Bogus bill collector: Man becomes rich while driving hundreds of others into financial ruin

MILWAUKEE (WITI) -- Are you having trouble paying your bills? Tired of a debt collection agency calling you all the time? FOX6's Contact 6 has a warning about the "bogus bill collector" and how he became rich while driving hundreds of others into financial ruin.

"When you`re my age, you think you are reasonably street savvy. The answer to that is, no I wasn`t," fraud victim Colby Stafford said.

Stafford learned a hard lesson about trust when his business lost $10,000 in a telemarketing scam.

"At that point in time I was growing so fast, which is a good thing, but you`re spending all your cash," Stafford said.

Stafford took out a $50,000 loan to have more money readily available, but that loan left him vulnerable to telemarketers calling with a pitch.

"The telemarketers cold-called prospective clients and promised, for a fee, they would collect their business debts," U.S. Postal Inspectors Camille Hammonds said.

The owner of the debt collection agency was Neil Madison, who used some strong-arm tactics.

"He threatened to take them into involuntary bankruptcy, to take away their homes, their vehicles, and to see that they were criminally charged with fraud," Hammonds said.

Madison was ruthless in getting the money, but instead of returning it to business owners as promised, he kept it all for himself.

"The funds were used to buy a yacht, numerous luxury vehicles, a house in Laguna Beach CA, occasional prostitutes for top employees," Hammonds said.

As part of his scheme, Madison created promotional flyers, including something called a tri-con report, which supposedly showed a debtor's ability to pay.

"In reality, the report was totally bogus and made up. The tri-con report was an inside joke known to the employees as 'we will try to con the client,'" Hammonds said.

For awhile, the con was successful.

Stafford and more than 600 other victims lost more than $6 million.

Those victims included business owners who thought they had paid off their debts to other companies and others who thought the money they were owed had been collected.

"There were numerous small Mom and Pop American businesses who were forced out of business," Hammonds said.

Eventually, Madison was caught and sentenced to eight years in prison -- but Stafford believes Madison could have made his money without cheating other people.

"If you work that hard at something...my God I pay a lot of money to people who work hard for me. Why don`t you come work for me? You`re working so hard to con people, and by the way if you come and work for me you don`t have to go to jail," Hammonds said.

Postal inspectors advise always carefully checking out every company you do business with.

The state Attorney General's Office or the Better Business Bureau is an excellent way to gather the information before you give your money.