Sonoma County finance executive arrested in $28 million student debt relief scheme

A Sonoma County financial services executive, accused of stealing millions of dollars from borrowers struggling to repay their student loans, was arrested at San Francisco International Airport while trying to leave the country, federal prosecutors announced late Thursday.

Brandon Frere, 41, was charged with a single count of wire fraud following a 10-month criminal investigation into his Rohnert Park company, Ameritech Financial, and two affiliated businesses under his control, American Financial Benefits Center and Financial Education Benefits Center, the U.S. Attorney’s Office said.

The charge followed a complaint filed by the Federal Trade Commission against Frere and his companies in February. The judge in that case ruled against Frere and placed his companies under receivership. Frere appealed the ruling, and the case was still in federal appeals court in Oakland when he was arrested Wednesday night.

Frere and his attorney could not be reached Thursday for comment. A tweet sent from his Twitter account Thursday afternoon, posted while Frere remained in federal custody, stated: “Success isn’t about avoiding failure; it’s about not throwing in the towel. Pick yourself up, dust yourself off and get back in there.” The tweet was linked to a YouTube motivational video.

Prosecutors alleged Frere used his three companies to operate a fraudulent student loan debt relief scheme to enrich himself and his family from 2014 to November 2018. During that period, Frere and his companies are believed to have collected over $28 million, according to prosecutors.

The companies used mail solicitations and social media posts to recruit borrowers across the country trying to pay off their student loans. The mailers did not identify Frere or any of his companies, and instead purported to come from “The Student Loan Department.” Some borrowers cited in the criminal complaint believed the companies were government agencies, or at least sanctioned by the government.

According to the criminal complaint, the companies collected advance fees of approximately $600 to $800 per victim, purportedly to prepare and submit documents to enroll consumers in U.S. Department of Education programs that can reduce payments on some loans and forgive portions of others.

Frere and the companies also allegedly collected enrollment fees ranging from $100 to $1,200, as well as monthly fees ranging from $49 to $99 for a so-called financial education membership program.

As part of the alleged scheme, Frere’s companies misled victims about their ability to obtain lower monthly payments and loan forgiveness, prosecutors said.

The complaint stated that Frere’s companies would promise to lower customers’ student loan payments and eventually have their debts forgiven, promises that the companies could not deliver on.

Instead, the complaint alleges, customers would often find their loans in a worse situation after signing up with Frere’s companies.

Victims of the scheme were misled about where their enrollment fees were going.

Many customers were led to believe the fees were being applied to their student loan repayment, when in fact they were for membership in the financial education program, leading to higher payments than they would have made for the loans alone.

The complaint also alleges that Frere’s companies would actively interfere with some customers’ ability to repay their loans. The companies would require customers to hand over sensitive information, including their Social Security numbers and login information for their Federal Student Aid accounts.

In some cases, the companies then changed the passwords and contact information on the borrowers’ original loan accounts, locking the customers out of their own student loan accounts. In one case, the companies listed a single email address as the contact for 199 different student loan accounts serviced by a single lender.

After locking customers out of their own online loan accounts, the companies routinely placed the loans in forbearance - an action that allows borrowers to temporarily stop making payments to their lender while preventing the lender from contacting the borrower. Frere’s companies would then continue to collect money from the borrowers while they were unaware the payments were not going toward their loans, the complaint alleged.

Employees of Frere’s companies were trained to encourage victims to misrepresent their family size so that they could be enrolled in programs for which they were not eligible, the complaint alleged. Customer service agents would tell borrowers that family size is “pretty much just an arbitrary number that you as a client determine and provide me,” according to the court filing.