Student loan clients recount financial damage wrought by indicted Sonoma County executive
When he counted up his monthly losses 1½ years later, Manuel Vildasol realized a single phone call nearly five years ago to reduce his monthly student loan payment had cost him nearly $2,500 in fees he unwittingly allowed a student loan debt relief company to withdraw from his bank account. And to make matters worse, today at 63 he still has about $75,000 in college loans to repay.
Vildasol, a former U.S. Marine, was a few months shy of turning 59 and working for a rural health care nonprofit in New Mexico when he called the American Financial Benefits Center in April 2014, a company founded and led by Sonoma County native Brandon Frere.
A month after Frere became the first person nationwide to be charged criminally in addition to being sued by the Federal Trade Commission in early 2018 as part of its two-year “Game of Loans” operation targeting student loan debt relief companies' alleged deceptive tactics, the number of customers prosecutors say he's duped and the scope of the financial hardship they've suffered has become clear.
Vildasol is only one of more than 40,000 people across the country allegedly deceived by AFBC and its two sister companies, Ameritech Financial and the Financial Education Benefits Center. Both also were run by Frere in Rohnert Park, according to court documents in the federal criminal case against him.
After earning master's degrees in business administration and human resource management from the University of Phoenix, Vildasol had about $70,000 in student loan debt and was looking to reduce his $350 monthly college loan payment. A friend referred him to AFBC, telling him the company had helped him repay his college loan quicker for less money.
Vildasol spoke with an AFBC sales representative who told him he qualified for a federal program known as Public Service Loan Forgiveness. It would enable his loan to be forgiven if he consistently made monthly payments and continued working for a nonprofit for 10 years.
The sales representative told Vildasol he could immediately cut his monthly college loan payments by claiming more dependents, including his grandchildren he took care of on weekends. Vildasol was led to believe that after paying a fee to AFBC for a few months, his student loan payments would be reduced to $49.70 a month. He pressured Vildasol to sign documents electronically, 25 pages in total filled with nearly incomprehensible small print, while still on the phone with him.
The effects of signing those documents are still reverberating in Vildasol's life. In a declaration to the FTC, the federal agency that accused Frere and his companies of engaging in deceptive and fraudulent business practices in the civil charges filed against them last year, Vildasol summed up his big mistake: “I trusted him.”
Federal authorities accused Frere and his student loan debt relief companies of collecting a variety of fees from customers with the promise of reducing the financial burden of their college loans. Instead, prosecutors claimed Frere and his companies did not deliver what they promised and swindled $28 million from student loan borrowers from 2014 to 2018. Of that total, they alleged Frere transferred $9 million to his personal bank accounts.
A federal judge in November took management control of the companies from Frere and placed them in the hands of an outside manager known as a receiver. The receiver froze the businesses' assets and closed the companies at the end of November.
Thomas McNamara, the court-appointed receiver, indicated in a court filing in late December that Frere's businesses won't be reopened.
“We conclude that Defendants' businesses cannot operate legally and profitably going forward,” McNamara wrote. “Deceptive and illegal practices are ingrained in, and are central to, the profitable operation of the business.”
Through his attorney, McNamara declined to comment for this story, citing the legal action against Frere. FTC investigators were unavailable last week for comment for this story, because they are furloughed indefinitely as a result of the government shutdown.
Feds move in on Frere
On Dec. 5, federal authorities arrested Frere at San Francisco International Airport as he was boarding a plane for Cancun with $3,000 in cash and blank company checks in his pockets. They charged him with wire fraud and jailed him.
After Frere had spent a few days in jail, a federal judge in San Francisco released him on $3 million bail, took his passport, required him to turn over 25 weapons and ordered him confined to his parents' Sebastopol home while his case winds through federal court.
Frere's lawyers, both in the criminal case and earlier civil case brought by the FTC, insist he did nothing wrong and his companies always were honest with customers. Frere is due back in court Feb. 27. His criminal defense attorney, Ed Swanson, said he and his client are “not at a place in the case where it makes a lot of sense to say things that are going to be out in the public record.” At Frere's arraignment in December, Swanson told the federal judge Frere's actions are defensible and characterized the criminal case as a dispute with federal prosecutors over how Frere “handles his money.”