Ameritech Financial CEO Brandon Frere arrested on federal student loan fraud charges

A Sonoma County financial services executive, accused of stealing millions of dollars from borrowers struggling to repay their student loans, was arrested at San Francisco International Airport while trying to leave the country, federal prosecutors announced late Thursday.

Brandon Frere, 41, was charged with a single count of wire fraud following a 10-month criminal investigation into his Rohnert Park company, Ameritech Financial, and two affiliated businesses under his control, American Financial Benefits Center and Financial Education Benefits Center, the U.S. Attorney’s Office said.

The charge followed a complaint filed by the Federal Trade Commission against Frere and his companies in February. The judge in that case ruled against Frere and placed his companies under receivership. Frere appealed the ruling, and the case was still in federal appeals court in Oakland when he was arrested Wednesday night.

Frere and his attorney could not be reached Thursday for comment. A tweet sent from his Twitter account Thursday afternoon, posted while Frere remained in federal custody, stated: “Success isn’t about avoiding failure; it’s about not throwing in the towel. Pick yourself up, dust yourself off and get back in there.” The tweet was linked to a YouTube motivational video.

Prosecutors alleged Frere used his three companies to operate a fraudulent student loan debt relief scheme to enrich himself and his family from 2014 to November 2018. During that period, Frere and his companies are believed to have collected over $28 million, according to prosecutors.

The companies used mail solicitations and social media posts to recruit borrowers across the country trying to pay off their student loans. The mailers did not identify Frere or any of his companies, and instead purported to come from “The Student Loan Department.” Some borrowers cited in the criminal complaint believed the companies were government agencies, or at least sanctioned by the government.

According to the criminal complaint, the companies collected advance fees of approximately $600 to $800 per victim, purportedly to prepare and submit documents to enroll consumers in U.S. Department of Education programs that can reduce payments on some loans and forgive portions of others.

Frere and the companies also allegedly collected enrollment fees ranging from $100 to $1,200, as well as monthly fees ranging from $49 to $99 for a so-called financial education membership program.

As part of the alleged scheme, Frere’s companies misled victims about their ability to obtain lower monthly payments and loan forgiveness, prosecutors said.

The complaint stated that Frere’s companies would promise to lower customers’ student loan payments and eventually have their debts forgiven, promises that the companies could not deliver on.

Instead, the complaint alleges, customers would often find their loans in a worse situation after signing up with Frere’s companies.

Victims of the scheme were misled about where their enrollment fees were going.

Many customers were led to believe the fees were being applied to their student loan repayment, when in fact they were for membership in the financial education program, leading to higher payments than they would have made for the loans alone.

The complaint also alleges that Frere’s companies would actively interfere with some customers’ ability to repay their loans. The companies would require customers to hand over sensitive information, including their Social Security numbers and login information for their Federal Student Aid accounts.

In some cases, the companies then changed the passwords and contact information on the borrowers’ original loan accounts, locking the customers out of their own student loan accounts. In one case, the companies listed a single email address as the contact for 199 different student loan accounts serviced by a single lender.

After locking customers out of their own online loan accounts, the companies routinely placed the loans in forbearance - an action that allows borrowers to temporarily stop making payments to their lender while preventing the lender from contacting the borrower. Frere’s companies would then continue to collect money from the borrowers while they were unaware the payments were not going toward their loans, the complaint alleged.

Employees of Frere’s companies were trained to encourage victims to misrepresent their family size so that they could be enrolled in programs for which they were not eligible, the complaint alleged. Customer service agents would tell borrowers that family size is “pretty much just an arbitrary number that you as a client determine and provide me,” according to the court filing.

The complaint alleges that Frere’s companies spent hundreds of thousands of dollars to benefit him and members of his family.

Bank records show his companies paid over $128,000 to airlines, hotels, resorts, casinos, cruise lines and similar companies; over $202,000 to automotive and motorsports companies; and over $253,000 to companies that provide building, landscaping and related supplies and services, according to the affidavit.

Frere allegedly directed more than $864,000 in payments to members of his family and family-owned businesses, according to prosecutors. Frere himself allegedly transferred millions of dollars to his personal accounts, including over $9 million in transfers to accounts that he controlled in Andorra and Luxembourg.

Frere was arrested Wednesday night at SFO as he attempted to board a flight to Cancun, Mexico.

A week before his flight, Frere transferred $400,000 out of accounts controlled by his companies, sending the money to his personal account, his family members and his lawyers, according to the criminal complaint.

It is unclear how he was able to do this, given that the federal judge in the FTC case had placed the companies under outside management and specifically cited preventing such transfers as a reason the restriction was needed.

Frere made his initial appearance in federal court in San Francisco Thursday morning and was held in the custody of the U.S. Marshals Service. He is scheduled to appear in court Monday before U.S. Magistrate Judge Sallie Kim.

Frere is the president, chief executive officer, secretary and primary shareholder of the three companies listed in the criminal complaint, according to prosecutors.

Frere was born and raised in Sonoma County, according to a biography posted to his personal website.

He studied at Santa Rosa Junior College and California State University in Chico, where he earned a bachelor’s degree in construction management. After graduating from college, he started his career in homebuilding, working for Centex Homes in the Bay Area from 2002 to 2007. His last position there was senior construction field manager.

Then he moved into real estate investing. Under the umbrella of Frere Investments, he bought and expanded several spa franchises in the Bay Area. He decided to go from there into financial services, with a focus on student loans because he had them himself.

Stating that loan repayment options and student loan servicing were confusing, he decided in 2013 to start his own financial guidance firm, American Financial Benefits Center, for college graduates with student loans.

Frere said he wanted to help college grads with school loans with refinancing or managing their loan debt.

In 2015, he split his company into two and named the firms Ameritech Financial and Financial Education Benefits Center.

Later that year, he started Alltech Financial.

His LinkedIn profile lists him as CEO and founder of Ameritech, Alltech, Financial Education Benefits Center, American Financial Benefits Center and Frere Enterprises. Ameritech and Alltech operate in Rohnert Park.

Financial Benefits Center is based in San Ramon, while Frere Enterprises is headquartered in Petaluma.

If convicted of wire fraud, Frere faces a maximum sentence of 20 years in prison, and a fine of $250,000 or not more than the greater of twice the gross gain or twice the gross loss from the fraud.

Show Comment

Our Network

The Press Democrat
Sonoma Index-Tribune
Petaluma Argus Courier
North Bay Business Journal
Sonoma Magazine
Bite Club Eats
La Prensa Sonoma
Sonoma County Gazette