SAN FRANCISCO (KGO) -- Thousands of consumers, many of them here in the Bay Area, say Ameritech Financial, a student loan debt repayment company took their money and pushed them further into debt.
On Friday, the Sonoma County CEO of that company, Brandon Frere, pleaded guilty to wire fraud and money laundering charges.
Frere owned and operated three companies-American Financial Benefits Center (AFBC), the Financial Education Benefits Center (FEBC), and Ameritech Financial (Ameritech); all based in Rohnert Park, California.
According to his plea agreement, between January of 2014 and November of 2018, Frere used the companies to market student loan document preparation services for borrowers who wished to apply for programs through the Department of Education.
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Frere targeted potential customers who were seeking federal loan forgiveness, loan consolidation, and reduced-payment programs. When Frere's companies sold consumers "document preparation" services, they also sold them a purportedly optional membership in a "financial education benefits program." The so-called benefits program provided the opportunity to customers to sign up for services such as LifeLock identity theft protection and roadside assistance.
Last December, Frere was arrested at San Francisco International Airport attempting to leave the country. As part of his plea agreement, he admitted he instructed his employees to follow misleading sales scripts so that people wouldn't fully understand what they were paying for.
The US Attorney's Office says that Frere "instructed his employees (1) to make false statements concerning the companies' ability to deliver fixed payments for the life of student loans and loan forgiveness under alternative repayment plans; (2) to engage in enrollment practices that improperly inflated a consumers' family size to reduce their prospective payments under federal alternative repayment plans (and therefore make it appear to the consumer that their monthly payments would be lower than what they would have been if the family size were not inflated); and (3) to hide the monthly fees that consumers would pay for a purportedly optional financial education benefits program while leading victims to believe that the benefits program was already included in the document preparation service. Frere admitted for the purposes of sentencing that the amount of losses attributable to his scheme was no less than $25,000,000 and up to $65,000,000."
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"Frere also admitted that in order to conceal the proceeds of his wire fraud scheme, in 2015, he began transferring to overseas bank accounts that he controlled large sums of the funds that he had received through the scheme. He continued this process in August 2017, after he became involved in litigation with the Federal Trade Commission ("FTC") and became concerned the FTC or a court might be able to seize the proceeds of his fraud. The FTC filed a civil complaint in February 2018 against Frere and his companies in federal court in Oakland," the US Attorney's Office writes.
Victims ABC7 News previously spoke with said they believed they were consolidating their student loan debt and receiving federal loan forgiveness. In actuality they were paying for document preparation services and a financial education benefits program. They later discovered they were further in debt because they had stopped making payments on their student loans.
Frere is free on bond. His sentencing is scheduled for March. He faces a maximum 20 years in prison for each count. He also faces fines and could be ordered to pay restitution to the victims. The Federal Trade Commission also has a pending case against Frere.
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Ameritech Financial CEO Brandon Frere pleads guilty to wire fraud, money laundering