Debt Collector Accused of Scamming Credit Unions Loses Appeal
Charles V. Stanley remains in jail after allegedly committing more debt collection crimes while out on bail.
The U. S. Court of Appeals for the Ninth Circuit in Sacramento last week upheld a district court judge’s decision to keep Charles V. Stanley Jr., 64, of Los Angeles in jail after prosecutors determined he allegedly committed additional debt collection crimes while he was free on bail.
Stanley was the owner of a Creditor Specialty Service Inc., an Acton, Calif.-based debt collection company. Credit unions and other businesses contracted with CSS to collect debts from members and customers.
CSS filed for Chapter 7 bankruptcy in 2016. According to court documents, 31 individuals, business and organizations, including seven credit unions, have made more than $20 million in monetary claims against CSS. Of that total, the credit unions have made $19,115,688 in monetary claims,
Beginning in January 2012 and continuing through August 2016, Stanley allegedly directed CSS employees to collect money from debtors while under-reporting the amounts collected, according to the indictment. He allegedly diverted some of the under-reported funds to pay personal expenses and other clients, continued to collect money from debtors of one credit union even after it terminated its contract with CSS, and filed lawsuits or settled with debtors without required client authorization.
He was indicted last June and pleaded not guilty to 14 felony counts of bank fraud, wire fraud, mail fraud and conspiracy to commit bank, wire and mail fraud. He posted a $250,000 bond and was released under special conditions. Some of those conditions required Stanley to have no role in the debt collection field and that he not use or possess any identification, mail matter, access device of any identification related materials. Another condition required Stanley not to commit a federal, state or local crime.
According to federal prosecutors, Stanley violated conditions of his release by using a defunct law firm and opened a bank account in its name to collect fees for old debt funds collected by the law firm that Stanley knew were being held by the Sacramento County Sheriff’s Department. The defunct law firm used to represent creditors in wage garnishment actions, some of which were paid to the sheriff’s department, Stanley was the only signatory on the bank account, which he opened just three months before he was indicted. .
Last summer while he was on release, Stanley submitted at least 77 claim forms via the U.S. mail to the sheriff’s department claiming the law firm never received its payment of fees for collecting these debts. Stanley received more than $7,000. Federal prosecutors allege Stanley made 77 false statements to obtain money and he committed mail fraud.
After a federal district judge revoked Stanley’s release and ordered his detention in February, the former debt collector’s appeal was turned down last week and he remains in prison.
The credit unions and their monetary claims filed against CSS are the $2.5 billion Provident CU in Redwood City, Calif., ($8,036,331); the $773 million Silver State Schools CU in Las Vegas, ($66,715); the $3.3 billion Chevron FCU in Oakland, Calif., ($5,983,735); the $629 million Safe 1 CU in Bakersfield, Calif., ($786,322); the $360 million Sea West Coast Guard FCU in Oakland, Calif., ($3,257,374); the $72 million American Lake Credit Union in Lakewood, Wash., ($13,250); and the $2.7 billion SAFE CU in Folsom, Calif. ($971,961).
The $4.3 billion Redwood Credit Union in Santa Rosa, Calif. also has filed lawsuits against CSS in bankruptcy court, but it has not made any monetary claims against the debt collector, according to publicly available federal court documents.
Stanley’s jury trial is scheduled for September.