A New Hyde Park man has pled guilty in Federal court to charges stemming from a $10 million fraud scheme.
According to U.S. Federal prosecutors for the State of Connecticut, Randall Silver, 43, of New Hyde Park, entered a guilty plea on December 13 to one count of conspiracy to commit wire fraud, bank fraud and money laundering, and one count of wire fraud. Silver was a vice-president of finance and chief financial officer at the Oxford Collection Agency, Inc.
Two additional executives of Oxford Collection Agency, Inc. – Charles Harris, 38, of Babylon, NY, and Carlos Novelli, 43, of Vero Beach, FL – have pleaded guilty in Bridgeport federal court. Oxford Collection Agency was a private financial services company that engaged in accounts receivables management, primarily debt collecting, with offices in New York, Pennsylvania and Florida.
According to court documents and statements made in court, various businesses and other entities contracted with Oxford Collection Agency to collect debts owed them by consumers. Oxford’s clients included, among others, an educational institution, a laboratory, a computer company and various banks. Oxford collected debts from consumers under the pretense that it would report all such collections to its clients and remit the appropriate amount to the client.
However, Silver, Harris and Novelli and other Oxford executives allegedly routinely caused Oxford to collect debts that were never remitted to its clients. The co-conspirators referred to these unremitted collections as a client’s “backlog.” To hide the backlog, co-conspirators would make periodic fraudulent collection reports to certain clients that under-reported the amount of funds collected.
Certain co-conspirators also transferred money from one client trust account to another client account, from Oxford’s operating account to a client account, or from a client account to Oxford’s operating account to cover various shortfalls and backlogs or to improperly use collections to directly fund Oxford’s operations.
Starting in April 2007, Oxford secured a line of credit from Connecticut-based Webster Bank, a bank that received funds through the Troubled Asset Relief Program (TARP), without informing Webster Bank about its significant client backlogs or outstanding payroll taxes. Reportedly, with Silver’s assistance, the Webster Bank credit line was increased to $6 million. Oxford Chairman Richard Pinto, along with his son Peter Pinto, the company’s president and CEO, Silver and others also allegedly laundered funds from the credit line to promote the ongoing fraud scheme against their clients. During this same period, the Pintos, Silver and others, also solicited millions of dollars in investments from various investors, without ever disclosing to their investors the existence of their backlogs according to the charges. Some the investor funds were transferred into Richard Pinto’s personal bank account without investor knowledge.
As part of the scheme, certain co-conspirators also paid kickbacks to employees of one or more financial institutions in order to compensate them for providing Oxford with the bank’s debt collection business.
In pleading guilty to a wire fraud charge unrelated to the conspiracy offenses, Silver admitted that he embezzled $193,963 from Oxford by transferring funds from Oxford’s “Client Payables” account at Webster Bank to an account at a New York bank that he controlled.
Each of the conspiracy charges carries a maximum term of imprisonment of five years, and wire fraud carries a maximum term of imprisonment of 20 years. At sentencing, the defendants also face fines and orders of restitution.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation, the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Connecticut Securities, Commodities, and Investor Fraud Task Force.