SAN FRANCISCO – Brandon Frere was sentenced to 42 months in prison following his guilty plea to wire fraud and money laundering charges, announced United States Attorney David L. Anderson and Federal Bureau of Investigation, Special Agent in Charge John F. Bennett. The charges stem from a multi-million-dollar scheme to use deceptive sales tactics to convince people to enroll in his companies’ student loan repayment services programs. The sentence was handed down by the Hon. Susan Illston, United States District Judge.
Frere, 43, of Sonoma County, owned and operated three companies—American Financial Benefits Center (AFBC), the Financial Education Benefits Center (FEBC), and Ameritech Financial (Ameritech)—all based in Rohnert Park, Calif. According to his plea agreement, between January of 2014 and November of 2018, Frere used the companies to market student loan document preparation services for borrowers who wished to apply for programs through the Department of Education. Frere targeted potential customers who were seeking federal loan forgiveness, loan consolidation, and reduced-payment programs. When Frere’s companies sold consumers “document preparation” services, they also sold them a purportedly optional membership in a “financial education benefits program.” The so-called benefits program provided the opportunity to customers to sign up for services such as LifeLock identity theft protection and roadside assistance.
Frere admitted he instructed his employees to follow misleading sales scripts and to employ deceptive sales tactics so that people would enroll for services without fully understanding what they were paying for. For example, when initially enrolling consumers in the document preparation service and signing them up for the financial education benefits program, Frere hid the fees for the financial education benefits program and described the benefits program in a way that made it seem like the cost of the program was included in the document preparation services. Further, Frere admitted he instructed enrollment associates not to present the benefits program as an optional or additional service to the document preparation service; this way, consumers would purchase the benefits packages without knowing they were doing so.
In sum, Frere instructed his employees (1) to make false statements concerning the companies’ ability to deliver fixed payments for the life of student loans and loan forgiveness under alternative repayment plans; (2) to engage in enrollment practices that improperly inflated a consumers’ family size to reduce their prospective payments under federal alternative repayment plans (and therefore make it appear to the consumer that their monthly payments would be lower than what they would have been if the family size were not inflated); and (3) to hide the monthly fees that consumers would pay for a purportedly optional financial education benefits program while leading victims to believe that the benefits program was already included in the document preparation service. Frere admitted for the purposes of sentencing that the amount of losses attributable to his scheme was no less than $25,000,000 and up to $65,000,000.
Moreover, Frere admitted that in order to conceal the proceeds of his wire fraud scheme, in 2015, he began transferring to overseas bank accounts that he controlled large sums of the funds that he had received through the scheme. He continued this process in August 2017, after he became involved in litigation with the Federal Trade Commission (“FTC”) and became concerned the FTC or a court might be able to seize the proceeds of his fraud. The FTC filed a civil complaint in February 2018 against Frere and his companies in federal court in Oakland. (Federal Trade Commission v. American Financial Benefits, et al., Case No. CV 18-00806-SBA).
Frere was arrested December 5, 2018, at SFO as he attempted to board a flight to Cancun, Mexico.
Frere was charged by information on October 1, 2019 with one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of money laundering, in violation of 18 U.S.C. § 1956(a)(2)(B). Frere pleaded guilty to both counts.
In addition to the prison term, Judge Illston also ordered Frere to serve an additional term of 36 months of supervised release. Judge Illston also scheduled a hearing for October 16, 2020, to determine restitution issues.
Assistant U.S. Attorney Scott Joiner is prosecuting the case with the assistance of Claudia Hyslop and Kimberly Richardson. The prosecution is the result of an investigation by the Federal Trade Commission, Federal Bureau of Investigation, and Internal Revenue Service Criminal Investigation, with assistance from the U.S. Department of Education Office of Inspector General.