A Sebastopol man who orchestrated a scheme that defrauded student loan borrowers of tens of millions of dollars was sentenced to 42 months in federal prison, the U.S. Attorney’s Office in San Francisco said Monday.
U.S. District Judge Susan Illston also on Friday ordered Brandon Frere, 43, to serve an additional 36 months of supervised release. The judge set a hearing for Oct. 16 to determine how much restitution Frere will have to pay his former customers, the student loan borrowers.
In December, Frere pleaded guilty to wire fraud and money laundering charges in connection with the scheme.
In his plea agreement, Frere admitted to defrauding borrowers of $25 million to $65 million between January 2014 and November 2018, according to the U.S. Attorney’s Office.
Frere had owned and operated three Rohnert Park-based financial services companies — American Financial Benefits Center, the Financial Education Benefits Center and Ameritech Financial — that sold “document preparation services” for those applying for federal student loan forgiveness, loan consolidation or reduced-payment programs.
Frere admitted to instructing his employees to use deceptive sales tactics to sign up customers to buy additional financial service plans without their knowledge, and to mislead borrowers about the companies’ ability to reduce their student loan payments, according to prosecutors.
His criminal defense attorney, Ed Swanson, could not be reached for comment on Monday.
When initially enrolling customers in the document preparation service, employees also signed them up for a “financial education benefits program,” which claimed to allow customers to register for services such as LifeLock identity theft protection and roadside assistance.
Employees then hid the program fees from customers to make it seem as though the cost was included in the main document preparation service. Frere told employees not to present the program as an optional service so that customers would buy it without knowing they were doing so.
In addition, Frere instructed employees to mislead borrowers about the companies’ ability to deliver fixed monthly student loan payments for the length of loans and loan forgiveness under repayment plans. Employees improperly inflated customers’ family sizes, which made it appear to customers their monthly payments would be less than what they actually were.
To conceal the money from his scheme, Frere transferred funds to overseas bank accounts starting in 2015. He continued doing so in August 2017, after he became involved in litigation with the Federal Trade Commission and he worried the commission or a court might seize the money from his scheme, according to prosecutors. The FTC later filed a civil complaint against Frere and his companies in federal court in Oakland in February 2018.
Frere was arrested by federal agents Dec. 5, 2018, at San Francisco International Airport as he was attempting to board a flight to Cancun, Mexico, and was formally charged Oct. 1, 2019 with crimes connected with the student loan scheme.