Tue, Dec 31, 2013

http://thetimes-tribune.com/news/former-execs-with-downtown-scranton-location-sentenced-for-money-laundering-1.1609822

A former top executive at a credit and collections company that operated a call center in Scranton is serving a federal prison term resulting from a multimillion-dollar fraud scheme.

Connecticut U.S. District Judge Stefan Underhill recently sentenced Peter Pinto, 38, of East Quogue, N.Y., to four years in prison resulting from a conspiracy involving bank fraud and money laundering.

Mr. Pinto was former president and chief executive at Oxford Management Services, a Long Island company that engaged primarily in debt collection out of offices in New York, Scranton and Florida.

The company ran a call center from 2007 to 2011 at the Oppenheim Building.

When Oxford relocated local operations from a 900-square-foot office in Archbald to a 7,300-square-foot space at the Oppenheim Building in the summer of 2007, the state offered up to $350,000 in expansion aid.

Oxford had operated in Archbald since 2002 and had 60 employees at the time of the relocation. The company pledged to create 150 additional jobs to meet state requirements for assistance.

Oxford expanded to 100 employees by September 2008, but ceased operations in the spring of 2011.

DCED money

State Sen. John Blake was executive deputy secretary at the Pennsylvania Department of Community and Economic Development when Oxford relocated to Scranton. He said the assistance for the company was approved by the Governor's Action Team, a DCED group of economic development specialists who assist new businesses and expanding companies in Pennsylvania.

Oxford could have received up to $150,000 in state tax credits and $200,000 in job-creation grants if the company created 150 jobs over three years after the relocation, said Mr. Blake, D-22, Archbald.

He attempted to contact DCED on Monday to determine whether the state had initiated action to recover any of the grant money.

"There are provisions in these contracts, that if a company does not perform, to claw back," he said, using a financial and legal term for recovery of revenue through penalty. "Sometimes, we have had to go pretty hard to get money back and we did."

Officials at the Greater Scranton Chamber of Commerce could not recall any direct dealings with Mr. Pinto or Oxford.

Mr. Pinto and his father, Richard, pleaded guilty in May 2012 in Connecticut federal court to wire fraud and conspiracy to commit bank fraud and money laundering.

Debts collected

From January 2007 to March 2011, federal authorities alleged, Oxford collected debts for clients, including the former Washington Mutual Bank and Dell Financial Services, and routinely withheld the collection amounts from their clients. They diverted the money for their own use, authorities charged, and referred internally to the withheld amounts as a client's "backlog."

The Pintos in 2007 also secured a $6 million line of credit through falsified documents from Connecticut-based Webster Bank, authorities alleged, and laundered money from the bank to sustain the fraud scheme against the company's clients.

In addition, the Pintos solicited millions of dollars from investors without disclosing existence of the backlogs, federal officials charged.

Richard Pinto, chairman of the company's board, was sentenced to five years in federal prison in January. He has since died.

Four others have pleaded guilty in the case, including Patrick Pinto, Peter Pinto's brother. The former chief financial officer at Oxford is awaiting sentencing.

Victims lost more than $10 million in the scheme, according to the U.S. attorney's office in Connecticut.