Nearly two years ago, Neil Madison was sentenced to eight years in prison for running a debt collection agency that actively scammed businesses that were looking for help recovering debts. A news report on a TV station last night added new details to the case.
In June 2012, Madison was given his sentence after a guilty plea on conspiracy and fraud charges. One of his associates got three years in prison.
Madison and his employees promised prospective clients that for a 25 percent fee, they would collect business debts owed by debtor companies. After clients signed up for the B2B debt collection services, Madison and his employees collected funds by harassing, intimidating, and threatening debtors in telephone calls, emails, and letters. Once Madison collected the funds from debtors, he didn’t make remittances to his clients, and kept nearly all of the funds in order to support his lavish lifestyle that included the purchase of a Porsche and several other luxury vehicles, as well as a 32 ft. boat.
In a segment that aired last night on KFDX in Wichita Falls, Texas, new details emerged about how the scam worked and what Madison spent the money on.
Madison’s company targeted businesses that had recently taken out loans, figuring they were the companies most in need of collection services. Not only did collectors use illegal tactics in recovering the debts, they failed to remit any money to clients.
Madison then used the funds, more than $6 million over eight years, to pay for personal luxuries and even occasionally hired prostitutes for top employs (Here’s some free advice from insideARM.com: that shouldn’t be a part of any incentive program).
Watch the report below:
ARM companies soliciting legitimate business should never make promises they can’t keep. Madison’s pitch was so attractive, it was hard for clients to turn down. Make sure potential clients have realistic expectations of what a professional collection agency can do for them. And if you hear of companies making extraordinary claims, don’t be afraid to question the legitimacy of those making them.