Workers in debt control indicted

3 former AmeriDebt staffers in N.Y. accused of fraud in FBI probe

April 06, 2006|By EILEEN AMBROSE | EILEEN AMBROSE,SUN REPORTER

Three former employees of AmeriDebt's New York office were arrested this week after being indicted for mail fraud conspiracy, a U.S. postal inspector said yesterday.

The arrests are part of a broader criminal investigation by the FBI and postal inspectors into the credit counseling industry, including the business activities of AmeriDebt founder, Andris Pukke.

Pukke, without admitting wrongdoing, agreed in January to settle a $172 million civil lawsuit filed by the Federal Trade Commission the day before the start of the trial.

Authorities on Tuesday arrested Bradley Dorman, Louis J. Mustachio and Daniel D. Ruggiero, who had worked at AmeriDebt's Huntington, N.Y., office, said Postal Inspector Lou LaFleur.

AmeriDebt sold the office's assets in April 2000 to Debticated Consumer Counseling Inc., which was run by Pukke's younger brother Eriks. Dorman, Mustachio and Ruggiero then became supervisors at Debticated.

The three have pleaded not guilty and each has been released on $50,000 bond, LaFleur said.

The three men are accused of directing sales agents to make false and misleading pitches to pressure consumers into enrolling in the nonprofit's debt management plans, according to the indictment.

Among the allegations in the indictment: Sales staff told consumers their first payment would go toward setting up the plan and negotiating with creditors, but instead went toward bonuses and commissions to sales agents. Consumers were told they could qualify for low-interest loans if they made on-time payments, but almost all loans were denied.

Authorities are seeking about $24 million from the three men, the amount of Debticated's revenue from 2000 to 2003, LaFleur said.

Dorman, Mustachio and Ruggiero could not be reached for comment. Lawyers for the Pukke brothers also were unavailable.

LaFleur said yesterday that two of Debticated's top sales agents pleaded guilty last fall to wire and mail fraud conspiracy. Their case was under seal until recently, he said.

The criminal investigation into credit counseling began in 2003. Last year, LaFleur confirmed that investigators were looking at a variety of organizations, including DebtWorks, a for-profit company founded by Andris Pukke. DebtWorks processed accounts for nonprofit credit counselors, including Maryland-based AmeriDebt and Debticated.

Regulators have accused Pukke of draining millions of dollars from the nonprofits and into DebtWorks, which they said financed his lavish lifestyle. AmeriDebt filed for bankruptcy and closed its doors early last year.

The Pukke brothers were not named in the indictment. LaFleur would not comment on them. He said the investigation is not over. "We are following where the investigation takes us," he said.

eileen.ambrose@baltsun.com

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