Fake Courtroom Debt Collector Ordered to Pay $522,780

The former head of a collection agency that used a fake courtroom to trick some debtors into paying has been ordered to pay more than $500,000 in fines and legal fees. The judgment comes after the defendant in the case won the right to appeal the case, but opted not to offer a defense.

A judge in Pennsylvania last week set the final number at $522,780 for Michael J. Covatto, the president of Unicredit America, Inc. The collection agency had been accused of staging a fake courtroom scene for consumers that made the debtors think they were involved in a legal proceeding. Of the total, $348,500 was in fines with the remainder being compensation to the state attorney general’s office to cover their legal fees.

Pennsylvania Attorney General Linda Kelly had wanted a judgment of $1.2 million against Covatto. But Judge John A. Bozza opted for an amount of less than half that request. There is still a chance the state might hit its number when it settles with Covatto’s partner, his half-brother Anthony D. Covatto.

Michael Covatto last month won the right to appeal the initial judgment against him. But he did not offer a defense last week before Bozza entered a default judgment on behalf of the state.

It is not known whether Covatto can actually pay the restitution. Since the story broke nearly two years ago, he has shuttered his business and filed for personal bankruptcy protection.