The Pennsylvania Attorney General's Office has secured a judgment against Michael J. Covatto, the former president of defunct collection agency Unicredit America Inc., that means he will owe money to the state and possibly Unicredit's former debtors.

Erie County (Pa.) Judge Michael E. Dunlavey, who shut down Unicredit in 2010 at the request of the Attorney General's Office, granted the office's petition for a judgment.

Unicredit in late 2010 was charged with collecting money from unsuspecting consumers by pretending to hold hearings in a room decorated to look like a courtroom, according to a lawsuit. The suit alleged the company used people posing as sheriff's deputies to summon people to an office in Erie, Pa. that employees called "the courtroom," The company then staged court proceedings to obtain money from them.

As part of the judgment, Dunlavey prohibited Covatto, 50, from being involved in any business ventures with his father, Alfred D. Covatto, 73, who was a consultant to Unicredit, according to court proceedings; and Michael Covatto's half-brother, Anthony D. Covatto, 25, who had been Unicredit's vice president.

Dunlavey at a later hearing will determine the amount of the judgment and who would be eligible for compensation, according to an order filed this week. He said the money will go to the state and to debtors affected by what Dunlavey said were Unicredit's unfair trade practices, including the use of the fake courtroom.

In addition, Dunlavey said, the "illegal civil judgments" Unicredit filed against debtors in Erie County Court will be stricken or otherwise marked as invalid, with details in a future court order.

Dunlavey's ruling does not erase the underlying debts in those judgments. The ruling means the debtors are not bound by Unicredit's judgments, but still are responsible for the debts, said Nils Frederiksen, a spokesperson for the Attorney General's Office.

Dunlavey's order also directs the state Pennsylvania Department of Transportation to strike any liens Unicredit filed against vehicles "to secure payments of amounts purportedly owed to businesses that had contracted with Unicredit for debt collection."

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