Mission Settlement Agency, owner Michael Levitis, and three employees were arrested and charged this week with mail fraud, wire fraud and conspiracy in what prosecutors are calling a four-year criminal scheme that bilked customers of money used to pay expenses of a popular nightclub, luxury car leases and credit card bills.
The case against the New York City-based debt settlement firm stems from a referral by the Consumer Financial Protection Bureau. The agency filed a parallel civil case against the defendants.
More than 1,200 people lost a total of millions of dollars in the scheme, according to federal prosecutors.
Levitis, 36, and his employees allegedly tricked potential customers by telling them Mission had ties to federal government and a major credit-rating agency, according to the indictment. They also gave the victims phony accounts of debt-settlement results they claimed to achieve for other customers.
From mid-2009 to March 2013, an estimated 2,200 customers paid nearly $14 million to Mission. The company took $6.6 million in fees from those customers and paid approximately $4.4 million to creditors. For more than 1,200 customers, the company allegedly took nearly $2.2 million in fees without paying even a penny to the customers' creditors, the indictment says.
Mission employees, in response to customers calling into question the process, allegedly worked from a script stating that "creditors today are content to get the settled amount in light of all the bankruptcies, chargeoffs and bad debt out there."
Prosecutors are seeking civil forfeiture of nearly $2.2 million, the nightclub Rasputin - a popular Russian-theme establishment in Brooklyn that Levitis owns, two other pieces of real estate and 40 bank accounts allegedly used to launder money generated by the scheme.
Levitis and employees Denis Kurlyand, Boris Shulman and Manuel Cruz were arraigned in Manhattan federal court Tuesday. Levitis pleaded not guilty and was released on $1 million bond.
Levitis was previously indicted in 2011 for lying to the FBI in connection with the pay-to-play dealings of former state senator Carl Kruger, for which he was fined and placed on probation.
His lawyer has told the press he had been cooperating with authorities and was not complicit.