Attorney General James and Federal Trade Commission Halt Phantom Debt Collection Scheme

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Defendants Distributed and Collected on Millions of Dollars In Debts that Consumer Did Not Owe 

New York State Attorney General Leticia James.

NEW YORK, NY — July 1, 2019 — Attorney General Letitia James and the Federal Trade Commission today announced court orders stopping a scheme to distribute and collect on millions of dollars in “phantom debts,” fake debts that consumers did not owe. The settlement permanently bans Buffalo based defendants Hylan Asset Management, LLC, Andrew Shaevel, Jon Purizhansky, and their companies, from participating in any debt collection activities, distributing any debt, or processing payments on any debt.

“Repaying debt is stressful enough without the added worry that collectors are faking bills,” said Attorney General Letitia James. “Stopping this massive scheme is a win for every New Yorker who no longer has to fear being swindled out of millions of dollars for phantom debts. My office will continue to stand up for consumers to stop illegal debt collection and debt brokering activities. I thank our partners at the FTC for their work on this case.”

We’re proud to partner with the New York Attorney General in our efforts to clean up this industry and stop unlawful and abusive practices,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection.

In the the filed complaint, Attorney General James and the FTC allege that Hylan Asset Management, LLC and its owners, Andrew Shaevel, and Jon Purizhansky, knew that certain debt portfolios Hylan owed contained fake debts that consumers did not owe.  Much of this debt was supposedly issued by lenders operating under the name Bahamas Marketing Group, or “BMG,” but was actually fabricated by disgraced former payday lending operator Joel Tucker. Some of these bogus debts were “auto-funded” loans, or loans deposited into consumers’ bank accounts without their consent, while others were wholly fictitious debts created from consumer data Tucker had acquired.

The Plaintiffs alleged that even though they knew the portfolios contained fake debts, Hylan, Shaevel, and Purizhansky nonetheless placed these phantom debts with collection companies, who in turn, illegally pursued consumers for payments. When government officials began investigating the matter, Hylan sold millions of dollars of the BMG phantom debt to an offshore company in an attempt to continue profiting off the tainted debts.

Worldwide Processing Group, LLC, operating under the name “Forward Movement Recovery,” collected on phantom debt that it received from Hylan. Worldwide, and its owner Frank Ungaro, Jr., are alleged to have known that certain debts they were collecting on were fake, but collected on them anyway. Collectors working for Worldwide and Ungaro threatened and harassed consumers to attempt to convince them to pay debts that in many cases they did not owe.

The order imposes a judgment of $6,750,000 against defendants, which is suspended upon payment of $676,575. Shaevel and Purizhansky are each required to pay $235,000, while their defendant companies must pay $206,575. A separate order for Worldwide and Ungaro imposes a judgment of $4,940,000, but is suspended upon payment of $118,000.

This case is being handled by Assistant Attorney General Christopher L. Boyd in the Attorney General’s Buffalo Regional Office with assistance from Senior Consumer Fraud Representative Karen Davis and Investigator Erica Law. The Buffalo Regional office is led by Assistant Attorney General-in-Charge Michael Russo. The Division of Regional Affairs is led by Chief Deputy Attorney General for Regional Affairs Jill Faber.

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SOURCE: New York State Office of the Attorney General Leticia James.

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eHeziAttorney General James and Federal Trade Commission Halt Phantom Debt Collection Scheme

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