Unicredit America Inc., the Erie, Pa.-based collection agency that used a fake courtroom to coerce debtors to pay, could have to pay more than $1.2 million in penalties pending a ruling by Senior Erie County Judge John A. Bozza.

The figure, presented by Pennsylvania's Attorney General's office during a hearing Friday, is based on the office's legal costs and the number of Unicredit-related complaints it handled. The office is specifically seeking civil fines and costs from Michael J. Covatto, who had been Unicredit's president.

Some of the money could go to debtors although any court ruling will not erase their underlying debts. Bozza said he will rule on the $1.2 million request at an unspecified date.

State investigators, according to an Erie Times-News report, also said Unicredit used questionable subpoenas and other tactics to pressure debtors into paying. Unicredit's practices were egregiously unfair to consumers and warrant the stiff penalties, Deputy Attorney General Leslie Grey told Bozza.

"They were trading on the integrity of the court system," she told the Erie Times-News.

Covatto, 51, did not appear at the hearing and has not fought the attorney general's efforts to secure a judgment against him in the Unicredit case. He filed for bankruptcy in June 2011, raising questions about whether he would have any assets to pay fines or costs. The Attorney General's office has action pending against him in U.S. Bankruptcy Court over the potential recovery of Unicredit-related fines and costs. No criminal charges have been filed in the case.

Anthony D. Covatto, 26, who had been Unicredit's vice president and is the half-brother of Michael Covatto, could be forced to pay a portion of the fines. The Attorney General's office asked Bozza to order a default judgment against Anthony Covatto because he was late in filing a challenge to the office's request for fines and costs.

Anthony Covatto is arguing that he is now presenting a defense and that a default judgment is unwarranted.

Friday's hearing before Bozza culminated nearly two years of work by the Attorney General's office against Unicredit. It sued in Erie County Court over the fake courtroom - what Unicredit called its Debt Resolution Center - and other collection tactics in October 2010.

Erie County Judge Michael E. Dunlavey, who has since retired, ordered the fake courtroom closed in November 2010 and said Unicredit engaged in unfair trade practices. Based on those decisions, state regulators have pursued fines and costs against Covatto, and won a default judgment against him in July, after he failed to file challenges in court. The default judgment, which Dunlavey ordered, cleared the way for Bozza to consider how much to fine Covatto.

Based on information Grey, the deputy attorney general, presented in court, the more than $1.2 million is derived from:

- $698,000 in fines related to the 698 judgments and other final actions Unicredit obtained against debtors from district judges or in Erie County Court. Grey asked for a fine of $1,000 - the statutory maximum - for each judgment.

- $173,000 in fines related to the 141 complaints the Attorney General's office took from consumers over Unicredit. Grey asked for a fine of $1,000 each for 125 complaints and a fine of $3,000 each for as many as 16 complaints in which the consumers were older than 60.

- $1,773 in filing fees.

- $345,013 in investigative and legal fees the Attorney General's office has accrued, based on what would be the office's hourly rates.

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