Brooklyn Man Tied to Disgraced Ex-Senator Is Charged in Fraud Scheme Michael Levitis is no stranger to notoriety. He was convicted in 2011 of lying to F.B.I. agents in the investigation of a former New York state senator, Carl Kruger. His wife and mother had roles on a reality television show, "Russian Dolls." He controls Rasputin, a Russian-themed nightclub. John Marshall Mantel for The New York Times Michael Levitis is at the center of a nationwide fraud case. The United States attorney's office filed a suit seeking that Mr. Levitis forfeit Rasputin, a nightclub in Brighton Beach, Brooklyn. And he is now the central figure in a multimillion-dollar nationwide fraud scheme that the authorities say preyed on debt-ridden clients that his company, Mission Settlement Agency, was supposed to be helping. Mission held itself out as a company that, for a $49 monthly fee, would negotiate on behalf of customers to lower their debt to credit card companies and banks. But on Tuesday, federal prosecutors in Manhattan accused Mr. Levitis, his company and a group of employees of deceiving clients and taking thousands of dollars that they had set aside to pay creditors while doing little or no work to reduce their debt. Mr. Levitis, 36, a now-suspended Brooklyn lawyer, used some of the money to pay the operating expenses of the nightclub, to make lease payments on two Mercedes and to cover his mother's credit card bills, prosecutors said. More than 1,200 customers, meanwhile, "found themselves in even worse shape than when they began," Preet Bharara, the United States attorney in Manhattan, said at a news conference. Out-of-pocket exorbitant fees paid to Mission, not one nickel closer to paying down their debt and in some cases facing court action by the very creditors who they thought Mission had been paying on their behalf. Mr. Bharara said the case represented the first criminal charges to arise from a referral by the Consumer Financial Protection Bureau, a new federal agency that has been the subject of much partisan wrangling in Washington and whose director, Richard Cordray, has yet to be confirmed by the Senate. "These people are wolves in sheep's clothing," Mr. Cordray said at the news conference of the defendants. Mr. Bharara's office also filed a lawsuit that seeks forfeiture of Rasputin as well as other property and bank accounts. Mr. Levitis, who was charged with conspiracy, mail fraud and wire fraud, pleaded not guilty and was released on $1 million bond. His lawyer, Jeffrey Lichtman, said by phone that his client had known about the investigation for several months, had cooperated fully and had tried to provide information to the government about certain employees he believed were responsible for wrongdoing. Mr. Lichtman said his client was ignored. "The frustrating part about this is we repeatedly attempted to present evidence to the government that there were rogue employees that were working at Mission and were engaging in the sort of fraud that we now see in the indictment," Mr. Lichtman said. "We're prepared to fight it to the end," he added. In the 2011 case, Mr. Levitis received probation and a fine for lying to F.B.I. agents, records show. Three co-defendants - Denis Kurlyand, Boris Shulman and Manuel Cruz - who also worked at Mission pleaded not guilty and were released on bond. Their lawyers could not immediately be reached for comment or had no comment. Two other former Mission employees have already pleaded guilty. The investigation, conducted with the United States Postal Inspection Service, used an undercover agent and a cooperating witness who posed as a Mission customer for several months, court papers show. The indictment charged that since about 2009, about 2,200 Mission customers paid nearly $14 million for debt-related services; of that money, it said, Mission took about $6.6 million in fees and paid only about $4.4 million to its customers" creditors. In the case of more than 1,200 customers, the indictment charged, Mission took fees of nearly $2.2 million and "has never paid a single penny to the customers" creditors as payment for any negotiated debt."