Three former executives of a defunct debt-collection firm have pleaded guilty to charges they lied to a bank that received funds from the Troubled Asset Relief Program.
Randall Silver, Charles Harris and Carlos Novelli, all former executives of Oxford Collection Agency, have accepted liability for criminal charges that they used Oxford to collect debts on behalf of varied companies without remitting the entire amount owed to the clients, the inspector general of Tarp and the U.S. attorney in Connecticut announced Wednesday. They diverted some of the collections to enrich themselves, the authorities said.
The men allegedly used false information to obtain a $6 million line of credit from Webster Bank, the Waterbury, Conn.-based subsidiary of Webster Financial (WBS). Webster Financial received $400 million from the Treasury Department's Capital Purchase Program in November 2008 that the company has since repaid.
"Executives at Oxford stole from their company's clients, investors, and from Webster Bank, a Tarp recipient, to line their own pockets," Christy Romero, Special Inspector General for Tarp, said in a news release. "Ripping off a Tarp bank equals ripping off taxpayers."
"The [inspector general for Tarp] and our law enforcement partners will continue to hold those responsible for Tarp fraud accountable for their crimes," Romero added.
Lawyers for Silver, Harris and Novelli all declined to comment.
According to court papers, the men allegedly used the line of credit from Webster to fund their operations over a period of roughly four years starting in 2007. Though Silver, Harris, Novelli and others allegedly directed Oxford to collect debts from consumers that they represented would be remitted to clients, the men allegedly misled clients about the amounts collected, used collections to fund Oxford's operations and bribed companies to secure business.
Oxford's clients included Washington Mutual, the lender acquired in 2008 by JPMorgan Chase (JPM), and Dell (DELL).
Silver, Oxford's former chief financial officer, was charged with submitting false financial statements to Webster and soliciting millions of dollars from investors without disclosing the existence of collections Oxford had failed to remit, the U.S. Attorney's office alleged.
The defendants, who entered their pleas in the U.S. district court in Bridgeport, Conn., face fines, restitution and jail time.
