CFPB, NY AG Go After Hidden Assets of Collection ‘Kingpin’

It’s something you normally see on TV or in the movies. An individual, in an attempt to hide something valuable from an ex-spouse or law enforcement, signs over possession of the asset to a friend or relative for $1. It usually doesn’t work on TV or in the movies, and, if the Consumer Financial Protection Bureau and the Attorney General of New York have their way, it won’t happen in real life either. The CFPB and the New York AG have filed a complaint against debt collection “kingpin” Douglas MacKinnon, seeking to seize a house valued at $1.6 million that MacKinnon sold to his wife and daughter for $1 when he learned his companies were being investigated for a “massive” debt collection scheme.

MacKinnon and his fellow defendants in the scheme were ordered back in 2019 to pay $60 million in redress to their victims and penalties. MacKinnon has not made any payments toward satisfying the judgment and has not cooperated with the CFPB or the New York AG to obtain relevant financial information, according to the Bureau. So now the CFPB is seeking to have the sale of the home invalidated and the property seized so it can be used to partially repay the outstanding debt MacKinnon owes to the government.

“Douglas MacKinnon operated a brazen scheme, fraudulently inflating consumers’ debts, and he was equally brazen in trying to fraudulently conceal his own assets,” said CFPB Acting Director Dave Uejio, in a statement. “Today’s action shows that attempts to defraud the federal government and evade the consequences of breaking the law will not succeed. I thank [New York] Attorney General [Letitia] James for her partnership in shutting down this scheme and in bringing MacKinnon to account.”

The house in question is a 6-bedroom, 7-bathroom 8,100-square foot property in East Amherst, N.Y. that is valued at $1.6 million, according to Zillow.com.

MacKinnon and his fellow defendants were accused of setting up more than 250 collection operations across the country — most of them in Western New York — and using threatening tactics to try and collect on debts, spoofing numbers of courthouses and government agencies, making false threats of arrest, while also adding $200 to the balance owed. 

“Forcing consumers to pay more than they owe and falsely issuing threats to have consumers arrested for not complying with these predatory debt-collection practices is shameful,” said James in a statement. “To evade the effects of the settlement by trying to illegally transfer assets demonstrates a complete disregard for the authority of the government to bring violators of the law to justice. I thank the CFPB for their partnership to recover these funds.”

Under the terms of the settlement, MacKinnon, Northern Resolution Group and Enhanced Acquisitions were ordered to pay $40 million in restitution to consumers and $10 million each to the CFPB and the New York AG, for a total of $60 million. Mark Gray and Delray Capital, other defendants and alleged participants in the scam, were fined $4 million in restitution to consumers and $1 million each to the CFPB and NY AG, but those fines have been reduced to a $1 civil money penalty and $10,000 in consumer restitution because of an inability to pay the full amount. The amounts of the fines represent the amounts that were taken from individuals as a result of this scam.

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