A man once called the "kingpin" of Buffalo debt collectors has made an offer to the government agencies trying to collect $60 million in restitution and civil penalties he owes.
How much of the debt Douglas MacKinnon is offering to pay is unclear – the proposal was not described during a status conference in federal court Monday or in any publicly filed court documents.
A hearing was held Tuesday to determine whether Douglas MacKinnon should be sanctioned and even incarcerated for not fully complying with a government subpoena.
The Consumer Financial Protection Bureau is reviewing his offer, according to a lawyer for the federal agency.
"We're open for business in trying to get this case settled," said attorney Joseph G. Makowski, who represents MacKinnon.
In 2016, the federal bureau and the state Attorney General's Office sued MacKinnon and his companies, Northern Resolution Group and Enhanced Acquisitions, accusing them of harassing, threatening and deceiving consumers across the nation into paying inflated debts or amounts they did not owe. The collection tactics included using “spoofed” phone numbers to pretend to be calling from a court or government agency, and the collectors also sent threatening messages to consumers to frighten them into paying, according to the lawsuit. MacKinnon and his companies were permanently banned from the debt collection industry.
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Douglas MacKinnon has not paid anything toward the $60 million he agreed to pay in a settlement with federal and state officials in 2019, government lawyers say.
When State Attorney General Letitia James announced a $60 million settlement in 2019, she referred to MacKinnon as a "kingpin" of Buffalo debt collectors. She said MacKinnon and his companies set up more than 250 shops throughout the country as part of "an elaborate and unscrupulous rip-off scheme that defrauded hundreds, if not thousands, of individuals across the nation."
MacKinnon's latest offer comes after the two agencies sought sanctions against him for more than a year for not responding to a subpoena for financial information. This past summer, U.S. District Judge Frank P. Geraci Jr. told MacKinnon's lawyer to send a proposal to the agencies by July 22, but the judge later extended the deadline to Sept. 22.
"I tried to put some meat on the bone in terms of being clear what it is we were offering as part of a global settlement," Makowski told Geraci on Monday.
MacKinnon is waiting to hear from the federal agency "on whether our proposal works or not," Makowski said.
The Consumer Financial Protection Bureau received the offer last week, said Jacob Schunk, an attorney for the agency.
In their filing, government lawyers said they believe Douglas MacKinnon "has transferred and concealed his assets and stonewalled discovery efforts to avoid collection efforts."
"The takeaway for now is that we have some questions about it," he told the judge. "Our management has not had a chance to review it."
Of the $60 million MacKinnon agreed to pay to settle the case, $40 million would be set aside to pay restitution to consumers, and $20 million would be set aside for civil penalties to state and federal governments.
Reacting to his failure to abide by the agreement, the state and federal agencies in May 2020 sought his bank statements, credit card bills, income tax returns, deeds, mortgages, promissory notes and documents reflecting any trusts, stocks, properties, estate planning and asset transfers to his family members, among other records. But MacKinnon missed multiple deadlines to turn over the information. In February 2021, the government agencies asked U.S. Magistrate Judge H. Kenneth Schroeder Jr. to hold MacKinnon in civil contempt, with "coercive incarceration" as a sanction, since a fine would not mean much to someone with an unpaid $60 million debt. The government also sought financial sanctions against MacKinnon's family members for not turning over requested information.
Government lawyers have said MacKinnon has a history of using his family members and friends as straw persons to hold and transfer assets on his behalf.
In September 2021, Schroeder agreed that MacKinnon and his family members failed to comply with the court’s previous order and wrote that he would recommend civil contempt sanctions – incarceration for MacKinnon and a monetary sanction of $500 per day for the others – if they did not turn over the requested materials by October 2021.
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
Geraci held a hearing in December 2021, as well as several hearings and status conferences since then, as MacKinnon and the government agencies attempted to resolve their dispute. MacKinnon and his family members have submitted information since Geraci's status conferences.
In May, the State Attorney General's Office told the court it was prepared to suspend or withdraw "the ongoing piece of contempt obligation," but indicated the fines could still be assessed for "prior non-compliance" by three family members over Schroeder’s September 2021 order. A brother of MacKinnon responded to a subpoena 46 days after the October deadline, and based upon a potential $500 per day fine, faced a $23,000 penalty. Two of MacKinnon's sons did not provide any response to the subpoenas until Jan. 6, 2022 – 69 days after the deadline – and faced a total fine of $34,500 each.
In a ruling this past July, Geraci declined to assess any contempt sanctions against MacKinnon or his family members.
"Judge Schroeder’s September 2021 order was a warning of possible sanctions, not a definitive finding or order that Douglas MacKinnon or the non-parties were in contempt and subject to accruing sanctions," Geraci said in his July ruling.
"The court is not persuaded that it would be fair to impose retrospective sanctions," Geraci said.
At a hearing last January, MacKinnon said he lived in North Tonawanda, had about $3,000 in cash on hand, and makes $1,000 a week doing sales work and budgeting for a heating, ventilation and air conditioning company.