The state Attorney General’s office has reached a settlement banning Buffalo-based debt collector Robert Heidenreich, also known as “Bobby Rich,” from the debt collection industry for misleading consumers on how much money they owed and using illegal tactics to collect the inflated debt.

In addition to the ban, the settlement also includes a suspended judgment of $1.7 million.

Jose Melendez and Urban, Heidenreich, Melendez and Associates LLC, also referred to as Cash Group Southern Tier, were found to be in violation of sections of the state Labor Law in October mandating the state’s minimum wage and to prevent wage theft. The company had an office at 1800 Washington St., Suite 5, Jamestown.

The New York Attorney General’s Office and the Federal Trade Commission alleged that Heidenreich, and collectors working for him, violated the law by demanding and collecting more money from consumers than owed. In the debt collection industry, this practice of trying to collect more than a consumer’s balance in full is known as “overbiffing.” The settlement also alleged that collectors employed by Heidenreich pretended to be law enforcement personnel, attorneys, and process servers to collect on inflated debts by falsely threatening consumers with arrest and other legal actions.

“We will not sit idly by as businesses extort payment from consumers by using illegal, deceitful tactics,” said Letitia James, state attorney general, in a news release. “Collecting on money that consumers do not owe, and doing so using false threats of arrest and other unscrupulous means, is inexcusable and unlawful. My office is committed to protecting New Yorkers from illicit scams, and I thank the FTC for their partnership on this case.”

The lawsuit was filed in October 2018 and involves defendants Robert Heidenreich and six corporations allegedly under his control: Campbell Capital LLC; Kahl, Heidenreich, and Nemmer LLC; Urban, Heidenreich, Melendez, and Associates, LLC; J & V Receivables LLC; Rich Financial LLC; and BCH & Associates Ltd. As part of the settlement, the judgment against Heidenreich is partially suspended to $30,000 due to his inability to pay the amount in full. A default judgment was entered against the six corporations in the case. All of the funds from the settlement will go towards consumer restitution.

According to the complaint, Heidenreich managed as many as four offices where employees made repeated calls to consumers to collect on alleged debts, and frequently moved these offices. The complaint says he instructed employees to use a variety of unregistered fictitious business names in interacting with consumers.

The companies, Barbara Underwood, former state attorney general wrote, use a variety of false, deceptive and abusive tactics that allegedly violate federal and state law, including pretending to work at a county sheriff’s office or pretending to be a process server. The state alleged Heidenreich’s employees made false or deceptive threats to consumers to pressure them into paying debts.

“Defendants’ employees, for instance, falsely tell consumers that they are about to be arrested, have committed crimes, or are about to be sued or served with legal papers because of their failure to pay an alleged debt,” Underwood wrote. “Consumers are then told they can resolve these fabricated exigencies by making payments on debts Defendants claim are owed. To help coerce these payments, Defendants’ collectors frequently inflate the amounts they claim consumers owe by hundreds or even thousands of dollars. Defendants’ employees also pressure consumers by calling their employers and family members about the alleged debts and use profanity and other abusive language during collection calls with consumers.”

Underwood said the companies also unlawfully called employers and family members about consumers’ alleged debts, used profane or abusive language in phone calls and misrepresented facts. The lawsuit seeks a civil penalty of $5,000 for each violation of New York’s General Business Law.

Jose Melendez and Urban, Heidenreich, Melendez and Associates LLC were ordered by the state labor commissioner in October to pay $25,948.69 in wages owed to 22 employees of Cash Group Southern Tier’s office in Jamestown, $18,160.94 in interest on the wages owed to the employees, liquidated damages of $6,487.17, and a civil penalty of $73,897.38.

This case was handled by Assistant Attorney General Christopher L. Boyd, under the supervision of Assistant Attorney General-in-Charge of the Buffalo Regional Office Michael Russo, with assistance from Senior Consumer Fraud Representative Karen Davis, Investigator Jennifer Hill, and Supervising Investigator Ken Peters. The Division of Regional Affairs is led by Deputy Attorney General for Regional Affairs Jill Faber, under the oversight of First Deputy Attorney General Jennifer Levy.