Nine days ago, Sonoma County native Brandon Frere was notified that a federal judge in Oakland was poised to make a decision on whether to strip him of control of his financial empire and turn it over to a court-appointed manager.
Frere acted quickly to make one final withdrawal from his companies’ coffers: He transferred $400,000 from his student loan debt relief businesses. He deposited about $179,000 in his personal bank account, $30,000 in a family account and the rest was sent to his lawyers, FBI agent Christopher Bognanno said in a sworn affidavit attached to the criminal complaint filed this week against Frere and his cadre of companies.
Less than an hour later, U.S. District Judge Saundra Brown Armstrong issued a Nov. 29 order placing his Rohnert Park student loan debt relief company, Ameritech Financial, and two affiliated firms he ran as CEO, under the control of an outside manager.
FBI agents arrested Frere six days later at San Francisco International Airport, stopping him Wednesday as he prepared to board a flight to Cancun.
When they searched him, they found $3,000 cash and a number of blank checks from his student loan servicing companies.
With the arrest, Frere became the first person swept up in a 2-year-old federal crackdown on student loan debt relief companies to face a criminal charge related to his business practices, Federal Trade Commission officials said Friday.
Charged with fraud
Prosecutors allege that Frere and his companies bilked student loan borrowers nationwide out of at least $28 million since 2014. They accused him of transferring millions of dollars to himself and his family members — including more than $9 million to his personal bank accounts in Luxembourg and Andorra — from borrowers’ funds held by Ameritech and two other related businesses Frere founded.
He was charged with a single count of wire fraud and remained in federal custody Friday pending a detention hearing Monday morning in U.S. District Court in San Francisco.
In a separate civil case, the Federal Trade Commission claimed that Frere, Ameritech and its sister companies had deceived tens of thousands of student loan borrowers into paying up to $60 million in fees and other charges for purported loan debt relief services.
The Nov. 29 preliminary injunction issued by Armstrong prohibits his company from providing any financial services and any of its executives from taking any assets from the company. She concluded the FTC was likely to prevail in its assertion that Frere and his companies had engaged in “deceptive and abusive business practices.”
An attorney representing Frere in the FTC civil case Friday declined to comment. His criminal defense attorney could not be reached for comment.
Ameritech, and sister firms Financial Education Benefits Center and American Financial Benefits Center, were sued by the FTC in February as part of the agency’s “Operation Game of Loans,” a nationwide joint federal and state law enforcement action targeting deceptive student loan debt relief scams.
The sector is ripe for abuse as more than 42 million Americans have student debt that totals more than $1.4 trillion. It is the second-largest category of debt for Americans behind home mortgages.
While most companies targeted by the FTC have negotiated settlements, agency officials said, Frere and his cadre of companies denied the allegations. In court documents, they asserted that “at all times, the acts and statements Defendants have made were fair and reasonable, and performed in good faith based on all relevant facts known to Defendants.”