The ominous letter from the prosecutor's office was addressed to her grandfather, Albert Lachowicz, but it came to Jennifer Paczan because she was handling his finances. Even five years later, the Pennsylvania woman still recalls her reactions: first worried, then confused, and, finally, outraged on his behalf.
The letter was signed by Beaver County District Attorney Anthony J. Berosh, and was on the D.A.'s letterhead. It said Berosh's office had received reports alleging that Lachowicz had engaged in "criminal activity" by "issuing a fraudulent check."
Paczan, then a student at the University of Pittsburgh, knew that hadn't happened. Her grandfather's nursing home had taken an unexpected payment from his bank account on the same day she wrote a $10 check for one of his prescriptions. To fix her error, she not only repaid the $10, but $35 more to cover the pharmacy's returned-check fees.
So why was she getting a threat from the D.A. - followed several weeks later by another letter from Berosh topped even more ominously, "Warning of Criminal Charges"?
It turned out she wasn't. Instead, both came from a California company, National Corrective Group, that was behind an elaborate scheme to profit from simple mistakes made by people like Paczan.
Last week, National Corrective Group finally got a well-deserved - but distressingly delayed - correction of its own. The Consumer Financial Protection Bureau accused it and two corporate successors of "using deceptive threats of criminal prosecution and jail time in order to intimidate consumers."
Fearing the worst if they didn't comply, consumers were typically spurred to pay $250 or more in fees, including for a course in checking-account management, says Philadelphia attorney Irv Ackelsberg, part of a group of consumer lawyers who began fighting the scheme a decade ago.
In a consent order signed by National Corrective's CEO, Mats Jonsson, the companies promised to quit the worst of their practices. They'll stop posing as local prosecutors, threatening jail or other forms of intimidation, and using prosecutors' letterhead.
The worst part of this story? That the scheme worked only thanks to the complicity of hundreds of local prosecutors around the country, who were invited to join in profiting from the deceptions. You might even call it "rent a D.A."
Paczan can't recall the exact words she heard when she called the toll-free number on her letter, but here's what it still said Thursday when I tried: "You've reached the Beaver County District Attorney Bad Check Restitution Program."
Paczan grew suspicious when she was told she couldn't even talk to a supervisor to explain her situation. Eventually, she discovered the class-action suits that first targeted American Corrective Counseling Services Inc., National Corrective's corporate predecessor.
Ackelsberg was asked to help with the case when American Corrective dodged those first legal challenges by filing for bankruptcy. He says the company's hedge-fund owners tried every imaginable tactic - including legal attacks on him and his firm - to keep the scheme afloat.
Why did it finally come apart?
Some credit clearly goes to a committee of the American Bar Association, which ruled in November that the rent-a-D.A. scheme violated ethical standards that govern prosecutors just like other lawyers. But Ackelsberg mostly credits the CFPB for doing what it was meant to do: protect consumers from financial abuses.
The shred of logic these programs rely on is that they spare prosecutors from pursuing small cases. The problem is that most bounced checks aren't crimes at all. The CFPB says fewer than 1 percent of cases in which National Corrective sent a second, more threatening letter were referred to prosecutors' offices, let alone pursued.
"It's not a crime to bounce a check," Ackelsberg says. "The issue is intent." But seniors, especially, respond fearfully to legal threats, he says.
Ackelsberg says National Corrective "used to brag that they 'owned the D.A. brand.' " It took too long, but the bar and CFPB have made clear that, too, was a lie. Company officials only rented it, and they've lost their lease.