Three Buffalo area debt collectors broke federal and state laws by lying to consumers, threatening to have them arrested and adding unauthorized amounts to the debts that consumers owed.
That conduct has resulted in a court order that permanently bars three local business people and their companies from the debt collection industry and requires them to pay a total of $27 million in restitution and damages.
The resolution of the civil case against Joseph Ciffa, 50, and Gregory MacKinnon, 53, both of Grand Island, and former Buffalo-area resident Angela Burdorf, 38, now of Winter Park, Fla., was announced Friday by State Attorney General Barbara D. Underwood.
MacKinnon's Amherst company is called Vantage Point Services, Burdorf's Amherst firm is called Payment Management Solutions and Ciffa's Niagara Falls business is Bonified Payment Solutions Inc., prosecutors said.
Ciffa, MacKinnon, Burdorf and their companies used "deceptive and abusive" debt collection practices that broke federal and state laws, U.S. District Judge William M. Skretny's order states. The defendants signed an agreement this week to waive all rights "to appeal or otherwise challenge" the charges specified in the order.
In a lawsuit filed in early 2015, the Attorney General's Office and Federal Trade Commission alleged that the defendants "misrepresented themselves to consumers as attorneys or officials working for law enforcement agencies and the courts," threatened consumers by falsely telling them they would face felony arrests and be sent to jail if their debts were not paid, and failed to provide written information about the supposed debts.
"We have zero tolerance for debt collectors who use illegal and unconscionable tactics to coerce payment, such as threatening jail time," said Underwood, who described the defendants as "scam artists."
Ciffa also faces criminal problems in federal court. In 2015, several felony charges were filed against him by the U.S. Attorney's office. He pleaded guilty in February to felony charges of wire fraud conspiracy and filing false tax returns. He faces sentencing next January before District Judge Richard J. Arcara.
Prosecutors said Ciffa has been in the debt collection business since 2013, operating offices at various times in Niagara Falls, Kenmore and Grand Island. Between January 2015, and December 2016, authorities said, Ciffa's company collected about $3 million from victims.
Ciffa admitted that he filed a false tax return for the tax year 2015, underreporting his business income and avoiding $15,651 in tax payments.
During 2015, when his actual income was nearly $1.3 million, Ciffa defrauded the Erie County Social Services Department by filing an application claiming that he and his wife made a total of $610 a week, prosecutors said. The phony claim enabled Ciffa, his wife and their two children to receive health care benefits under the Medicaid program, designed to help people in poverty.
The case announced on Friday was handled by Assistant Attorney General Christopher L. Boyd and Senior Consumer Fraud Representative Karen Davis, Supervising Investigator Ken Peters, and Investigator Jennifer Hill.