Referrals by CFPB Bring First Indictment

In May, the Consumer Financial Protection Bureau (CFPB) proved itself to be an active enforcement agency when the first indictment stemming from its referral was filed.  The U.S. Attorney’s Office for the Southern District of New York charged Mission Settlement Agency, a debt settlement services provider, Michael Levitis, who allegedly operated Mission, and three of Mission’s employees with mail and wire fraud for systematically defrauding and exploiting individuals with credit card debt out of millions of dollars.  See United States v. Mission Statement Agency, 13-CR-00327 (S.D.N.Y. May 1, 2013).  Two of Mission’s employees pleaded guilty in separately filed matters.  See United Stated v. Shirinov, 13-CR-00319 (S.D.N.Y. April 26, 2013); United States v. Lemberskiy, 13-CR-00325 (S.D.N.Y. April 20, 2013).  As stated in the indictment, approximately 2,200 customers paid Mission over $13 million for assisting them in obtaining relief from their credit card debt between mid-2009 and March 2013.  Allegedly, Mission failed to make payments to the creditors of 1,200 of its customers, keeping $9 million in fees and paying only about $4.4 million to its customers’ creditors. According to the indictment, Mission and its employees promised individuals struggling with credit card debt to reduce their debt by up to 45 percent.  Allegedly, among other tactics, Mission sent mail solicitations to its potential customers that were addressed from the “Reduction Plan Administrator” of the “Office of Disbursement”, bearing the seal of the United States.  A forfeiture action was also brought by federal prosecutors against Rasputin Restaurant and Nightclub in Brooklyn and other entities owned by Levitis that received the proceeds of the alleged fraud.  See Complaint, In re Rasputin Restaurant/Nightclub, 13-CV-03069 (S.D.N.Y. May 7, 2013).

The CFPB also initiated civil proceedings against Levitis, Mission, Levitis’s Law office, a second law firm, and a consulting firm that allegedly took part in misleading Mission’s customers about fees charged and services offered by Mission. See Complaint, CFPB v. Mission Settlement Agency, Civ. No. 13-CV-3064 (S.D.N.Y. May 7, 2013).  The CFPB is alleging violations of the Consumer Financial Protection Act of 2010, the Telemarketing and Consumer Fraud and Abuse Prevention Act, and the Telemarketing Sales Rule.  The bureau seeks disgorgement of profits, civil penalties, restitution of unlawfully collected fees, and attorney’s fees.

To see CFPB v. Mission Settlement Agency Complaint, please follow the link: http://files.consumerfinance.gov/f/201305_cfpb_complaint_mission-settlement.pdf

To see United Stated v. Shirinov Complaint, please follow the link: http://www.justice.gov/usao/nys/pressreleases/May13/MissionSettlementAgencyetalChargingDocuments/U.S.%20v.%20Zakhir%20Shirinov%20Information.pdf

To see United States v. Lemberskiy Complaint, please follow the link: http://www.justice.gov/usao/nys/pressreleases/May13/MissionSettlementAgencyetalChargingDocuments/U.S.%20v.%20Felix%20Lemberskiy%20Information.pdf