In a move to spread management responsibilities, Joseph K. Rensin, the founder of fast-growing Creditrust Corp., has named J. Barry Dumser president and chief operating officer.
The Baltimore company, which acquires, collects and manages delinquent credit-card and consumer loan accounts, also said that it has recovered $500,000 from a former employee.
The funds allegedly were "misdirected," the company said in a filing with federal regulators.
Up to now, Rensin held the firm's three top titles. He will remain chairman and chief executive officer.
"To think that a company our size could have the same person wearing so many hats, this was a long time in coming," Rensin said yesterday. "He [Dumser] has got a tremendous background."
Dumser, Creditrust's general counsel since 1997, has supervisory control over a large portion of the company.
Before joining Creditrust, he worked at Chevy Chase Bank, where he managed the bankruptcy and probate units and supervised the litigation department.
Creditrust, which went public in 1998, has grown from a two-employee operation when it was started by Rensin and a colleague in 1991, to a company with about $80 million in revenue and 1,300 employees.
It posted earnings of $13.6 million in the first nine months of this year, compared with $2.8 million in the corresponding period in 1998.
"They have had a great deal of success," said Walter P. Fitzgerald, an analyst at Brean Murray & Co., a New York investment banking firm. Creditrust has benefited from the bankruptcy of its main competitor, Commercial Financial Services, of Tulsa, Okla., said Fitzgerald.
Got assets at discount
The Baltimore company picked up CFS' assets at discounts and hired some of its employees.
In addition, CFS' troubles have left the credit-card debt collection business wide open for Creditrust.
"There is no serious competition for them," Fitzgerald said. "I think they are in a terrific business; they have done a marvelous job."
Dumser's promotion was disclosed in a document filed with the Securities and Exchange Commission on Friday.
The document also revealed that an unnamed "management employee" funneled about $500,000 of the company's money into a personal account.
"In eight years, we have never had anything like this happen before," Rensin said yesterday in confirming the incident. "It was somebody certainly we had a lot of trust in."
Management became aware of the problem in October.
Rensin said the employee, whom he declined to name, requested a check to pay a Creditrust vendor.
The check was never sent to the vendor, but was instead deposited in the employee's bank account where it remained for about seven weeks, Rensin said.
"The good news -- our internal controls caught this," he said. "We have not suffered a new loss. We got the money back. There is nothing else to say."
The company has not taken legal action against the employee, who resigned, because the money was recovered, Rensin said.
Rensin said internal systems have been improved as a result.
"We get over 100,000 customer payments a month," Rensin said. "Sometimes things happen."
Shares of Creditrust closed yesterday at $16.50, down 25 cents.