By Nate Raymond
NEW YORK (Reuters) - The owner of a Georgia-based debt collection company was sentenced on Thursday to five years in prison for engaging in what prosecutors said was a scheme to shake down more than 6,000 financially-strapped consumers nationwide into making payments to his firm.
John Williams, who owned Williams, Scott & Associates LLC, was sentenced by U.S. District Judge Richard Sullivan in Manhattan after a federal jury in July found him guilty of conspiring to commit wire fraud.
Sullivan, who also ordered the 50-year-old to pay nearly $4 million in restitution, said Williams participated in a scheme that terrorized consumers by threatening them with arrest if they did not pay up on outstanding debts.
"There is a need to send a message that, 'Hey, this is outrageous,'" he said.
In court, Williams, who will get credit for the two years he has served while in custody, denied wrongdoing. He said the debts his firm sought to collect on were legitimately owed, and he questioned why he was charged criminally unlike others in his field.
"I think it was a personal vendetta," Williams said, without elaboration.
The case spotlighted efforts by U.S. authorities to combat unscrupulous participants involved in debt collection, which the U.S. Consumer Financial Protection Bureau lists as the No. 1 most-complained about area of consumer financial services.
The case was brought by Manhattan U.S. Attorney Preet Bharara's office, which has pursued several prosecutions targeting consumer frauds.
Debt collection firms like Williams' buy delinquent debts, often for just pennies on the dollar, and then try to collect the full amounts owed.
The firms contend they are simply seeking to recoup money owed, but critics say many firms cross the line.
Williams and six of the Norcross, Georgia-based debt collector's employees were arrested in November 2014, six months after the Federal Bureau of Investigation raided the firm and the Federal Trade Commission sued to close it.
Prosecutors said Williams orchestrated a scheme to coerce consumers into paying his company using scare tactics and threats, defrauding 6,000 customers from 2009 to 2014 into paying nearly $4 million.
Prosecutors said employees would call consumers, falsely claim to be detectives or investigators associated with government agencies and warn that arrests were possible if they did not cooperate.
Scripts read by employees used legal language designed to instill fear, including that the "statute of limitations" on the consumers' "civil legal rights" had expired, prosecutors said.
The six employees charged have all pleaded guilty.
The case is U.S. v. Williams, U.S. District Court, Southern District of New York, No. 14-cr-00784.
(Reporting by Nate Raymond in New York, editing by G Crosse)