the dollar to highlight the corruption-rife industry’s ways. A segment on Oliver’s show that night delved into some of the methods debt collectors use to harass, strong-arm and bully debtors into thinking that they have no option but to sell off their essential assets in order to satisfy their debts.
One of the more infamous of these cases actually has a satisfying ending for the consumers, however.
The Attorney General’s Office sued the Pennsylvania-based Unicredit America Inc.’s in October 2010, charging that the debt collection agency used a fake courtroom and other illegally coercive practices to intimidate debtors into making payments.
You read that right–Unicredit had allegedly set up a room that looked like a real court, complete with a fake judge and fake deputies. The lawsuit alleged that the “deputies” threatened debtors with arrest, sent Unicredit employees to debtors’ homes and “served” the debtors with what purported to be court hearing and deposition subpoenas.
Once the suit was filed, other debtors, many of whom were 60 years of age and older, started coming forward to substantiate the lawsuit’s claims. They said they had been intimidated by the above practices into providing the company with access to their bank accounts, surrendering the titles to their vehicles or other assets, and making immediate payments.
This should go without saying, but all of the above are the definition of the unfair, abusive and deceptive practices the FDCPA bans.
The judge in the case closed Unicredit by November of 2010.
The Attorney General’s Office filed an amended complaint in January 2012, seeking civil damages for each of the abused debtors for its violations of unfair trade practice and consumer protection. It also asked the company to make restitution to the debtors.
The judge awarded the Attorney General’s Office more than $500,000. And lo and behold, Unicredit’s president named in the suit, Michael Covatto, filed for Chapter 13 bankruptcy protection.
The government dropped its attempt to collect against Covatto in bankruptcy court, possibly because they realized there were no assets to collect. The Attorney General’s Office then attempted to collect from Anthony Covatto, Michael’s half-brother and Vice President of the now-defunct Unicredit, but his financial situation was no better.
The irony of this case is notable–that two men responsible for illegally coercing debt from vulnerable debtors ended up being pursued by the debt-collection powers of the courts and federal government. One of them had to seek the same bankruptcy protection that his former company pushed many a debtor towards.
It would have sent more of a message for the government to pursue criminal fraud charges against these two, but maybe the Attorney General’s Office felt that the message had gotten across. For the debtors coerced out of their money who never received money from the judgment, this is probably little solace.
If you are contemplating bankruptcy in the Charlotte area, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with legally sound advice for your particular situation.
About the Author
Kyle Frost joined Arnold & Smith, PLLC in 2013 where he focuses his practice on all aspects of civil litigation and bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.
Born and raised in upstate New York, Mr. Frost attended the University at Albany on a Presidential Scholarship, graduating magna cum laude with a double major in Political Science and Sociology. He went on to attended Wake Forest University School of Law in Winston Salem, North Carolina.
Following college, Mr. Frost spent over a year teaching English in South Korea. He worked in a private school in Seoul developing curriculum, English programs, and educating both children and adults that were interested in learning a new language.
In his spare time, Mr. Frost enjoys homebrewing, fishing, and travelling.
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