"debt Reduction" Attorney Accused Of Fraudulent Dealings

Attorney General Spitzer today announced a lawsuit against Andrew F. Capoccia, an Albany-based attorney who operates "debt reduction centers" across the state. The lawsuit accuses Capoccia of a series of improper business dealings, including using deceptive advertising, and making false claims about services.

"Individuals with severe financial problems can often benefit from expert advice and assistance in paying back their debts," Spitzer said. "Many of those who turned to Andrew Capoccia for such assistance, however, were often placed in debt reduction programs that only worsened their financial problems and hastened bankruptcy."

Capoccia and his partner Herbert Moscowitz are accused of targeting individuals with severe financial problems and luring them into their offices with promises of significant reductions in overall debt, while avoiding bankruptcy. As part of this appeal, consumers were told that Capoccia would return all fees if debts could not be reduced.

Once enrolled in a debt reduction program, Capoccia instructed clients to stop paying their debts and instead make monthly payments to an escrow account that he controlled. Before any of the consumer's debts were paid, however, Capoccia's fees were deducted from this account. The fees generally accounted for what would have been several months of debt reduction payments by the consumer.

The lawsuit, filed in State Supreme Court, Albany County, specifically charges Capoccia, Moscowitz and their businesses which operate out of the Capital Region, Syracuse, Rochester, Buffalo, Nassau County, and Manhattan, with a pattern of fraud and misrepresentation for the following:

• Repeatedly claiming, in advertisements and in meetings with consumers, that they could reduce consumers' debt by 50 to 75 percent and avoid bankruptcy. In fact, Capoccia was fully aware that many creditors refuse to negotiate with his firm. Such creditors often pursue immediate legal action when they determine that a consumer is represented by Capoccia. As a result, many of Capoccia's debt reduction clients have been left with no alternative but to file for bankruptcy after they stop paying their debts;
• Falsely claiming that the debt reduction program would not seriously impair a consumer's credit rating, and failing to disclose important information to consumers about the consequences of a damaged credit rating and the possibility of lawsuits and judgments. Capoccia's advertisements maintained that consumers could actually improve their credit by using the program;
• Failing to disclose that, in not paying debts in a timely manner, a consumer risks accrual of interest and late fees, which will result in a consumer's escrow account having insufficient funds to pay off the debts--even if Capoccia succeeds in obtaining the promised debt reduction; and
• Falsely representing that Capoccia would return the fees if he fails to obtain the promised debt reduction.

The lawsuit seeks to stop Capoccia's deceptive and fraudulent business practices, to ban him from operating a debt reduction service unless he posts a one million dollar performance bond with the Attorney General's Office, to have him make full restitution and pay damages to injured consumers and pay civil penalties for each violation of law.

Individuals with complaints about Andrew F. Capoccia and his debt reduction services are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.

This case is being handled by Assistant Attorney General Mark Fleischer and Associate Attorney Robert Vawter of the Consumer Frauds and Protection Bureau.