Richard Pinto, 68, chairman of the board and de facto head of Oxford Collection Agency between January 2007 and March 2011, was sentenced Thursday to five years in prison, followed by five years of supervised release, for his role in a multimillion-dollar fraud scheme at the agency.
U.S. District Judge Stefan R. Underhill also ordered Pinto, of Wellington, Fla., to pay restitution of approximately $12.3 million and to serve the first three years of his supervised release in home confinement.
“Over several years, this defendant orchestrated a substantial fraud through which his company stole millions of dollars from clients, lenders, and investors,” said David B. Fein, U.S. Attorney for the District of Connecticut. “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.”
Last May, Pinto and his son, Peter Pinto, 37, of East Quogue, N.Y., each pleaded guilty to one count of conspiracy to commit wire fraud, bank fraud and money laundering and one count of wire fraud stemming from a $10 million fraud scheme against Connecticut-based Webster Bank, federal officials said.
Peter Pinto was the president and CEO at the agency. Oxford was engaged in accounts receivable management, mostly debt collections, with offices in New York, Florida and Pennsylvania.
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, Richard Pinto and other Oxford executives routinely caused Oxford to collect debts that were never remitted to its clients, according to Fein.
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 client backlogs or outstanding payroll taxes, according to Fein.
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.
Three other Oxford executives, not counting Peter Pinto, in December pleaded guilty to charges stemming from the scheme, including: Vice President of Finance and Chief Financial Officer Randall Silver; Executive Vice President Charles Harris; and Chief Operations Officer Carlos Novelli. All of the other executives in the case await sentencing.