A former manager of a Boca Raton, Fla.-based investment firm that bought and resold debt received a 71-month prison sentence last week on charges of wire and mail fraud.
Steven D. Goldberg of Goldberg & Associates LLC also was given three years of supervised release following his jail term, according to the office of Jeffrey H. Sloman, acting U.S. Attorney for the Southern District of Florida. District Judge Kenneth A. Marra handed down the sentence. In August, Goldberg pleaded guilty to eight counts of wire fraud and one count of mail fraud.
Goldberg negotiated the sale of non-paying receivable accounts to investors, according to the U.S. Attorney's Office. Goldberg, however, did not have the title to these accounts, and often provided the investors with phony wire transaction numbers and other false financial information.
The total loss to investors is approximated at more than $3.3 million. Goldberg used the investors' money for his personal benefit, according to Sloman's office.
Last spring, Goldberg told Collections & Credit Risk that his company had exited the debt buying business but remained focused on real estate.
In a lawsuit filed Nov. 5, 2007 in U.S. District Court, Southern District of Florida, Hudson & Keyse LLC, a well-established debt broker in Painesville, Ohio, alleged that Goldberg agreed to buy consumer accounts with a face value of $47.8 million for $2.4 million, to close July 27.
The lawsuit stated that Goldberg failed to pay the purchase price; used the consumer information "to attempt to collect the amounts owed by the consumers despite the fact that H&K is the true owner of the accounts;" "sold or attempted to sell and assign some or all of the proprietary information concerning the consumer accounts to third parties;" and failed to return the portfolio to H&K, according to a Collections & Credit Risk report.
RMB Holdings LLC sued Goldberg & Associates on Oct. 29, 2007, in U.S. District Court, Eastern District of Tennessee, alleging breach of contract after buying a $1.66 million portfolio to which Goldberg allegedly did not hold title.
Dallas-based NorAm Capital Holdings acquired a portfolio from Goldberg & Associates in December of 2007. "The seller represented that he was the principal owner and provided an evaluation portfolio, a seller survey, media samples as well as the executed contract from the originator," NorAm co-chairman and CEO Dan Cofall told Collections & Credit Risk.
After closing the purchase, NorAm determined that "not only did the seller not have title to the portfolio, but also the evaluation portfolio had been significantly altered in order to entice NorAm into the transaction," Cofall said.