AG Files New Lawsuit Against Erie’s Unicredit

by Alex Ferreras on January 9, 2012 in Latest Financial News


The state Attorney General’s Office has renewed its suit against a now-defunct Erie debt collection agency, Unicredit America Inc.

This time, it wants to hold its president, Michael J. Covatto, and his half-brother, Anthony D. Covatto, vice president of the company, personally liable for violations of consumer protection laws.

Deputy Attorney General Leslie Grey filed the amended complaint in Erie County Court on Thursday.

It renews claims first filed in 2010 that Unicredit operated a fake courtroom at 1537 W. 39th St. and used deceptive, intimidating practices to extract payments from debtors.

Grey maintains that Michael Covatto and Anthony Covatto directly participated in the company’s unfair practices and had the ability to stop them. They, along with the corporation, should be liable for damages, Grey said.

The attorney general’s initial suit, filed in Erie County Court in October 2010, named Unicredit as the sole defendant. Erie County Judge Michael E. Dunlavey responded to the suit by ordering the fake courtroom closed in November 2010.

The Attorney General’s Office first sought to add the Covattos to the complaint in June. Dunlavey added Anthony Covatto, 25, to the complaint but was stymied in the request to add Michael Covatto, 50, because he filed for Chapter 13 bankruptcy protection days earlier.

Chief U.S. Bankruptcy Court Judge Thomas Agresti in November cleared the way for the state government to move against Michael Covatto when he ruled Michael Covatto’s personal bankruptcy does not insulate him from the Attorney General’s Bureau of Consumer Protection.

Though he let the Attorney General’s Office proceed, Agresti said the office could not “enforce any money judgment” against Michael Covatto without approval from Agresti. The Attorney General’s Office is seeking fines and costs.

It appears from proceedings in Bankruptcy Court thus far that Michael Covatto’s only remaining asset is his home in the 800 block of Ruth Avenue in Millcreek Township.

Michael Covatto has declined to comment. In September, a federal magistrate judge appointed him an assistant federal public defender, who generally represents criminal defendants. The assistant federal public defender, Thomas Patton, has declined to comment.

No criminal charges have been filed in the Unicredit case.

In Bankruptcy Court, a bankruptcy trustee has written that it appeared that Michael Covatto “was being investigated for possible state and federal criminal charges.”

Following Patton’s advice, Covatto has repeatedly invoked his Fifth Amendment right against self-incrimination and refused to answer some questions about his finances and Unicredit’s operations in bankruptcy proceedings.

While the Attorney General’s Office suit moves forward on the docket in Erie County Court, the Attorney General’s Office, as a creditor, has also filed a claim against Michael Covatto in Bankruptcy Court. The Attorney General’s Office wants to ensure Covatto’s bankruptcy would not preclude him from paying fines or costs if he loses the civil suit.

Covatto’s bankruptcy lawyer, Michael Graml, wants Agresti to dismiss the claim of the Attorney General’s Office. Graml is arguing the Attorney General’s Office has failed to present evidence that Covatto engaged in fraud with Unicredit.

Agresti will hear arguments on the dismissal request at the federal courthouse in Erie on March 5.

Staff writer Ed Palattella contributed to this story.


LISA THOMPSON can be reached at 870-1802 or by e-mail.

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Source: Lisa Thompson Erie Times-News, Pa.

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