Former President of Scam Collection Agency Files for Personal Bankruptcy, Pleads Fifth

Sometimes when you’re the former president of an illegal collection agency that was forced to shut down due to fraudulent practices like setting up fake courtrooms and coercing money out of debtors by threatening to throw their 73-year-old mothers in jail, you have to declare personal bankruptcy. And sometimes when you declare personal bankruptcy (because of the list already mentioned), you might be advised by your attorney to plead the fifth. Frequently. And often.

Take, for instance, the former president of the now-defunct Unicredit America Inc. of Erie, Pennsylvania. His name is Michael J. Covatto, and boy is he having a tough time of it.

Back in November of 2010, his collection agency was shut down by an Erie County judge after the state Attorney General’s Office filed a consumer-protection suit against it in. At issue were such questionable practices as threatening incarceration and that weirdness mentioned above about a fake courtroom. Here’s how that played out:

Debtors who didn’t respond to initial contact or judgments from Unicredit were “ordered” to appear in “court.” However, unbeknownst to the debtor, “court” turned out to just be a room dressed up to look like court — complete with a woman pretending to be a judge. Unicredit maintains that the woman was never identified as a judge. She was simply outfitted in a long black robe and sat in the judge’s chair and had a gavel and gave “rulings.” But, you know, not a judge. Not at all.

Thanks to all of these shenanigans and goings-on, poor Michael J. Covatto has found himself in a financial pickle since it’s expensive trying to defend oneself, so it’s Hello, Bankruptcy Court! And it doesn’t look like things are going to be getting any easier. He has asked for, and been appointed, a federal public defender — something one usually doesn’t need unless one is about to be named in federal crime investigation.

But guess what sometimes happens when you’re the former president of an illegal collection agency that was forced to shut down due to fraudulent practices like setting up fake courtrooms and coercing money out of debtors? Sometimes, you also end up as part of a federal crime investigation! I don’t make these rules; I simply report them.

Criminal charges have yet to be filed against Covatto — but that “yet” is just a formality and a placeholder until a date can be found to replace it. Covatto clearly knows something is coming down the pike, what with the federal public defender and all. We’ll keep you updated as we learn more.