Brandon Frere identified as an “entrepreneur, leader, revolutionary and consumer advocate” in social media he crafted for an unassuming public. Capitalizing on an otherwise upstanding reputation, his student loan debt relief enterprise appeared to be the product of grandeur, dedication and drive. Frere may very well possess these attributes, but it’s clear his business ambitions were self-serving to the point of illicit.
Frere, a former Rohnert Park CEO, was convicted and sentenced in 2020 to 42 months in prison for orchestrating a fraudulent student loan debt relief. Through an elaborate corporate façade involving three companies established between 2011-2015: American Financial Benefits Center, The Financial Education Benefits Center, and Ameritech Financial.
Although this was neither the first student loan scam nor the last, the size and scope of the scandal—and the collateral damage incurred by the fall of Frere’s fraudulent empire—sent shock waves not only through the community Frere was once a valued member of, but the nation.
From three company headquarters triangulating Rohnert Park, Frere took advantage of more than 40,000 consumers nationwide, amounting to an embezzled sum estimated to be between $25 million and $65 million. Beyond the financial scope, the collateral damage caused by this act is intangible. Frere targeted a highly vulnerable demographic. His customers primarily sought federal loan forgiveness, consolidation and reduced-payment programs.
According to Bognanno, an FBI agent on the case, “Frere targeted recipients of federal student loans who were often struggling to make payments and devised a scheme to steal millions of dollars from them for the benefit of himself and his family members.”
He did so by marketing himself as a role model for entrepreneurs and individuals seeking to move up in their lives and spouted his own experience with the student loan system as his primary inspiration in starting his enterprise. A 2018 PR newswire article about Frere’s “debt relief programs” stated, “His knowledge of the often confusing landscape of student loan repayment became a vital theme in his future endeavors, and he now uses those experiences to help guide others through the daunting process of applying for available federal repayment and loan forgiveness programs.”
Had his efforts been legitimate, he might well have become “a guide.” Instead, he abused both his understanding of the perceived complexity of federal repayment and the vulnerability felt by individuals in debt.
Financial setbacks—and abuses—do more than damage credit. Although a number is often assigned to financial crimes (in terms of how many dollars were lost), this fails to encompass the complete value of those funds to the lives of the individuals working hard to make ends meet. Debt loan scams not only damage credit but strip victims of opportunities they might have had in the future. Financial abuse hinders an individual’s capacity to create a savings safety net, build an emergency fund, pay rent or buy a home, provide for oneself and possible dependents and prepare for children’s college education.
Crime and punishment
Once the FTC filed a civil consumer fraud lawsuit in February 2018 alleging that Frere embezzled an estimated $28 million from victims between 2014-2018, it was a downhill slide. On November 29, U.S. District Judge Saundra Brown Armstrong of Oakland, following up on the civil case the Federal Trade Commission opened in February, would issue a preliminary injunction. According to an article by Bay City News, this would ban “Frere and his companies from offering debt relief services, collecting fees or taking control of any assets.” After being told of the injunction, Frere purportedly shifted $400,000 from his three companies to private accounts belonging to him, his family and lawyers a mere 45 minutes prior to the injunction. It appeared Frere was creating an asset protection program prior to an attempted exit from the country. In less than three weeks, Frere was intercepted on December 5, 2018, at SFO while boarding a flight to Cancun, Mexico. According to the United States Department of Justice, he was believed to have been fleeing the country because of an alleged $7 million he deposited into overseas accounts in Andorra and Luxembourg. Ultimately, Frere pleaded guilty to charges of wire fraud and one count of money laundering. He was convicted on October 1, 2019.
According to the U.S. Department of Justice, “Frere formulated, directed, controlled, and participated in the operations of the following companies: American Financial Benefits Center (AFBC), Ameritech Financial (Ameritech), and Financial Education Benefits Center (FEBC), which were registered as California Corporations on February 11, 2011, October 28, 2015, and October 30, 2015, respectively.” Frere was sentenced to 42 months with supervision upon release and forced to read the impact statements of all those he conned.
It took two years of investigation and court proceedings to convict Frere in 2020.
Great scammers think alike
The situation prompts the question: is Frere an outlier or is the landscape of loans and debt relief growing more dangerous? Looking at nationwide cases, there is not only an alarming frequency but consistency between the cases—even if the scales differ. It may well be worth walking and revisiting the crime to alert any red flags lurking in scams that have yet to be caught.
Reviewing the evidence prevalent in the Frere case, his antics mirror disturbing motifs with other debt relief scammers. Was he a mastermind or a morally bankrupt opportunist? Among the comparable elements between the Frere fraud and others is a reliance on domestic corporate structures acting in concert, pocketing profits in international accounts (beyond U.S. jurisdiction), and a false promise—often that’s too good to be true.
One eerily similar crime was committed by a company called “Student Debt Doctor” beneath the ownership and direction of Gary B. White, Jr. He was sued by the Federal Trade Commission (FTC) in 2017. According to the FTC, “the company tricked consumers into believing they could receive immediate relief from monthly loan payments and complete loan forgiveness in return for a large, upfront fee.” Ultimately, the FTC issued “22,817 checks totaling more than $2 million to borrowers” to alleviate some of the financial damage inflicted on victims of the crime. He, like Brandon Frere, was officially banned from providing debt relief services in 2018.
In another case, Frank Gebase, Jr. purportedly stole $240,000 from borrowers’ bank accounts via a string of unauthorized charges, according to the Consumer Financial Protection Bureau (CFPB). His tactic was to hijack the database of a previous scammer that the CFPB shut down six years before. The rebooted enterprise was shut down on April 5, 2017, and Gebase was fined $175,000, which went directly to the victims’ relief fund.
Maximus is regarded as the largest student loan debt company. The former federal government student loan contractor was brought to its knees on October 21, 2021, after a lawsuit by the National Consumer Law Center. Most of the 8 million Americans (whose loans are valued at $800 million) with student accounts managed via Maximus never knew the name of the multi-billion dollar publicly traded corporation—only that they were paying back federal student loans. According to the Student Borrower Protection Center, “Maximus is a different kind of student loan servicer…because it operates as if it were the U.S. Department of Education.” In this situation, both the federal government and borrowers were conned, with the borrowers bearing the bulk of the burden.
It is estimated that Maximus scammed millions of individuals by operating without transparency and conducting business as though it were a part of the federal government when, in fact, it is a massive corporation. According to the Student Borrower Protection center, “The victims of Maximus’ abuses are borrowers hit hardest by the student debt crisis—defrauded by for-profit schools, denied debt relief by the Trump Administration, and now cheated out of their last dollar by a rogue government contractor.”
The Maximus scandal crested in 2020, coinciding with the pandemic, another source of extreme financial hardship. It also gave rise to renewed energy and attention not only to victims of student loan relief fraud but also to student loan seekers in general. Given President Biden’s recent announcement to forgive $500 billion in student loan debt, education financing structures have been called to the forefront of dialogue more than ever before.
Prevalence of scams
Research indicates that, although the Frere scandal stands out in scope, student loan debt relief scams are not uncommon. Between 2017-2019, the CFPB handled about 20,600 cases of student debt loan relief fraud. According to the CFPB, between 2020-2021, the bureau “received approximately 835,300 complaints of which approximately 5,300, or roughly 0.6 percent, were related to private or federal student loans.” The next year, complaints attributed to private or federal loans rose to 1.6 percent.
The Brandon Frere case stands out in that he designed his corporate trifecta as a private entity posing to have legitimate contracts with the federal government. There was no previous legitimate entity that was derailed by corruption, a database hijack, nor any shred of legitimacy whatsoever from the outset. Ultimately, Frere’s enterprise was not making payments on the client’s behalf despite the fact that clients were paying into “the system.” Many found themselves further in debt than when they began making payments to Ameritech Financial.
Nationwide, although the absolute number of complaints related to federal student loans decreased between 2020-2021, the percentage of student loan-related complaints dramatically increased post-pandemic. According to CFPB, the jump to 28 percent in 2020 continued to trend upward in 2021 with student loan issues clocking at 36 percent. One way to view this statistic is that authorities are growing more effective at preventing financial abuse and inconvenience in other sectors disproportionately to federal student loan issues. Another view is that those seeking to commit a financially exploitative crime are capitalizing on the rise in borrowers since the onset of the 2020 pandemic.
White collar crimes
It’s possible the Frere case indicates another level of injustice in what the legal system dubs “white collar crimes.” In an America where the wealth gap is rising, does an inability (or unwillingness) to punish wealthy individuals who transgress the financially precarious—even in the 1 to 40,000 ratio presented by this case—corrode the institutional strength of the legal system? For Frere, the $3 million bail was a hurdle easily cleared. Is a few years behind bars (with prospects of early release) comparable to an entire life, let alone tens of thousands? Although the clock cannot be turned back on the Frere scandal, one can move forward with a clearer picture of the landscape of fraud—and the landmines within it.
One should begin by checking a public list of banned debt providers compiled by the FTC identifying individuals and entities forbidden from providing debt relief. This is a great place to start and is continually being updated, but even so, it is not comprehensive. According to the FTC, “it is illegal for debt relief businesses to charge consumers before they help them.” Likewise, loan advice from an intended servicer should be free of charge. So, one should beware of any entity demanding upfront fees.
One should also check to see if an intended provider has complaints launched against them in the CFCB’s public complaint database. The Department of Education has free online resources available to guide borrowers toward the right repayment plan. No loan provider should be offering “exclusive” information that other providers “do not have.”
It’s also important to remember that if a company or entity reaches out to an individual (rather than the indivudal actively seeking their services), they may be trying to create a sense of legitimacy or credibility that is lacking.
If a loan provider shows some of the red flags mentioned above, potential victims can launch a complaint via the CFCB. Victims of fraud may also be eligible for relief services via the CFPB Victim Relief Fund. Additional resources are available via the Project on Predatory Student Lending as well as the Housing and Economic Rights Advocates.
With increasing awareness comes a greater set of resources available to help those who have been preyed upon by financial fraud. Likewise, it’s critical to remember that, although individuals and entities claiming to provide debt relief may (or may not) overtly display the red flags noted above, increasing attention—and scrutiny—is vital. Accountability in the legal realm (combined with awareness amongst debt relief seekers) makes the entire system safer and is the only way to stop the next Brandon Frere, the next Frank Gebase, Jr., or the next Maximus from wreaking havoc on individuals trying to make ends meet.
Pinning down Brandon Frere
February 11, 2011: Established the Financial Education Benefits Center (FEBC)
October 28, 2015: Established Ameritech Financial (Ameritech)
October 30, 2015: Established American Financial Benefits Center (AFFB)
February 2018: FTC Files a Civil Consumer Fraud Lawsuit for embezzling $28M
November 29, 2018: $400,000 suspiciously transferred out of company accounts
November 29, 2018: Preliminary Injunction issued by U.S. District Judge Saundra Brown Armstrong forbidding operations
December 5, 2018: Intercepted at SFO en route to Cancun
October 1, 2019: Officially convicted
Student Loan Scams
Title: 10 Red Flags to Avoid
Although the absolute number of student loan-related abuses is decreasing, the damage of being victimized by the scheme is severe. You can keep yourself safe from imposters marketing themselves as student loan relief resources by identifying the following red flags.
Hidden monthly fees
Requests for credit card numbers
Request bank account information
Imposing aggressive marketing tactics
Advance charges (illegal since 1996)
Using public information to imply connections or clout
Claiming to have “special access” to resources that others do not have
Offering the “guarantee” of customizable debt repayment plans but coercing the applicant into consolidating their federal loans and signing onto a fixed repayment plan