Did Debt Buyers Fall Victim to One Corrupt Bank Official? Or Is it More?

Patrick Lunsford

The bank official at the center of yesterday’s bribery charges against a debt buyer just happens to be the same executive who late last year pled guilty to accepting bribes from another ARM company. So what’s going on here? Is bribery an unspoken part of the debt collection industry, or did a single corrupt bank officer lure a couple of bad actors into his web?

The story Tuesday of United Credit Recovery (UCR) owner Leonard G. Potillo, III being arrested by Federal law enforcement officers has attracted a lot of attention. And for good reason: the sheer size of the alleged fraud ($76 million) coupled with ripping off other companies within its own industry piqued everyone’s interest.

More is now coming out about the case. In its indictment, the government identifies a former officer at U.S. Bank as “W.T.” This person is accused of accepting more than $1 million in bribe payments from UCR in exchange for inside information and favorable treatment in the auction of debt portfolios. (One part of the indictment states that W.T. received “more than $1 million in bribe payments,” but in the enumeration of individual bribe payments, the total reaches only $214,000, not that the total really matters).

“W.T.” are the initials of a former U.S. Bank officer that pled guilty in November 2013 to accepting some $24,000 in bribes and kickbacks from Oxford Collection Agency run by the Pinto family in a long-running case.

Wilbur Tate, III, an assistant VP at U.S. Bank from January 2004 through February 2011, was in charge of outsourcing collection accounts to collection agencies and selling debt portfolios. For more than two years, Oxford executives engaged in a bribery scheme where they 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.

After his guilty plea in late November, Tate was scheduled to be sentenced in February, but that hearing was postponed and he remains free on bail. He faces up to five years in prison.

Federal officials have not confirmed that Tate was the “W.T.” in Potillo’s indictment unsealed this week, or provided an update on his case involving the Pintos/Oxford. It is reasonable to assume that at some point in the near future, Tate will be charged in the Potillo/UCR case.

Tate pled guilty to just one count of conspiracy to commit bank bribery in the Oxford case, likely the result of negotiations for a plea agreement. Potillo, on the other hand, faces 10 counts of bribery of a bank official, each carrying a potential 30 years in prison. That won’t happen, of course, as Oxford executives got far less time when their sentences were handed out.

Still, it begs the question of why an ARM company would ever engage in bribery. Did Tate exert such influence, or offer the correct value, to make it seem reasonable? Is this a common thing in the ARM industry?

It should be noted that both Oxford and UCR, and its managers, are accused of far more than just bribing Tate. There are some other serious fraud charges against both. So did Tate target companies and executives he thought would be receptive to quid pro quo? Or did the companies see the opening and make the first move?

We’d love to hear from the industry on this. Obviously, we don’t want wild accusations thrown around, so let’s not even go there. But have you heard of schemes similar to this in the past (or present)?