Brandon Frere pleads guilty in multimillion-dollar student loan fraud case

A Sebastopol man pleaded guilty Friday to wire fraud and money laundering charges in connection with a scheme that defrauded student loan borrowers of millions of dollars, the U.S. Attorney’s Office said.

Brandon Frere, 42, owned and operated three companies based in Rohnert Park - American Financial Benefits Center, the Financial Education Benefits Center and Ameritech Financial. In his plea agreement, Frere admitted to using the companies to market student loan document preparation services for people who were applying for programs through the Department of Education between January 2014 and November 2018, according to a news release from the U.S. Attorney’s Office.

The scheme defrauded borrowers of $25 million to $65 million, Frere admitted for the purposes of sentencing. It targeted customers who were seeking federal loan forgiveness, loan consolidation and reduced-?payment programs.

Frere told his employees to follow misleading scripts that used deceptive sales tactics so people would sign up for services without understanding them, the news release said. When initially enrolling customers in the document preparation service, employees were told to also sign them up for a “financial education benefits program,” which claimed to allow customers to register for services such as LifeLock identity theft protection and roadside assistance.

However, Frere told his employees to hide the fees for the program from customers and make it seem as though the cost was included in the document preparation service. He told employees not to present the program as an optional or additional service, so customers would purchase it without knowing they were doing so.

Frere also instructed employees to make false statements about the companies’ ability to deliver fixed payments for the life of student loans and loan forgiveness under alternative repayment plans, the news release said. Under him, employees improperly inflated customers’ family sizes, which made it appear to customers that their monthly payments would be lower than what they actually were.

To conceal the money from his scheme, Frere began transferring it to overseas bank accounts in 2015. He continued that process in August 2017, after he became involved in litigation with the Federal Trade Commission and worried the commission or a court would be able to seize the money from his scheme, the news release said. The commission later filed a civil complaint against Frere and his companies in federal court in Oakland in February 2018 - a lawsuit that is still ongoing, said Frere’s criminal defense attorney, Ed Swanson.

Scott Belnap of Riverton, Utah, is one of thousands of people across the country who was scammed by one of Frere’s companies. Belnap, though, said he was one of the lucky ones. Two weeks after he signed up for Ameritech’s loan debt relief services, a Federal Trade Commission investigator called him and asked about his experience with the company. After learning about the commission’s lawsuit against Frere and his companies, Belnap called Ameritech and canceled his account. He estimated that he only lost a few hundred dollars because of the scheme.

“I was very lucky,” Belnap, 37, said. “There’s a lot of people that were much worse off.”

Frere was arrested Dec. 5, 2018, at San Francisco International Airport as he was attempting to board a flight to Cancun, Mexico, and was formally charged ?Oct. 1, 2019. He is now free on bond pending his sentencing, which is scheduled for March 27.

Swanson said his client has been cooperating with the government to recover the proceeds from his businesses.

“Mr. Frere has fully accepted responsibility for his conduct,” Swanson said. “He’s acknowledged everything he did wrong with the businesses he ran, and he has been working with and will continue to work with the government to do everything he can to make things right.”

Frere faces a maximum sentence of 20 years in prison for each count, the news release said. For his fraud count, he faces a fine of up to $250,000. For his money laundering count, Frere faces a fine of up to $500,000.

Belnap said the more he learned about the scheme, the more he felt bad for other customers who were misled by it. He said he heard some people even went two years not knowing that the companies hadn’t been paying off their loans, even though they were still paying the fees the companies were charging them.

“Anybody that takes advantage of an already vulnerable group ... that’s a really underhanded and unethical thing to do,” Belnap said. “I’m glad (Frere pleaded) guilty and I’m glad that these people that were very much taken advantage of will get some sort of closure or restitution.”

You can reach Staff Writer Chantelle Lee at 707-521-5337 or chantelle.lee@pressdemocrat.com. On Twitter @ChantelleHLee.