A former collection manager for now-defunct Washington Mutual Bank has pleaded guilty to receiving kickbacks while he was working for the bank.
As per a Department of Justice (DOJ) press release, Michael Gesimondo, 57, of Farmingdale, N.Y., waived his right to indictment and pleaded guilty on Jan. 10 to one count of conspiracy to accept money as a reward in connection with a business transaction of a bank.
Gesimondo, who is scheduled for sentencing on April 4, faces up to five years in prison.
According to court documents and statements made in court, Oxford Collection Agency was a private financial services company that engaged in accounts receivables management, primarily debt collecting, with offices in New York, Pennsylvania and Florida. Between 2007 and 2011, Oxford Collection Agency executives engaged in a multi-year scheme to defraud its lender, investors and clients. The investigation also revealed that Oxford Collection Agency was actively involved in bribing bank officials.
According to the DOJ, while Gesimondo was employed at Washington Mutual, he was in charge of outsourcing collection accounts to collection agencies. The bank had contracted with the Oxford Collection Agency to collect debts owed to it by consumers.
Officials allege that between May 2008 and May 2009, Gesimondo received kickbacks from Oxford Collection Agency as a reward for providing the agency with the bank's debt collection business, often providing Gesimondo with a percentage of the collected debt amount.
Washington Mutual Bank was closed by federal regulators in Sept. 2008. and its assets were sold off to JPMorgan Chase, which received funds through the Troubled Asset Relief Program (TARP). The bank has since repaid the funds.
According to the release, seven other individuals have been convicted as a result of the investigation and prosecution of criminal activity arising from Oxford Collection Agency and the debt collection industry.
The ongoing investigation is being conducted by the Internal Revenue Service – Criminal Investigation; the Federal Bureau of Investigation; the Special Inspector General for the Troubled Asset Relief Program; and the Connecticut Securities, Commodities and Investor Fraud Task Force.