Chicago, Illinois - The operators of a Chicago-area fake debt collection scheme have been banned from the debt collection business and from selling debt portfolios under settlements with the Federal Trade Commission and the Illinois Attorney General. The settlements also require them to surrender assets totaling at least $9 million, which will be returned to consumers.
The charges brought by the agencies in March 2016 were part of Operation Collection Protection, an ongoing federal-state-local crackdown on deceptive and abusive collection practices. A federal court had temporarily halted the scheme pending resolution of the case.
According to the FTC, the defendants used names such as Stark Law, Stark Recovery, and Capital Harris Miller to target people who had obtained or applied for payday or other short-term loans. Since 2015, according to the FTCâ€™s complaint, they pretended to be a law firm with authority to sue and obtain substantial judgments against delinquent consumers. They also allegedly provided bogus payday loan debt portfolios to other debt buyers, who then tried to collect the fake debts.
In addition to banning the defendants from the debt collection business and from selling debt portfolios, the settlement orders prohibit them from misrepresenting financial products and services, profiting from customersâ€™ personal information collected as part of the challenged practices, and failing to dispose of such information properly.
Each order imposes a judgment of more than $47 million, which will be partially suspended once the defendants have surrendered identified assets valued at more than $9 million. Hirsh Mohindra will give up certain bank and investment accounts, his home and rental properties. His brother, Gaurav Mohindra, will surrender $85,000, a one-kilogram gold bar, certain bank accounts, and his interest in a condominium. Preetesh Patel will give up $41,000 and certain bank and investment accounts. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.
The Commission vote approving the proposed stipulated orders was 2-0. The U.S. District Court for the Northern District of Illinois, Eastern Division, entered the orders on October 27, 2017.