Bank Fabrication and Fraud Causes Rise of New “Industry” — Phantom Debt

It was inevitable that smaller players would seize upon the “irresistible” opportunity to create or sell phantom debt. With the justice system lining up to approve the practice of stealing debt owned by investors and claiming the right to collect, it did not take a genius to come up with a plan to invent the right to collect debts that never existed.

It also didn’t take a genius to realize that that if you could pretend to be a servicer or collector of a real debt, it was just as easy to skip the part about real debt.

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Hat tip to Eric Mains

see Therrien


systematic schemes to collect on fake debts started only about five years ago. It begins when someone scoops up troves of personal information that are available cheaply online—old loan applications, long-expired obligations, data from hacked accounts—and reformats it to look like a list of debts. Then they make deals with unscrupulous collectors who will demand repayment of the fictitious bills. Their targets are often poor and likely to already be getting confusing calls about other loans. The harassment usually doesn’t work, but some marks are convinced that because the collectors know so much, the debt must be real.

Phantom debt actually falls into multiple categories all sharing the same fundamental characteristic — there is no right to collect it. The debt might be entirely fictional, partially fictional, or real. The parties seeking to collect on it are either real debt collectors or just scam artists. The owners of the debt have been left in the dust. They are investors who were defrauded and who are being silenced by confidential settlements.

So a small cottage industry has emerged out of the cancerous great mortgage fraud. To make money you merely need to get a list of people and then send out collection notices. Those collection notices look pretty frightening until you scratch the surface.

In the end, it comes down to the same thing we have been facing in wrongful foreclosures (which means virtually all foreclosures). The foreclosing parties are no more than the same scam artist fake debt collectors that has rippled through the financial industry.

They don’t own the debt because they never paid for it either by lending money nor by paying for the debt afterwards. Fake documents are used to paper over the obvious defective nature of their claims. The money collected is never used to forward or pay to the real victims — investors who put up the money in the first place.

All this became possible because the justice system discarded the rule of law. Had it simply stayed consistent with existing case law and statutes, virtually none of the foreclosures would have happened, and the new industry of fraudulent collections would have been limited to just a few scam artists who ended up in jail.

Back when dinosaurs roamed the Earth and I was doing foreclosures for banks and homeowners associations, I can remember judges denying me a final judgment and sending me back to the drawing board because my paperwork was incomplete and therefore “not in order.” Every judge in the country was doing that whether the case was contested or not. The Judge reviewed the documents and if the dots were not connected they threw it back at the lawyer.

What happened to that?

3 Responses

  1. Reblogged this on California freelance paralegal and commented:
    This article is both outrageous and inspirational. Andrew Therrien decided to fight back and he made a difference. More people need to start doing that.

  2. SOS–fake debt collectors collecting fake debt.

  3. Unparalleled sinful greed on a magnitude that has doomed mankind!!

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