Fake Courtroom Debt Collector Wins Right to Fight $1.2 million Fine

A judge in Pennsylvania denied the state attorney general’s motion to enter a default judgment against a man accused of using a fake courtroom to coerce debtors into paying off their accounts. The latest move in the long-running case saw the AG ask for $1.2 million in penalties and fines.

The judge earlier this week denied a default judgment against Anthony Covatto, a senior executive of now-defunct debt collection agency Unicredit, based in Erie, Pa. Covatto is the half-brother of Michael Covatto, the owner of Unicredit and the man authorities say was the chief architect of a scheme that saw consumers lured to a fake courtroom under the pretense they were sitting before a real judge.

The practice was halted two years ago under intense media scrutiny. Since then, state prosecutors have been trying to get punitive measures levied against the company and its principles. In July, a judge permanently barred Covatto from the debt collection industry.

Pennsylvania Attorney General Linda Kelly wants the Covattos to pay $1.2 million in restitution and sought to use a previous default against Michael Covatto to force a judgment against Anthony. But the judge ruled that Anthony has a right to fight the proposed restitution in court.

The AG’s office said that the total restitution would include about $875,000 in fines related to Unicredit’s collection practices with the rest going to pay for investigative costs and legal fees accrued by the state’s prosecutors.

State officials noted that it was important that they go after both Covattos because Michael had declared bankruptcy shortly after a default judgment was entered against him.

The case will now proceed and it is not known whether Anthony will defend the charges.