Former Debt Buyer Sentenced to Six Years in Prison for Fraud

A man who ran a debt buying company in Florida was sentenced Thursday to six years in federal prison for crimes connected with the sale of debt portfolios he did not own.

Steven Goldberg, of Goldberg & Associates in Boca Raton, was sentenced by U.S. District Judge Kenneth A. Marra to 71 months in federal prison, to be followed by three years of supervised release. In August, Goldberg pled guilty to eight counts of wire fraud and one count of mail fraud.

Goldberg sold debt portfolios he did not own, according to authorities. He would provide falsified evaluation files and sale files as well as falsified evidence that he owned the files. Goldberg would also send buyers “bogus wire transaction numbers and other bogus financial information,” according to a statement from the court.

Debt buyers lost more than $3.3 million due to his fraud. An investigation showed that Goldberg had defrauded many well-respected accounts receivable management companies over the past few years.

The investigation involved the U.S. Secret Service, the U.S. Postal Inspection Service and the Boca Raton Police Department. A Dallas debt buyer, NorAm Capital Holdings, Inc., initially alerted authorities to Goldberg’s tactics.

Dan Cofall, Co-Chairman of NorAm, told insideARM that two years ago, Goldberg sold his company a portfolio that Goldberg did not have a title to. The fraud was discovered after NorAm paid for the portfolio.

Goldberg refused to refund the money to NorAm. At that time, the company decided to conclude the purchase with the actual owner of the portfolio.  NorAm also chose to aggressively pursue Goldberg, both civilly and criminally.

<!–PAGEBREAK–>

"We immediately contacted the proper authorities to get the ball rolling." said Cofall. "Our team included a former Secret Service agent and we were able to work directly with both the Boca Raton White Collar Crime Unit and the Secret Service.  We were fortunate to work with the right law enforcement agencies that took this case very seriously.”

“It happened very quickly,” said Cofall. “We went from theft to sentence in less than two years.”

Although the federal criminal charges against Goldberg have been satisfied, there are still numerous civil cases pending against him. Cofall said that his firm is vigorously pursuing their claims against Goldberg, his company and other parties associated with these transactions.  "There are others involved.  We know who they are and we are relentless." said Cofall.

Cofall said that this is the type of case that should wake up the debt buying industry. The investigation uncovered many other debt buyers that had been defrauded by Goldberg, Cofall said he was surprised that they did not pursue Goldberg as aggressively as NorAM.  

“There was only one other company represented at the sentencing hearing and our appearance made the difference between a short sentence and a much longer federal vacation,” he noted.

“Our industry does not do a good job of policing itself,” he said. “Our trade organizations should be significantly more vigilant when they screen both new and existing members for criminal backgrounds.  Goldberg had prior convictions, including felonies.”

Cofall said that there are many things the industry can do to better protect itself from rogue elements, like publishing a list of any litigation that one member files against another member of the debt buying community and requiring background checks, including criminal, for people applying for new association membership as well as for renewals.  Each member should complete a background questionnaire and that questionnaire should be vetted.

“Why are known, convicted felons allowed to be members in good standing in our industry?" asked Cofall.

Had Goldberg’s victims been aware of pending civil litigation against him by other debt purchasers, many of the losses could have been avoided, according to Cofall.