November 19, 2014 / 11:57 PM / 4 years ago

Debt settlement firm owner gets 9 years prison for fraud scheme

NEW YORK, Nov 19 (Reuters) - The owner of a New York debt settlement company was sentenced on Wednesday to nine years in prison for his guilty plea in a fraud scheme that authorities say victimized 1,200 people through false promises of relief from credit card companies and banks.

Michael Levitis and his company, Mission Settlement Agency, committed crimes that resulted in marred credit reports, foreclosure and even bankruptcy for clients who were already drowning in debt, U.S. District Judge Paul Gardephe said at a hearing in Manhattan.

“The financial harm and emotional damage the defendant caused will continue for years to come,” Gardephe said.

The prosecution stemmed from the first criminal case to be born out of a referral by the Consumer Financial Protection Bureau, an agency created as part of the 2010 Dodd-Frank financial oversight law.

On Tuesday, Manhattan U.S. Attorney Preet Bharara said his office was looking to build more cases in the consumer-debt arena. He announced another prosecution stemming from a CFPB referral involving a Georgia debt collection firm.

On Wednesday, Bharara briefly attended Levitis’ sentencing and issued a statement saying he was committed to prosecuting “those who seek to profit by exploiting financially struggling and vulnerable people.”

Prosecutors said that from 2009 to 2013, Mission touted its ability to help customers reduce their credit card and other debt.

Instead, authorities said, Mission exploited and defrauded over 1,200 customers across the country, taking in nearly $2.2 million in fees without paying anything to their creditors.

Levitis along with Mission Settlement pleaded guilty in April to conspiracy charges of mail and wire fraud. Along with the prison sentence, Gardephe ordered him to forfeit $2.2 million and pay a $15,000 fine.

Levitis, 38, must also pay $2.2 million in restitution jointly with Mission Settlement, which while out of business was ordered by Gardephe to also pay a $4.39 million fine.

Five other Mission employees have pleaded guilty and await sentencing.

In 2011, Levitis was sentenced to three years of probation and fined $15,000 for lying to federal agents during an investigation into former New York State Senator Carl Kruger, who pleaded guilty to corruption charges in 2011.

At his latest sentencing, Levitis said he apologized to his customers for his “terrible crimes.”

“I promise I will work the rest of my life to repay you,” he said.

The case is U.S. v. Mission Settlement Agency, U.S. District Court, Southern District of New York, No. 13-cr-j00327. (Reporting by Nate Raymond in New York; Editing by David Gregorio)

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