Fraudulent Debt Elimination Schemes
The Office of the Comptroller of the
Currency (OCC) is aware that the volume and variety of
fraudulent schemes supposedly designed to “eliminate” debt is
increasing. These schemes are being promoted via the Internet and in seminars throughout the United States. The fraudulent schemes are being marketed to ordinary people, not just the wealthy or sophisticated, including borrowers who are current on their payments and those approaching foreclosure.
The persons perpetrating the fraudulent schemes claim that they can eliminate borrowers’ various types of debt, including mortgages, credit card balances (including balances on cards issued by nonbank companies), student loans, auto loans, and small business loans. The variations on these schemes are endless.
A recent variation includes the
fraudulent use of the OCC’s 3-page Customer Complaint Form
(form). The form is included in the package of documents
provided to the victim, falsely adding another pretense of
legitimacy to the worthless program. The victim is told to sign only the third page of the form, not to date it or complete any other information requested on the form. The date, customer, and financial institution information will be completed by the perpetrators. The form is subsequently completed and filed with the OCC falsely stating that the financial institution has acted improperly with regard to the victim’s account.
These schemes are designed to defraud victims of an up-front fee, which typically ranges from $400 to $7,500. As a result of using a fraudulent scheme, victims could lose money and property, and damage their credit record. In addition, the creditor may take additional legal action against a borrower to resolve a fraudulent attempt to eliminate a borrower’s debt.
A second, extremely harmful, potential
result of participating in any of these illegal schemes is
the theft of a victim’s identity . Based upon the information provided to the perpetrators in a scheme, they may be able to steal a person’s identity and run up substantial new debts before the victim is aware of the theft. Resolving identity theft issues is an extremely difficult and time-consuming matter.
The following are sample variations of
the fraudulent processes used to fool borrowers into paying
money to “eliminate” debt:
·
A phony arbitration award from an
arbitrator not authorized under the debt agreement;
·
The use of a nonexistent “trust account”
supposedly held in a person’s name at the United States
Department of the Treasury or some other part of the federal
government;
·
The substitution of a debt instrument
issued by a company, group, trust, or person for the obligor’s
original note or account at the creditor;
·
The substitution of a fictitious
U.
S.
government debt
instrument, which claims to be payable or authorized by the
United States Department of the Treasury or a related person
or entity, for the obligor’s original note or account at the
creditor;
·
The substitution of a fictitious U. S.
government financial instrument, which references an account
located at the United States Department of the Treasury or
with a related person or entity, for the obligor’s original
note or account at the creditor;
·
The substitution of a fictitious
U. S.
government debt
instrument, which requires an official to authorize or refute
the authenticity of the instrument, for the obligor’s original
note or account at the creditor;
·
A notice to the creditor that the
contract or note is illegal and, therefore, the borrower does
not have to pay the debt and may even be entitled to a
compensatory award; and
·
A notice to the creditor that the
creditor does not have authority to “lend its credit” to the
obligor and has violated the law, and therefore, the borrower
does not have to pay the debt and may even be entitled to a
compensatory award.
These schemes have no substance in law or finance. No
one can eliminate an obligation to pay a debt, simply by
paying someone a small fee, relative to the debt to be
eliminated.
In the guise of educating borrowers,
these schemes provide inaccurate
or distorted information about applicable laws and
finance. Some examples of inaccurate information from these
schemes include the following:
·
Borrowing is a con game whereby a
borrower’s debt is money “created” by and owed to the
borrower.
·
A borrower’s debt is an asset of the
creditor owed to the borrower.
·
Secret information or laws can be used to
eliminate debt.
·
Banks and other creditors do not have the
authority to lend money or issue credit.
·
Three or more persons can set up
individual arbitration companies, create an arbitration award
for a fraction of the debt owed, have the award certified by
the two other companies, and submit the award and payment to
the creditor in satisfaction of the total debt.
Any information that you have concerning
these matters should be brought to the attention of
appropriate local or federal law enforcement.
If the fraudulent scheme is presented via the Internet or
e-mail, contact the Internet Crime Complaint Center (IC3).
Please go to the IC3 Web site at: http://www.ic3.gov and
follow the instructions for filing a complaint. Other sources,
such as individual contacts or seminars, should be reported to
the local office of the Federal Bureau of Investigation or
local financial fraud law enforcement organization. If the
proposal was received via the U.S. Postal Service, please file
a complaint with the U.S. Postal Inspector Service by
telephone at 1-888-877-7644, by mail at U.S. Postal Inspection
Service, 222 S. Riverside Plaza, Suite 1250, Chicago, IL
60606-6100 or via e-mail at http://www.usps.com/postalinspectors/fraud/MailFraudComplaint.htm. |