United States v. Steven Goldberg: A Debt Buyer Ripping off other Debt Buyers and selling debt accounts he didnt own

United States v. Steven Goldberg

Summary of Case:

In 2007, Steven Goldberg, manager of Goldberg and Associates, LLC in Florida, was involved in the business of debt collection, specifically buying and selling portfolios of charged off consumer debt. Goldberg made an agreement with Sherman Capital Markets, Inc. and Old National Bank to buy from each of them a portfolio of consumer debt.  Both Sherman Capital Markets and Old National Bank received agreements with Goldberg to buy the debt and sent Goldberg the debt accounts.  What they basically sent over is typically of the industry and is usually nothing more elaborate than an excel spreadsheet with a list of consumer names, telephone numbers, addresses, charged off/delinquent balances, etc.  But Goldberg did not pay either Sherman Capital Markets or Old National Bank for the debt accounts they had sent him.  He turned around and resold those accounts to other debt buyers and received approximately $1,200,000.00 and purchased a fancy home in Boca Raton, Florida.  Since he didn’t complete the agreement and fulfill his obligation to pay for the accounts he had acquired from Sherman Capital Markets and Old National Bank, he had no rights, title or interest to the debt to sell it in the first place.

The criminal case against Steven David Goldberg is: United States of America vs. Steven David Goldberg, Case No. 9:09-80030-CR-MARRA-l, United States District Court, Southern District of Florida.  

 

THE DETAILS OF GOLDBERG’S DEBT BUYER FRAUD BONANZA

In December 2007, Steven David Goldberg was the manager of Goldberg & Associates, LLC, a Florida corporation with its principal place of business and mailing address listed as 102 N.E. 2nd Street, #387, Boca Raton, Florida 33432.  Goldberg & Associates, LLC was a debt seller that specialized in the acquisition and sale of distressed assets and traditional and non-traditional investment opportunities. The distressed asset industry is based on investors purchasing nonpaying receivable accounts that have been charged off by the credit issuer for pennies on the dollar and then converting these nonpaying receivable accounts into paying accounts with the goal of making a profit over and above the purchase price.

General Electric Capital (“G.E.”) was a corporation with its principal place of business and mailing address listed as 3135 Easton Turnpike, Fairfield, Connecticut, 06828. G.E. was a financial institution that specialized in originating consumer debt accounts, including credit card accounts, in the United States and elsewhere. G.E. owned a portfolio of consumer debt accounts. General Electric Capital (“G.E.”), a financial institution that specialized in originating consumer debt accounts, including credit card accounts owned a portfolio of consumer debt accounts.  G.E. contracted with Sherman Capital Markets, Inc, a debt buyer and reseller company located at 200 Meeting Street, Suite #206, Charleston, South Carolina, to sell a portion of its debt portfolio that contained account files that included G.E. credit card accounts.   (Sherman is also entwined with the debt buyer entity which frequently sues consumers and reports to their credit reports as LVNV Funding)

Sherman Capital Markets, Inc., after purchasing and receiving ownership of these accounts from G.E., contracted with Goldberg in his capacity as manager of Goldberg & Associates to sell a portion of that G.E. debt portfolio that contained 84,736 account files for approximately $10,923,212.68.  Steven Goldberg agreed to pay the $10,923,212.68 fee for the 84,736 account files in the G.E. portfolio and as part of that agreement was to pay Sherman Acquisition, LLC, a subsidiary of Sherman Capital Markets, via wire transfer of funds for those accounts.  Sherman Capital Markets, Inc. sent Goldberg the accounts files for the G.E. debt portfolio in an unencrypted and unredacted condition pending the clearance of Goldberg’s wire transfer of $10,923,212.68.  Despite receiving the account files from Sherman Capital Markets, Inc, Goldberg never sent the wire transfer of $10,923,212.68 and thus he never actually owned these accounts.

Old National Bank of Evansville, Indiana, owned a portfolio of auto debt accounts. Through a debt portfolio broker, Old National Bank contracted with Goldberg of Goldberg & Associates, LLC to sell a portion of the Old National Bank debt portfolio that contained 1,318 auto debt accounts for approximately $300,000. Goldberg agreed to pay $300,000 for the accounts via wire transfer.  Old National Bank, through the broker, sent Goldberg the debt portfolio in an unencrypted and unredacted condition pending Goldberg’s wire transfer of $300,000. Despite receiving the account files from Old National Bank, Goldberg never sent the wire transfer of $300,000 and thus he never actually owned these accounts.

Goldberg never paid for those two debt portfolios, the G.E. debt portfolio of 84,736 account files and the Old National Bank auto debt portfolio of 1,318 auto debt accounts.  Despite the fact that he did not actually own the accounts because he did not finish the deal by paying for them, he hired a debt portfolio broker to begin breaking up and selling off these accounts to other debt buyers. In December 2007, he hired Phillip Duff, of Oakley – Duff Group, Inc. d/b/a Lighthouse Consulting and Asset Management, Inc. to broker the sale of the G.E. debt portfolio accounts that he did not own by breaking the portfolio up and selling sets to  five other debt buyers.  He gave Phillip Duff a copy of the sales agreement between Goldberg & Associates and Sherman Capital Markets, Inc. and after brokering these five sales of the G.E. debt portfolio, he sent to each purchaser a file in an encrypted or redacted condition in order to prevent the purchaser from gaining full access to the files.

Goldberg & Associates, through Phillip Duff, entered into an agreement to sell New Century Financial Services, Inc. located in Whippany, New Jersey a subset of the G.E. debt portfolio, which included approximately 1,370 account files for which New Century Financial Services, Inc. wired Goldberg $196,471.33 on  December 5, 2007.

Goldberg & Associates, through Phillip Duff, entered into an agreement to sell NEIA Finance Company, LLC located in Omaha, Nebraska a subset of the G.E. debt portfolio, which included approximately 400 debt account files for which NEIA Finance Company, LLC wired Goldberg $81 ,466.29 on December 6, 2007.

Goldberg & Associates, through Phillip Duff, entered into an agreement to sell American Acceptance Company, LLC of Merrillville, Indiana of a subset of the G.E. debt portfolio, which included approximately 1,300 debt account files for which American Acceptance Company, LLC wired Goldberg two payments each being $101,332.62 around December 26, 2007.

Goldberg & Associates, through Phillip Duff, entered into an agreement to sell Water Street Financial, Inc. of Timonium, Maryland a subset of the G.E. debt portfolio, which included approximately 1,200 debt accounts for which Water Street Financial, Inc wired Goldberg $144,658.24 on December 10, 2007.

Goldberg & Associates, through Phillip Duff, entered into an agreement to sell HEK Acceptance, Inc., a.k.a Goodman & Poeszat, LLC located in Southfield, Michigan of a subset of the G.E. debt portfolio, which included 6,521 debt accounts for which HEK Acceptance, Inc. wired Goldberg $130,652.47 on December 11, 2007.

Goldberg & Associates, through a debt portfolio broker, entered into an agreement to sell NorAm Capital Holdings located in Corinth, Texas a subset of the Old National Bank debt portfolio that included approximately 1,318 account files for which NorAm wired Goldberg $431 ,229 on December 17, 2007.

According to page 9 of NorAm Capital Holdings SEC Filing,

In December 2007, the Company and Goldberg LLC signed an Account Purchase Agreement whereby the Company would purchase portfolios of charged off automobile loans from Goldberg LLC that were originated by a commercial bank.  The Company wired Goldberg LLC the purchase price of approximately $431,000 for these portfolios.  The Company then resold the portfolios to another buyer.  In January 2008 the Company learned that Goldberg LLC did not have title to the accounts at the time of the purported “sale” to the Company, and the originating bank still owned the accounts.  The Company rescinded the transaction with its buyer and refunded the buyer’s payment received by the Company.  The Company made demand on Goldberg LLC for the immediate return of the funds that the Company wired to Goldberg LLC, but such funds were not immediately repaid.  On January 22, 2008, the Company brought suit against Goldberg LLC and Steven Goldberg, individually, seeking compensatory damages and an equitable lien and constructive trust against real estate owned by Goldberg LLC.  On January 30, 2008 Goldberg LLC and Steven Goldberg individually signed a promissory note in the principal amount of $439,000 (the “Goldberg Note”) in favor of the Company with a maturity date of February 5, 2008, and Goldberg LLC signed a mortgage on certain real estate to secure the Goldberg Note.  As of the date of filing of this 10QSB report, the Goldberg Note remains outstanding, and the Company is continuing its efforts to collect the note.

By selling the debt accounts for which he did not own, Goldberg received received approximately $1,200,000.00 and purchased property located at 2001 Coconut Road, Boca Raton, Florida.

 

THE RESULT

Steven Goldberg plead guilty to Wire Fraud 18 U.S.C. §§ 1343 and 2 and Mail Fraud 18 U.S.C. §§ 1341 and 2 on August 14, 2009 and was sentenced to 71 months in federal prison.  He also faced several civil lawsuits from the debt buyers he defrauded.

 

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