The Federal Trade Commission wants the man behind the creation of AmeriDebt to return $172 million in fees paid by its customers over the years, claiming that he operated the nonprofit credit-counseling agency as a for-profit venture to enrich himself and his friends.
Also, the Internal Revenue Service intends to revoke AmeriDebt's tax-exempt status and seek taxes going back to January 2000, according to court documents filed by the FTC in federal court in Greenbelt yesterday evening.
In November 2003, the FTC sued AmeriDebt and Andris Pukke, who the agency said controlled the nonprofit since it was launched in late 1996. The agency accused AmeriDebt, one of the largest nonprofit credit counselors in the country at that time, of charging debtors exorbitant, poorly disclosed fees and funneling millions of dollars to Pukke's for-profit company, DebtWorks.
AmeriDebt, which until recently was based in Germantown, is liquidating under bankruptcy laws.
In its motion filed yesterday, the FTC asked the court for a judgment against Pukke and DebtWorks without a trial. It claimed that Pukke had a long history of deceiving customers.
"This case represents Andris Pukke's `third strike.' In 1996, he pled guilty to a felony charge of mail fraud. In 1999, the District of Columbia charged him with deceptive practices in connection with AmeriDebt and Infinity," another Pukke-owned company, the FTC said in its filings. "Even after these events, however, Mr. Pukke showed no remorse, but rather simply reorganized his business and continued to defraud consumers, causing massive injury."
Pukke and his lawyer couldn't be reached for comment. During a U.S. Senate subcommittee hearing last year on abuses in the credit counseling industry, Pukke invoked his Fifth Amendment right against self-incrimination. The federal court ordered Pukke last week to appear for a deposition, although one has not yet been scheduled.
"It is an irresponsible lawsuit given the fact that Andris Pukke saved approximately 200,000 people millions of dollars in debt," said John Williams, a lawyer who used to represent Pukke before switching law firms.
In yesterday's court documents, the FTC laid out its case of how Pukke created AmeriDebt as a nonprofit and later launched a for-profit company, DebtWorks, to handle customer accounts.
In its Maryland incorporation papers, AmeriDebt listed three directors, including Pukke's wife, Pamela Shuster Pukke.
