California man pleads guilty in $65M student loan scam
SAN FRANCISCO (AP) — A California man who bilked people out of up to $65 million by using deceptive sales tactics to enroll them in a student loan relief service pleaded guilty Friday to federal charges, prosecutors said.
Brandon Frere, 42, of Sonoma County, entered pleas to wire fraud and money laundering.
Frere ran three companies out of Rhonert Park, north of San Francisco. They were Ameritech Financial, American Financial Benefits Center and the Financial Education Benefits Center.
Between 2014 and November 2018, the firms offered to do the paperwork for borrowers who wanted to apply for federal student loan reduction and forgiveness programs, according to Frere’s plea agreement cited in a statement from the U.S. attorney’s office.
But when the companies sold document preparation services, they also sold customers a supposedly optional “financial education benefits program” that included services such as identity theft protection and roadside assistance, prosecutors said. That program cost up to $99 a month.
“Frere admitted he instructed his employees to follow misleading sales scripts and to employ deceptive sales tactics so that people would enroll for services without fully understanding what they were paying for,” the U.S. attorney’s office said.
For example, Frere hid the fees for the benefits program to make it seem the cost was included in the document preparation services, prosecutors said.
Frere acknowledged that the losses from the scheme totaled at least $25 million and up to $65 million, according to the U.S. attorney’s office, which said Frere also acknowledged hiding some proceeds by stashing them in overseas bank accounts.
The U.S. Federal Trade Commission sued Frere and his companies last year in federal court in Oakland.
Frere was arrested on Dec. 5, 2018, at San Francisco International Airport as he tried to board a flight Mexico, authorities said.
Frere is free on bond pending sentencing next March, when he could face up to 20 years in prison for each criminal count and some $500,000 or more in fines.