The Second Circuit Court of Appeals Monday upheld a four year federal prison sentence for a former collection agency executive who orchestrated a $12 million fraud scheme over the course of four years.
Peter Pinto, formerly CEO of Oxford Collection Agency, pled guilty more than two years ago to conspiracy to commit wire fraud, bank fraud, and money laundering and a count of wire fraud. The fraud was pervasive and systemic, leading to the arrest and sentencing of several Oxford execs, including members of Pinto’s family.
Pinto was sentenced to 48 months in federal prison, which he is currently serving in West Virginia. But he filed an appeal to the duration, arguing that his sentence was “substantively unreasonable.”
A three judge panel in the Second Circuit ruled Monday that Pinto’s sentence was not unreasonable. In fact, the 48 month term of incarceration fell “substantially below the applicable Guidelines range.”
The judges took into consideration the fact that Pinto cooperated with the government in his guilty plea. But they also noted the “serious nature of Pinto’s fraud scheme (which caused losses in excess of $12 million)” in upholding the four-year sentence.
“We cannot say that the sentence imposed by the District Court fell outside ‘the range of permissible decisions,’” the panel wrote.
Between approximately January 2007 and March 2011, Oxford collected debts on behalf of various clients in the bank card/credit card, telecom, and consumer credit industries under the pretense that they would report all such collections to their clients. Instead, the Pintos and others caused Oxford to routinely withhold collected debts from certain clients, running up what was referred to internally as a client’s “backlog.” The Pintos and others then diverted various funds from their client remittances and used them for their own ends.
During this time, Richard Pinto – Peter’s father — served as the chairman of the board of Oxford, and Peter Pinto served as the president and chief executive officer, overseeing the company’s daily activities. The company was headquartered in Fort Pierce, Fla., with additional offices in Melville, N.Y. and Scranton, Penn.
Starting in April 2007, the Pintos secured a line from credit from Connecticut-based Webster Bank without informing the lender about Oxford’s significant client backlogs or outstanding payroll taxes. The Pintos and others sent falsified financial statements to Webster Bank, eventually increasing the credit line to $6 million and subsequently laundered funds from the credit line to promote the ongoing fraud scheme against their clients. During that same period, the Pintos also solicited millions of dollars in investments from various investors without ever disclosing to their investors the existence of their backlogs. The Pintos also transferred some of the investor funds into Richard Pinto’s personal bank account without investor knowledge.
In addition to the bank and wire fraud, another member of the Pinto family, Patrick, and a bank executive with U.S. Bank in Ohio, Wilbur Tate, were charged with bribery. Beginning in approximately August 2008 and continuing for more than two years, Oxford Collection Agency executives engaged in a bribery scheme with Tate in order to obtain and retain the business of U.S. Bank.
As part of the scheme, Oxford executives initially provided Tate with boxes of expensive cigars, and subsequently sent Tate monthly cash payments of between $2,500 and $5,000, which were hidden in cigar boxes and mailed to Tate’s residence in Mason, Ohio.
Three non-Pinto former Oxford executives also pled guilty to fraud and other charges for their roles in the illegal proceedings of the company.