CEO Accused of Defrauding Student Loan Borrowers Arrested in California
Inside Subprime: Jan 14, 2018
By Grace Austin
A CEO accused of bilking millions from student loan borrowers trying to repay loans has been arrested and charged in California as he attempted to flee the country, according to federal officials.
Brandon Frere is being charged with wire fraud after an almost-yearlong investigation by the U.S. Attorney’s Office into his Northern California-based company and two of his other businesses.
He is accused of defrauding $28 million from thousands of student loan borrowers. Federal authorities say the fraud happened between 2014 and November 2018.
Frere’s woes began in February 2018, when the Federal Trade Commission first filed a civil complaint against him and his companies — alleging tens of thousands of student loan borrowers were duped into paying millions through fees and other charges. It’s part of the FTC’s federal-state law enforcement operation targeting companies committing student loan debt relief fraud.
Frere was caught by federal authorities at the San Francisco International Airport in December 2018 on his way to Cancun, Mexico. He claimed it was merely a weekend abroad. Frere was freed on $3 million bond, but put on house arrest with an ankle monitor. Frere is accused of siphoning millions from the companies to overseas bank accounts before and during the two investigations, something which federal officials argued made him a flight risk.
The Press Democrat reports Frere founded his firm in 2015, and that the business once had hundreds of employees and two locations in northern California.
Former employees claim that Ameritech told struggling student loan borrowers they could help sign them up for federal debt relief, submitting documents to the government on their behalf. Ameritech then charged those borrowers enrollment fees and other charges without helping to reduce their overall loan debt.
The U.S. Attorney’s Office characterized the “complex” scheme as such:
Frere’s companies “allegedly collected advance fees of approximately $600 to $800 per victim, purportedly to prepare and submit documents to enroll consumers in the Public Service Loan Forgiveness program, income-driven repayment program, and other alternative repayment plans with the U.S. Department of Education. Frere… also allegedly collected enrollment fees ranging from $100 to $1,200, as well as monthly fees ranging from $49 to $99 for a so-called financial education membership program.”
Employees would tell borrowers that all or some of the “financial education membership program” fees would go to their outstanding balances, which was false. Federal officials also say those employees encouraged borrowers to lie about their family size so they could be enrolled in programs they wouldn’t otherwise be eligible for.
Now, as Frere’s case continues, authorities are warning against student loan debt relief scammers. And unfortunately, as the student loan crisis continues to grow, debt relief scam artists that claim they can help struggling borrowers are most likely to carry on.
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