06/12/2012 02:48 pm ET

Debt Collector Accused Of Using Intimidating Threats, Pocketing Funds, Buying 32-Foot Boat

There's a right way and a wrong way to collect debts. And the wrong way definitely involves pocketing the funds you take in and using them to buy a boat.

That's what Neil Warren Madison Jr., of Salem, Oregon, is accused of doing in a court case that ended in sentencing last week. Madison, who pled guilty in December to mail fraud and conspiracy charges, received eight years in federal prison, according to a press release from prosecutors.

His crime, according to the court, was overseeing a debt-collection racket that operated for eight years and in two states. Prosecutors say Madison and his employees promised creditors they would collect on their debtors' outstanding sums.

Instead, say prosecutors, Madison's company kept most of the money it collected for itself -- money that employees reportedly obtained through threats and harassment. Madison is said to have used the money to buy a Porsche and a 32-foot boat, among other big-ticket purchases.

Oregon has become a heated battleground in the ongoing struggle between regulators, who try to keep consumers informed of their rights, and collection agencies, particularly those who use strong-arm tactics to squeeze money out of people. That struggle has grown more combative in recent years, as industry crowding and widespread consumer insolvency have resulted in more and more aggression on the part of collectors.

In 2008, the state's attorney general received more than 700 complaints from Oregonians about debt collectors. The following year, a new law awarded AG John Kroger the power to more vigorously prosecute collectors who use vulgar or threatening language or call people in the middle of the night.

Since then, the tug-of-war between collectors and debtors in the Beaver State has apparently only grown more intense. In February, it was reported that a Wells Fargo collector, in the course of trying to press a woman into paying her credit card debts, allegedly called the police and told them the woman was threatening to commit suicide. The woman sued for $250,000.