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JON CHESTO: Boston Herald
Attorney General Tom Reilly charged an Agawam-based nonprofit agency yesterday with illegally funneling millions it got from debt-strapped consumers to affiliated for-profit firms.
Cambridge Credit Counseling Corp. transferred $62 million in customer fees to pay for services provided by for-profit firms owned by top Cambridge Credit officers and other insiders, Reilly said in a civil suit filed in Boston.
By making so many payments to for-profit affiliates, the credit counseling company skirted a state law that says only nonprofits and lawyers can craft debt payment plans for consumers, Reilly claims.
"They really perverted the mission of a nonprofit," said Jamie Katz, Reilly's charities chief.
Elena Thomson, of Roxbury, said her credit rating fell apart during the year she used Cambridge Credit , ending in May 2003. She said she signed up with the firm because she was told she could eliminate her credit card debt in five years. Instead, five of her accounts are now delinquent.
"I've been in tears trying to figure out what I'm supposed to do," Thomson said. "When you hear 'nonprofit,' you think these people are working for you. But it never was like that. It was a total scam."
From August 2000 to December 2002, Cambridge Credit sent 71 percent of its consumer fees to for-profit firms controlled by insiders, Reilly's staff said.
Cambridge Credit denied the charges and claimed the transfers were for legitimate business transactions, such as providing back-office support through Brighton Credit Corp. of Massachusetts.
"Everything is squeaky clean," said Montieth Illingworth, a company spokesman.
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