On Thursday, June 7, 2012, Neil Warren Madison, Jr., 33, formerly of Salem, Oregon, was sentenced by the Honorable Robert E. Jones in United States District Court, to eight years in federal prison for his role in stealing nearly $6 million from more than 680 victims in a commercial debt-collection scam. Madison had pleaded guilty to conspiracy to commit mail and wire fraud and to mail fraud charges in December 2011.
Between approximately September 2001 and December 2009, Madison owned and operated three illegal commercial debt collection companies in Portland, OR and Orange County, CA called MCO, Inc., Federal Summit Financial, Inc., and Parker Elliott, Inc. Madison’s businesses were “boiler rooms” that employed anywhere from a few to approximately 20 employees who made hundreds of telephone calls per day to potential customers across the United States, Canada, and Mexico. Madison and his employees promised prospective clients that for a 25% fee, they would collect business debts owed by debtor companies. As part of the marketing strategy, Madison created and distributed brochures, mailers, and other promotional material that was full of lies, false promises, and misleading information. After clients signed up for debt-collection services, Madison and his employees collected funds by harassing, intimidating, and threatening debtors in telephone calls, emails, and letters. Once Madison collected the funds from debtors, he didn’t make remittances to his clients, and kept nearly all of the funds in order to support his lavish lifestyle that included the purchase of a Porsche and several other luxury vehicles, as well as a 32 ft. boat.
A hearing to determine the amount of restitution Madison will be ordered to pay will be held in July 2012. Madison, who currently lives in Newport Beach, CA, was ordered to report to federal prison in September 2012.
In March 2012, Casey Yarbrough, 31, of Keizer, Oregon, who had been part-owner of Federal Summit Financial, Inc., was sentenced to three years in federal prison for his part in assisting Madison and his bogus debt-collection agencies. Yarbourgh was ordered to report to prison on July 21, 2012, and to pay more than $61,000 in restitution for his role in the fraud scheme.
The case was jointly investigated by the U.S. Postal Inspection Service, the Oregon Division of Finance and Corporate Securities, and the U.S. Secret Service, and prosecuted by Assistant United States Attorney Claire M. Fay.