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'Kingpins' ordered to repay $66 million in debt-collection scams

Two men described as “kingpins” of debt-collection operations in the Buffalo region have had their businesses shut down and were ordered to pay $66 million under a settlement revealed Thursday.

Douglas MacKinnon and  his companies Northern Resolution Group and Enhanced Acquisitions, along with Mark Gray and his company Delray Capital, also have been banned from working in the debt-collection industry, state Attorney General Letitia James said during a news conference in Buffalo.

What MacKinnon and Gray did was essentially set up franchises by providing the infrastructure for debt-collection businesses, and their tactics included deception, threats and harassment, James said.

"They were kingpins," she said. "There's no question about it."

The settlements with the third-party debt collectors resolved civil lawsuits filed in 2016 by the state and the federal Consumer Financial Protection Bureau.

James said MacKinnon and his companies will be required to pay $60 million under the settlement, and Gray and companies were ordered to pay $6 million.

Of those amounts, $40 million of MacKinnon’s will be set aside to pay restitution to consumers. Gray and his companies were ordered to pay $4 million in restitution, but that amount has been “suspended” to $10,000 due to their inability to pay, the AG’s office said.

The $40 million and $4 million amounts were the estimated net revenues each brought in from their operations, officials said.

MacKinnon also faces a civil penalty of $20 million. A $2 million civil penalty against Gray also has been suspended due to his inability to pay. The full amount would be immediately owed if Gray or his companies are found to have misrepresented their financial condition, the AG’s office said.

Some of the collection tactics included using “spoofed” phone numbers to pretend to be calling from a court or government agency. They had also been accused of making false threats, including of arrest, wage garnishment or driver’s license revocation to compel payment by the victims.

The collectors also regularly added $200 to the debt amounts they purchased and worked to collect. Some consumers were told to pay even more through a practice known as “overbiffing,” or “over balance in full," according to the AG’s office.

“This was an elaborate and unscrupulous rip-off scheme that defrauded hundreds if not thousands of individuals across the nation who could least afford to be cheated out of their money,” James said.

MacKinnon and his companies set up more than 250 “shops” throughout the country, most of which were in the Buffalo region. MacKinnon sent staff to set up cubicles, phones and computers in office space he rented. He then closed offices that were “not collecting aggressively enough,” James said.

The  Attorney General’s Office said anyone who may have been victimized should call 853-8404 or visit ag.ny.gov. The office also plans to conduct outreach.

“Consumers can contact us,” James said. “We will assist them in trying to get their money back.”

Joseph G. Makowski, Gray’s attorney, said his client plans to pay the $10,000 fine within 30 days once a judge signs the settlement order. His client's legal expenses were going to make it prohibitively expensive to continue with the litigation and made a decision he believed was in his best interest, Makowski said.

Dennis Vacco, MacKinnon’s attorney, declined comment through an assistant.

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