Officials Say Debt Collectors Used Fake Subpoenas

ERIE, Pa. (Nov. 9) -- Authorities here are investigating a debt-collection company that allegedly used fake sheriff's deputies to deliver phony subpoenas ordering victims to appear in a bogus courtroom, where they were ordered to pay up.

"I've never seen anything like it," Erie County Chief Deputy Sheriff Jon Habursky told AOL News. "You are talking about educated people [who] allegedly concocted this mock courtroom, had a judge in a black robe [make] these judgments and forced these people to pay money that they didn't have."

Pennsylvania Attorney General Tom Corbett launched the initial investigation into the case after his office's Bureau of Consumer Protection received complaints against Unicredit America Inc.

According to a civil lawsuit filed by Corbett's office, Unicredit violated Pennsylvania's Consumer Protection Law and the Fair Debt Collection Practices Act, and also failed to comply with state and Erie County court rules governing the extraction of payments from consumers.

The agency, the lawsuit alleges, used deceptive tactics, including issuing phony subpoenas to summon victims to fictitious court proceedings, which were held inside Unicredit's Erie office.

"This is an unconscionable attempt to use fake court proceedings to deceive, mislead or frighten consumers into making payments or surrendering valuables to Unicredit without following lawful procedures for debt collection," Corbett said in a press release.

"Consumers also allegedly received dubious 'hearing notices' and letters -- often hand-delivered by individuals who appear to be sheriff's deputies -- which implied they would be taken into custody by the sheriff if they failed to appear at the phony court for 'hearings' or 'depositions,' " Corbett said.

The fake courtroom that Unicredit allegedly used contained furniture and decorations similar to those used in actual court offices. The room included a raised "bench" area where a judge would be seated; two tables and chairs in front of the bench for attorneys and defendants; a simulated witness stand; seating for spectators; and legal books on bookshelves, Corbett said.

Corbett's office further alleges that during some of the proceedings, an individual dressed in black was seated where observers would expect to see a judge.

"[It] looked like a court [room]," Nils Frederiksen, a spokesman for the attorney general's office, told AOL News. "Actually, it looked better than most district justice courtrooms in Pennsylvania."

According to the lawsuit, the fictitious court proceedings were used to intimidate consumers into "providing access to bank accounts, making immediate payments or surrendering vehicle titles and other assets."

Erie lawyer Larry D'Ambrosio, 78, is accused of orchestrating the hearings held in the mock courtroom, the Erie Times-News reported.

The investigation into the case was launched after Northwest Legal Services noticed a pattern of unusual debt collection practices.

"Based on what we learned, we advised them to file complaints with the attorney general's office," NLS staff attorney Andrea Amicangelo told AOL News.

Amicangelo declined to comment further, citing attorney-client privilege.

The lawsuit filed by the attorney general's office seeks restitution for all consumers harmed by Unicredit's allegedly unfair trade practices, along with civil penalties of up to $1,000 for each violation or up to $3,000 for each violation involving a victim age 60 or older.

Additionally, the lawsuit asks the court to prohibit Unicredit from conducting any debt collection or asset recovery in Pennsylvania until all consumer restitution and penalties have been paid.

According to Frederiksen, a hearing on the attorney general's application for a preliminary injunction against Unicredit was held in an Erie County courtroom last week.

During the court proceeding, Judge Michael E. Dunlavey examined a letter that D'Ambrosio had allegedly sent to an individual who had failed to respond to a subpoena from Unicredit.

"I shall have no alternative but to request from the Court of Common Pleas of Erie County to have the Sheriff attach you personally for your appearance before the Judge to answer to the Court for your disobeying the Subpoena [that was] issued by the Prothonotary and lawfully served upon you," the letter read. "You have attempted to flout the law; therefore, you must face the consequences. See me immediately."

Upon reading the letter, Dunlavey told D'Ambrosio he was prohibited from sending out similar letters.

"I can tell you one thing," Dunlavey said to D'Ambrosio, according to the Times-News. "You better not send another letter like that again. I'm ordering you not to do it."

At the conclusion of the hearing, Dunlavey ordered Unicredit to cease and desist from all post-judgment debt collection activities and to disclose financial and business records. The company was also ordered to stop all activities related to the alleged courtroom and to dismantle the facility within 30 days, Frederiksen said.

D'Ambrosio did not return calls for comment from AOL News today. Speaking with the Times-News last week, D'Ambrosio denied holding phony hearings and said that he followed rules of civil procedure.

"It's much ado about nothing," D'Ambrosio told the newspaper, adding that he thought Corbett was pursuing the case for political purposes.

Since last week's hearing, Dunlavey has ordered D'Ambrosio and others connected to Unicredit America to appear at a contempt hearing scheduled to take place Wednesday. The Times-News has speculated that D'Ambrosio's statements to the media prompted the hearing.

Krista Ott, the attorney representing Unicredit, told AOL News she had "no comment" on the case. Unicredit President Mike Covatto did not return calls for comment.

Jim Parsons, a reporter for Pittsburgh's WTAE News Channel 4, contacted Covatto last week and asked to look at the "fake courtroom." Covatto declined the request.

"First of all, that's an allegation that supposedly someone said, so talk to the attorneys," Covatto said. "You guys have a nice day. That's all I got to say."

Kenneth R. Hiller, a consumer protection attorney from Amherst, N.Y., says he has never heard of another case in which a debt collection company has been accused of setting up a fake courtroom. He has, however, seen cases in which debt collectors threatened to have debtors arrested if they fail to pay their debt.

"I have had cases where debt collectors have left messages on answering machines saying they were calling from the judge's office about a debt, and I've also seen fake summons," Hiller said. "I had a case where a couple was called by a debt collector [and told] they had to pay a debt or the sheriff would be at their house. They believed it ... [but], of course, it never happened. Those sorts of threats are not unheard of."

The attorney general's office is examining 370 judgments that Unicredit secured against Erie County residents. Frederiksen said that since news of the court case has spread, the number of complaints against the company has risen significantly,

"The work of identifying the total number of victims is ongoing," Frederiksen said. "We also have communications with the sheriff's office and the Erie County District Attorney's Office."

Erie County District Attorney Jack Daneri did not return calls for comment from AOL News today.

According to Habursky, his agency is still investigating the allegations that Unicredit used fake sheriff's deputies to deliver fake subpoenas to debtors.

"I am working in conjunction with the district attorney's office to look at the criminal sanctions," Habursky said. "We individually interviewed all our deputy sheriffs and nobody has any connection to this operation. ... Our people drive marked cars with lights on them. They are in full uniform [and] they have proper identification, so this is obviously someone [who] thought they could get away with something."

Habursky added, "By looking at this complaint, it looks like they preyed on the elderly [and] the sickly, which is extremely sad. They are impressionable [and] they are scared. ... People think, 'If I don't comply with this order they may put me in jail,' and I think that is why the term 'sheriff' was used as opposed to anything else. These victims just assumed [the people] were sheriffs and were [operating] under the scope of law enforcement."

No criminal charges have been filed against Unicredit regarding the allegations that it used a fake courtroom. The investigation by the Sheriff's Department is still in its preliminary stages, but Habursky says his agency is considering charges.

"Impersonating a law enforcement official would be one thing. ... [Another] could be unlawful entry," Habursky said. "From what I understand, they took inventory of valuables that they could seize if the debt wasn't taken care of, which does not follow the Pennsylvania rules of civil procedure at all."

Meanwhile, Frederiksen said the allegations in the case are unique.

"We have never seen anything like this before, and truthfully I am not aware that anybody else in the country has seen anything like this before," Frederiksen said.