Phony Credit Counseling Scams – A Guest Blog by Mark Cravens –

February 18, 2009

As a business ethics speaker and consultant, I am often writing here about “unethical behavior” and the consequences that follow.  And, from time to time I have the opportunity to interact with other professionals who share my passion for educating the public on issues of ethics, fraud and scams.  One such individual is known on the web as – – my friend Mark Cravens.  From personal experience, Mark was forced to delve into the world of scams and fraud and has, over time, become a foremost expert in the field.  As such, I have invited Mark to be a guest blogger from time to time.  I hope that you enjoy his work!

Guest Blog by Mark Cravens:   antiscam-doctor2

Times are tough and more Americans than ever are finding themselves in financial trouble. People are losing jobs, homes and nest eggs as the economy continues its downward slide. Then, as if things weren’t bad enough, struggling debtors reaching out for help are becoming the target of scammers.

Scam artists have always had an affinity for the weakest and most vulnerable; in this type of scam they take advantage of the current economic situation to make money from the many desperate people trying to climb out from under a growing mountain of debt.

When someone finds they’re struggling or unable to pay their current bills they’re often advised to seek credit counseling. Legitimate credit counselors can help borrowers reduce and manage their debt but beware companies that claim they can rid you of your debts. These phony programs seem “too good to be true” because they are.

Scam No. 1–Debt Elimination:

Operators of these scams advertise on the Internet, TV, radio and in newspapers. Sometime they even hold seminars that guarantee they can eliminate, terminate or cancel debts, especially credit card obligations. Usually, you’re asked to pay an upfront “membership,” “donation,” or “service fee” which can range from several hundred to thousands of dollars.

Scammers claim they’ll cancel your debt using various schemes that could involve ‘secret laws’, illegal contracts and arbitration. In the end many victims wind up losing more than their upfront money; some become the victims of identity fraud while others are sued by the credit card companies for repayment. Those who are lured into these schemes often lose more money than they originally owed.

Scam No. 2–Debt Reduction

In this scam, credit ‘counselors’ claim they have special relationships with creditors that allow them to negotiate your debt and reduce the amount you owe by 50% or more.  You’re told to stop making payments to your credit card company and instead send the money to a debt management firm that will hold it in trust to pay creditors.

Meantime, while they’re working out new details of your debt, they tell you to “rest assured that calls from collection agencies will cease.” Unfortunately, the phone doesn’t stop ringing and collection efforts sometimes get even worse.  These plans are hoaxes and debts aren’t lessened.  Ultimately, some borrowers are forced to file for bankruptcy.

The Real Deal

Fortunately, there is some real help out there for people struggling to manage their debt. Trustworthy debt counselors do exist and can help stop collection calls and reduce interest rates and late and over-limit fees.  They can repair your credit score or reduce the amount of your debt.  They can help you with a budget and provide money management advice. Credit counselors can also help you pay down your debt through a repayment program that could reduce your monthly payments and other fees.

How to Find a Reputable Credit Counselor

Check the Yellow Pages and you’ll see there are all kinds of credit counselors out there. Shop around for a Certified Credit Analyst (and if you don’t feel comfortable with a particular agency trust your gut and look for someone else). Check with the National Federation of Credit Counselors (NFCC) for some excellent advice on finding a reputable credit counselor.

If you are hiring a credit repair company to assist you, make sure they are accredited, licensed with the state, and have been in business for at least five years.

Consider Bankruptcy

One final word – don’t believe all your debts are just going to “disappear.”  There are no “magic wands.” If restructuring your debt isn’t going to solve your problems and your current situation is out of control, consider talking with a bankruptcy attorney and discuss the possibility of filing a Chapter 13 (re-organization.) This won’t eliminate your debt but it can make it more affordable.  The stigma of bankruptcy will last no more than 3 years and can allow you to restore your credit faster than simply ignoring your debt.

Mark Cravens, aka the Anti-Scam Doctor, was a scam victim himself. He now works to help others spot and avoid scams. Get the Top 10 Investment Scams and take a free quiz at


Business Ethics Choices: A Taxing Issue Leads to Prison for NC Tax Preparer

October 16, 2008

MARCELLUS THOMAS, 44, of High Point, North Carolina, was sentenced to 56 months imprisonment on federal income tax charges on September 23, 2008.  There is no doubt when THOMAS reports he will find that his crime was not worth the short term benefit he received.

Crime does not pay.  I know and speak from experience.  Every choice has a consequence.  As a business ethics speaker, I, like Thomas, paid the price for my unethical dealings by spending time in prison.  I am not proud of that fact, but I do know that there is nothing worth the cost of your freedom and other issues that come from being a convicted felon.

According to the US Attorney’s Office:

THOMAS, a commercial income tax preparer operating a company called Refund Recovery Group in High Point, was charged with causing fraudulent federal income tax returns to be prepared for clients and filing them with the Internal Revenue Service for the tax years 2002-2004. Despite the fact that most of his clients lived in publicly-assisted housing and were unemployed during those years, THOMAS claimed income from fictitious businesses such as hair salons and day-care centers on their tax returns without their knowledge in order to obtain income tax refunds under the Earned Income Tax Credit to which they were not entitled. THOMAS did not identify himself on the tax returns as the preparer. After having the Internal Revenue Service wire the refunds, which ranged from $1,377 to $2,726, to his own bank account, THOMAS kept a significant portion of the refunds for himself and gave the remainder to his clients.

From an ethics perspective, THOMAS went knowingly and clearly outside of the bounds of the law and what anyone would have known to be correct.  I cannot say that I would blame his clients as they would, for the most part, be ignorant of the tax law and what, if anything, they would be entitled to.  On the other hand, THOMAS, had to have known exactly what he was doing when he made up fictious companies in order to claim the refunds.

According to the IRS, THOMAS was convicted by a jury on June 6, 2008, of eleven counts of filing false income tax returns.

From $1,300 to $2,800 in refunds to 56 months in federal prison, somehow, based on experience, I think that THOMAS will learn that crime does not pay.  Perhaps, when released he will be able to take what he learned in prison and use it to some good in NC.  For now, his consequence is significant.  You do reap what you sow.

Financial Meltdown? Where Were Our Government Leader’s Ethics? Comments by Ethics Speaker Chuck Gallagher

September 23, 2008

The words are “urgent action” as uttered by those in financial leadership in our country.  Action needs to be taken in order to avoid a financial meltdown.  Somehow, I would suspect that words similar to that were uttered immediately before the Great Depression.  Have we learned nothing from past history?

According to CNN:

“You know, I share the outrage that people have,” said Paulson. “It’s embarrassing to look at this, and I think it’s embarrassing to the United States of America.”

“There is a lot of blame to go around – a lot of blame with big financial institutions that engaged in this irresponsible lending … blame to the people who made loans they shouldn’t have made, people who took out loans they shouldn’t have taken out,” said Paulson, who served as CEO of Wall Street giant Goldman Sachs for seven years before he became Treasury Secretary in 2006.

Now I’m confused.  Treasury Secretary Paulson is a smart man…otherwise he would not have lead Goldman Sachs and been named Treasury Secretary.  Yet, now we face one of the most significant financial crisis of our generation and times and at the heart of the issue are actions taken by aggressive financial institutions.

“Blame to the people who made loans they shouldn’t have…”  Secretary Paulson shame.  Blame to the people.  The people don’t have control over what loans are available and which loans are marketed to them.  I agree there should be blame, but to blame people who responded to sophisticated marketing campaigns that were promulgated by financial institutions who have huge profits to earn is absurd!

The “people” bought what you sold and only by the grace of the federal reserve is your former company – Goldman Sachs still in business.  The sad reality is – we are where we are due to misguided efforts and actions by those institutions (financial and government) who should have known better.

Fed Chairman Ben Bernanke is reported to have said that the central bank would prefer that the government not have to take an active role in raising capital needed by financial firms. But he said there was no alternative given current market conditions.

“Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy,” Bernanke said.

Ethics are defined as the discipline dealing with what is good and bad and with moral duty and obligation.  As an Ethics Speaker, I feel that those who lead have not only a moral duty but a supreme obligation to do what is good and in the best interest of those they serve.  At this moment the debate in Washington, DC directly relates to doing what is in the “good and best interest” of those they serve.  Sad that we had to arrive on the brink of a financial disaster in order for our leaders to take notice.

We can all make mistakes.  Leaders are not perfect.  But as I say in ever Ethics presentation I make – Every Choice Has A Consequence.  This is no different.  The self-serving profiteering choices of the past – loaning money to those who could not afford it and driving an economy on the back of those who are now blamed – is unethical and wrong.  I submit that had the same actions been made on a small scale – the government would have charged those involved with fraud and it would have been a “white collar crime” example.  But this is too big and now it is called a mistake with our top financial leaders and institutions being bailed out.

What do you think – Goldman, Merrill, Lehman, AIG, Freddie Mac and Fannie Mae – the government’s oversight – ethical or unethical?

An interesting commentary by Ron Paul can be found here…you might want to take a look.

Health Care Fraud – Texas Man Pleads Guilty – Comments by Chuck Gallagher Ethics Keynote Speaker

January 31, 2008

BRIAN KEITH WILSON entered his guilty plea to health care fraud in Texas on January 29th, 2008.
According to information presented in court, Wilson was CEO of Assessment Professionals, a drug and alcohol counseling center in Beaumont. From September 2004, until August 2005 Assessment Professionals, owned by Joseph Armstrong, submitted over 50,000 claims to Medicaid for individual and group therapeutic sessions allegedly conducted and provided to Medicaid-eligible adolescents for drug and alcohol abuse. Under the direction of Wilson, employees of Assessment Professionals would obtain children’s Medicaid numbers through various means, and then use those numbers to fraudulently bill Medicaid for drug and alcohol counseling.

Question: Was this the brainchild of the CEO? Was it done at the direction of the owner – Armstrong? And, what did either get out of it personally?

Wilson could receive up to 37 months in federal prison, must pay restitution of $347,161.89, and must provide assistance with the investigation and prosecution of others involved with Assessment Professionals. A sentencing date has not been set. Assessment Professionals’ counselors, Nicola Holtzman, Jimmie Admas, and Armando Carmona, and owner Duane Armstrong are still awaiting trial.

Prediction: Faced with over three years in prison and a substantial restitution order, Wilson will cooperate in order to convict those awaiting trial. For his efforts the federal prosecutor might suggest a downward departure from the minimum sentencing guidelines. However, Wilson will likely spend time in prison.

Chuck Gallagher - The Ethics Expert

Every choice has a consequence. Unfortunately, it appears that Wilson is just beginning the consequence phase of his white collar crime actions. As a business ethics speaker (, I see too many times issues that arise from choices that people knew were wrong to begin with. It is true – you reap what you sow.