ARM Industry Trade Groups Weigh in on Debt Buyer Sentencing

Last week, a Federal judge in Florida sentenced a former debt buyer to six years in prison for crimes he committed in conjunction with selling debt portfolios he did not own (“Former Debt Buyer Sentenced to Six Years in Prison for Fraud,” Nov. 17).

Steve Goldberg, formerly of debt purchaser Goldberg & Associates, was given a sentence of 71 months after pleading guilty to numerous counts of fraud. He presented for sale debt portfolios that were not his and repeated refused to refund money that he collected for the sales.

While Goldberg’s case was an outlier, questions were raised about the policing efforts of ARM industry trade groups.

Dan Cofall, whose company – NorAm Capital Holdings – alerted authorities to the actions of Goldberg, said, “Our trade organizations should be significantly more vigilant when they screen both new and existing members for criminal backgrounds.  Goldberg had prior convictions, including felonies.”

But DBA International, a trade association for debt buying professionals, noted that they do have such a policy in place.

“Today, any debt purchasers seeking membership in DBA International must agree to a vigorous background check, which includes a criminal background check, prior to being awarded membership,” said Roger Knauf, executive director of DBA.

The organization noted that the policy began in 2006, when DBA came under new management and leadership.

ACA International, the association of credit and collection professionals, also has a policy in place that weeds out potential bad actors. The group said in a statement to insideARM, “applicants for membership must state in writing that they have satisfied all applicable state licensing and regulatory requirements, and are required to disclose if any of the applicant’s owners or officers have been convicted of a crime or found liable in a civil action for actions or inactions that relate to credit or collection industry practices or procedures, including but not limited to: crimes related to the misuse of funds, clients trust accounts, fraud, forgery, embezzlement, tax evasion, identity theft, or other theft or larceny within the past 10 years.”

The rules apply to potential collection agency members as well as members applying to the Asset Buyers Division, ACA’s unit for debt purchasers.

Once ARM professionals are members of the group, ACA said they must play by the rules. “All potential ACA applicants and current ACA Members must agree to abide by and be subject to ACA International’s Code of Ethics and Code of Operations as a condition of membership. We also have an Ethics Committee that can receive and investigate complaints about any ACA Member alleged to have violated the association’s Code of Ethics. Based upon the outcome of its investigation, the ACA Ethics Committee has the authority to levy sanctions against an ACA Member up to and including expulsion from the association,” the organization said.

Knauf noted that the DBA’s policies were sound, but that the members of the organization were the real front line in dealing with fraud between industry professionals.

“DBA will continue to enforce its background check policy to make sure our organization’s members represent the best of our industry,” said Knauf, “In the meantime, we also encourage our members, like NorAm, to vigorously defend our industry, by working with law enforcement to weed out the bad actors who could do our industry damage.”