Feds charge Georgia debt collector Williams, Scott & Associates with fraud

Federal prosecutors in Manhattan Tuesday announced a crackdown on an "epidemic" of abusive debt collection practices as they unveiled charges against a Georgia company that claimed to be a federal agency and threatened people who didn't pay up with arrest.

Williams, Scott & Associates -- calling itself Warrant Services Association -- collected more than $4.1 million from 6,000 people nationwide by saying felony warrants would be "activated," driver's licenses would be suspended, and that "the statute of limitations on your civil legal rights has expired," the charges said.

Manhattan U.S. Attorney Preet Bharara said owner John Todd Williams and six employees, all residents of Georgia, were under arrest and face up to 20 years in prison for conspiracy to commit wire fraud.

He said his office, working with the Federal Trade Commission and consumer groups, planned to bring more cases and was exploring the possible liability of corporations that sell uncollectable debt at a discount to disreputable collectors and then try to look the other way.

"People have been in hard times lately," Bharara said. "There are a lot of Americans that have more debt than they used to have and a lot of people have gotten wise about how to scare them."

Williams, Scott employees, according to the charges, used scripts that had them claim an affiliation with the Justice Department, the U.S. Marshals Service and bogus entities such as the "Federal Government Task Force" and the "DOJ Task Force." Their correspondence sometimes contained the seal of the State Department.

They allegedly fooled people with mumbo-jumbo, claiming they were investigating people who couldn't pay their bills for "Depository Account Fraud" or "theft by deception."

Officials said the scam lasted from sometime in 2009 until May 2014.

The targets, prosecutors said, frequently were people who had taken out so-called payday loans -- high-interest, short-term loans to get an advance on a paycheck -- and they threatened vulnerable people, such as an eight-months-pregnant woman, with arrest.

"I'm not going to go back and forth," a collector allegedly said in a taped call. "I wouldn't care if you were nine months pregnant. I have a job to do here."