Debt Relief Industry Sued or Sanctioned

Disbarred Kentucky Attorney Bruce Atherton Accused of Offering Illegal Debt Relief Services by Attorney General. He’s Already Headed to Jail.

Indiana went after attorney Bruce Atherton of Kentucky and issued the statement below. As I remember, Bruce Atherton was behind Bruce Atherton and Associates in Kentucky that sold attorney based debt settlement services. A tipster (send in your tips here) told me he was also the guy behind Debt Restructuring of America (source) and My Choice Debt Management.

Indiana Attorney General Greg Zoeller filed the lawsuit against Atherton in Kosciusko County against a for-profit budget management company owned and operated by Bruce D. Atherton, an attorney from Louisville, Ky.

Zoeller’s complaint claims Atherton deceived a Milford, Ind. family into paying him hundreds of dollars for budget management services. Under Indiana law, a budget management company is required to have a license on file with the Indiana Department of Finance which the Attorney General’s suit claims Atherton failed to do. The Attorney General’s office has received 87 consumer complaints against credit services organizations including debt consolidation and debt settlement companies so far this year, already surpassing the total number complaints in 2009 which was 69.

“These credit repair scams are making it harder and harder for Hoosiers to get back on their feet,” Zoeller said. “I appreciate the support the General Assembly has provided by passing new laws that will make it harder for these operations to float under the radar.”

A new Indiana consumer protection law that took effect on July 1 requires all debt management and debt consolidation companies to register a $25,000 surety bond with the Attorney General’s office. The company’s bond acts as an insurance policy for consumers in the event the company fails to perform the services and does not provide a refund. Consumers can contact the Attorney General’s office to confirm whether a credit repair company has the necessary bond or not. If they do not, the company would be operating in the state illegally and may be violating other consumer protection laws.

Atherton was sentenced on July 15, 2010 to 10 months in prison and ordered to repay $472,720 from federal criminal charges for mail and wire fraud. He was also indicted on criminal charges in New Jersey for financial facilitation of criminal activity, theft by deception and conspiracy.

His lawyer also said in a sentencing memorandum that Atherton is an alcoholic and that his “professional and personal life has suffered the effects of alcohol abuse which began in 2000.”

The Kentucky Bar Association suspended his law license in September 2009. – Source

Update: July 23, 2010 – Letter From DROFA Attorney

I received the following correspondence below regarding this article.

To: Mr. Steve Rhode
From: Pamela J. Fratini, General Counsel, Debt Restructuring of America, Inc.
Date: July 23, 2010

In response to the assertions contained in your July 15, 2010, website entry, you are hereby advised that Bruce D. Atherton is not, in any form or fashion, an officer or owner of Debt Restructuring of America, Inc. (“DROFA”). He is also not an operator of DROFA. Had you taken the time to conduct the due diligence typically required prior to posting such nonsense on your website, you would have discovered the truth of the matter, which is that Mr. Atherton has acted as a contract consultant with DROFA and as such, has in the past, been a part-time vice president of legal affairs. He owns none of the assets of DROFA. He has no connection with the day-to-day business of DROFA.

Furthermore, your insinuations that DROFA operates in a scam fashion is an outrageous lie. We treat each and every client with dignity. We strive to assist each of our clients with their oftentimes intricate financial difficulties. We have the highest level of respect for each and every one of our clients. We achieve outstanding results for many of our clients in terms of settling their debts, in spite of the behavior of some of their creditors. We provide a valuable service to our clients.

More importantly, DROFA begins providing services to our clients immediately upon receipt of the signed contract. DROFA has never lied, and will never lie to any of our clients. We take abundant care to advise our clients of both their rights and their responsibilities. We would never recommend that they refrain from contacting a consumer reporting agency or tell a client that this office can eliminate any negative credit information on a credit report. When one of our clients is sued, we defend that lawsuit vigorously and pay all attorneys’ fees associated with the litigation. Put simply, our clients are the heart and soul of this company. We have not and will not consider doing business any other way.

READ  Debt Restructuring of America - Consumer Complaint - April 7, 2017

Finally, as perhaps the true measure of your absolute failure to check facts, the language contained on this page of your website is not the language of the recently revised Indiana legislation: https://getoutofdebt.org/20062/new-indiana-law-goes-into-effect-july-1-2010-and-impacts-debt-settlement. For your convenience, this is the link to the genuine Indiana statute: http://www.in.gov/legislative/ic/code/title24/ar5/ch15.html
The language of the Indiana General Assembly’s version of this legislation is attached hereto as Exhibit A.

We hereby demand that you refrain from such allegations in the future. You are advised to govern yourself accordingly or suffer the legal consequences.

My Response

If you look at my article I never said Bruce Atherton was a “an officer or owner of Debt Restructuring of America, Inc.”

What I said was that “A tipster (send in your tips here) told me he was also the guy behind Debt Restructuring of America (source) and My Choice Debt Management.”

If you follow the source link you will see I referenced a page on the Debt Restructuring of America site that says:

The principle attorneys overseeing the activities of Debt Restructuring of America, Inc., are: a) KeithLogue; and b) A.Stein. Bruce Atherton, an attorney with thirty (30) years of experience, has recently retired and has been retained as a consultant by the company. – Source

Although I never printed it, I suppose a visitor could become confused when they follow the link on the Debt Restructuring of America web site for the link you have to the bio of Bruce Atherton. I did look at the bio your site provides a link to for Mr. Atherton. – Source

In that bio, Debt Restructuring of America, inc. says: – Source

Bruce Atherton: Graduated from the University of Louisville, BA and JD, 1976 and 1979. He was previously admitted before the Bars of the Commonwealth of Kentucky and the state of Tennessee, as well as the United States District Courts for the Western and Eastern districts of Kentucky, the middle and Western districts of Tennessee, the Southern and Northern districts of Indiana, and the Eastern district of North Carolina. Mr. Atherton practiced business and consumer bankruptcy law from 1979 through September of 2009. He now runs a business consulting service to keep both businesses and consumers out of bankruptcy. He is a part owner of Debt Restructuring of America, Inc., and is the principle manager of the company’s day to day business affairs.

In fact the Debt Restructuring of America site still says that, eight days after I published my article. Current screenshot below.

Just to be sure, this is the Debt Restructuring of America site, correct?

So how do I remedy the statement on the Debt Restructuring of America site that says “[Bruce Atherton] is a part owner of Debt Restructuring of America, Inc., and is the principle manager of the company’s day to day business affairs” and your statement “that Bruce D. Atherton is not, in any form or fashion, an officer or owner of Debt Restructuring of America, Inc. (“DROFA”). He is also not an operator of DROFA”, we have a bonafide quandary.

As far as the “scam” comments go, those were not directed at Debt Restructuring of America but as I said, comments from the Indiana Attorney General in regards to the suit he filed against Atherton. I quoted the Indiana Attorney General press release in my story.

Here is the full press release from the Attorney General about Bruce Atherton.

FORT WAYNE, Ind. – Attorney General Greg Zoeller was in Fort Wayne today to shine the spotlight on illegal credit repair offers. A lawsuit has been filed in Kosciusko County against a for-profit budget management company owned and operated by Bruce D. Atherton, an attorney from Louisville, Ky.

Zoeller’s complaint claims Atherton deceived a Milford, Ind. family into paying him hundreds of dollars for budget management services. Under Indiana law, a budget management company is required to have a license on file with the Indiana Department of Finance which the Attorney General’s suit claims Atherton failed to do. The Attorney General’s office has received 87 consumer complaints against credit services organizations including debt consolidation and debt settlement companies so far this year, already surpassing the total number complaints in 2009 which was 69.

“These credit repair scams are making it harder and harder for Hoosiers to get back on their feet,” Zoeller said. “I appreciate the support the General Assembly has provided by passing new laws that will make it harder for these operations to float under the radar.”

A new Indiana consumer protection law that took effect on July 1 requires all debt management and debt consolidation companies to register a $25,000 surety bond with the Attorney General’s office. The company’s bond acts as an insurance policy for consumers in the event the company fails to perform the services and does not provide a refund. Consumers can contact the Attorney General’s office to confirm whether a credit repair company has the necessary bond or not. If they do not, the company would be operating in the state illegally and may be violating other consumer protection laws.

For Hoosiers with overwhelming debt, it is impossible to ignore the endless offers on television and radio, in newspapers and online that promise to fix bad credit easily and fast. The reality is these promises are misleading and often the companies are operating illegally. Victims of these scams often lose hundreds or thousands of dollars and their credit is no better off.

Atherton is currently facing federal criminal charges for mail and wire fraud. He was also indicted on criminal charges in New Jersey for financial facilitation of criminal activity, theft by deception and conspiracy. The Kentucky Bar Association suspended his law license in September 2009.

Consumers considering hiring a credit repair service should keep in mind the following five red flags that indicate a scam:

  1. The company wants you to pay for credit repair services before they provide any services.
  2. The company doesn’t tell you your rights and what you can do for yourself for free.
  3. The company recommends that you don’t contact any of the three major national consumer reporting companies (Equifax, Experian, and TransUnion) directly.
  4. The company tells you they can get rid of most or all the negative credit information in your credit report, even if the information is accurate and current.
  5. The company suggests that you apply for an Employer Identification Number to use instead of your Social Security number so you can invent a “new” credit identity – and then, a new credit report.

Zoeller recommends Hoosiers avoid for-profit companies for credit counseling and reminds Hoosiers that repairing credit takes time, effort and a personal debt repayment plan. The National Foundation for Credit Counseling certifies legitimate non-profit credit counseling services. In the Fort Wayne area, consumers can contact the Consumer Credit Counseling Service of Northeastern Indiana by calling 1-800-432-0420. Statewide, Momentive Consumer Credit Counseling Service is available by calling 1-888-711-7227.

To file a complaint or to confirm whether a credit service organization has a surety bond on file, call the Attorney General’s Consumer Protection Division at 1-800-382-5516.

NOTE: A copy of the complaint filed against Bruce D. Atherton will be available on the Attorney General’s website here: http://12.186.81.50/cpd/enforcement/ – Source

So in summary, let me see if I’ve got this right, you are mad at me when your own site says He is a part owner of Debt Restructuring of America, Inc., and is the principle manager of the company’s day to day business affairs. and you are upset with me for republishing the comments of the Indiana Attorney General about Atherton?

Thanks for the updated Indiana link. The copy on the site is the copy Indiana had public on the day the article was written. I’ll update it with the link you provided.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

36 Comments

  • I work for a finance company, which I will not name. I do the credit card collections. I contacted a woman a few weeks ago. She explained to me that Nancy from Debt Restructiong of America was handling this account. She said she had already paid the over 4000.00 to settle out her accounts. I explained to her that no payments have ever been made on this account on her behalf. She gave me Nancy’s phone number. I tried to a week to get someone from that office on the phone with no luck. I contacted the customer back and she told me she normally faxes there office to get a response. This toke me back. What kind of company does not return calls. You have to fax them for a call back. This company needs to be investigated and closed down.

  • ACH payments from a mortgage propect of mine starting 12/09 thru 6/10 went directly to BRUCE ATHERTON after it had been taken out originally by DEBT RESTRUCTURING since 5/09 – 11/09 and then picked up by DEBT RESTRUCTURING FROM 7/10 until this last month 11/11. Don’t let anyone tell you anything different – Bruce Atherton IS Debt Restructuring of America. I am looking at those above mentioned bank statements with the ACH withdrawals… Now they changed their name to Financial Assistance Group and will not give a physical address (he said it was a call center environment) and only would give a PO Box 11835 as a mailing address) If anyone wants, email me at [email protected]

    • Hi-  I am so messed up with DROA…and have been for going on 4 years….and I have finally given up on them and stopped payment on all funds to them monthly as of 10/11.  I do need the phsical address of the New Company name- so I can send a certified letter.   They have done me wrong in the amount of over 15,000.00.  I am sick over this whole thing.    Thank you so much.my email address is [email protected] 

  • BRUCE D ATHERTON HE WAS RELEASED FROM PRISON ON 7/5/2011 WERE IS HE NOW! HAS ANY ONE GOT THERE MONEY BACK.

  • Phdoc0, I see in a past post of yours you say in previous posts:
    “I’m just very skilled in business and understand the possible outcomes and risks involved in business decisions”
    You seem to be somewhat knowledgeable on the industry, yet, mostly in the “opinion” department. So, I have put together a summary for you.
    In Nationwide Asset Services, Inc. v. DuFauchard, 164 Cal. App.4th 1121 (Cal. App. 3d Distr. 2008), the Court of Appeal held that a “prorater” is someone who, either actually or constructively receives consumer funds. Constructive receipt of funds includes having sufficient control over those funds to permit disbursements both to creditors and of their own fees.
    Also, because you have mentioned my “licensing shortcomings” you have obviously failed to deduce that SettleFirst is not a debt management company, I’ll clarify. We are a debt settlement company. And, we are FTC compliant. No fees prior to a settlement, no control of the customer’s money, no disbursement or access of monies and no control funds. Our customers manage their own funds and approve their own settlements. We provide the discipline and structure for a savings plan that allows us to interact with their creditors for the purposes of negotiating the balances. And, we qualify each applicant. You need to be able to do more than “fog a mirror” to enroll.
    Another previous post of yours says:
    “my question is do they hold licenses in those states or are they simply another settlement companies that denies they need a license? I know for a fact they are required to operate under existing laws in those states, and hold a license. if they operate and have good performance and no license, they are simply operating under the raider b/c no complaints are being filed, but that doesn’t mean they are some new bread of “do gooders” in a bad industry. that’s the thing about most debt settlement companies, they tell themselves and others that “oh, we’re a settlement company, not a management company” or “we’re this and not that” and convince themselves and others that by using a “different word” the legislation of that state does not apply to them.”
    One, nobody is working “under the raider” – its radar. And two, I am not a yeast-based item found in the bakery section of Albertsons. It’s “breed”. Not “bread”. And yes, there is a difference between management companies and settlement companies. Maybe somebody should report you to the FTC for deceptive marketing with all your “I’m just very skilled and knowledgeable” comments. Ha.
    So, you want a link? here: http://www.corp.ca.gov/Educati
    Read that one? If it had too many long words in it for you, I have pasted some summaries from the link below for your convenience:
    State law requires only credit counseling organizations that pay debts on your behalf – such as pursuant to a debt management plan or a debt settlement plan – to be licensed under the Check Sellers, Bill Payers and Proraters Law (Financial Code Sec. 12000 et seq). Qualifying nonprofit organizations, however, may be exempt from the licensing requirements.
    • Credit counselors who do not pay your debts or otherwise handle your money are not required to be licensed by the State of California.
    • Credit counseling required under the federal bankruptcy law must be received only from providers approved by the U.S. Trustee Program. Such providers may or may not be licensed by the Department of Corporations.
    Interesting enough, you seem to have the same MO on nearly every post when you say things like the following pulled form another post of yours as follows:
    “I’ve read every piece of legislation and ever current statute in every state in the US that pertains to credit-related service. And as a CEO you should have as well. And I simply asked if you were licensed under any of the current statutes in those states you have a single customer. That’s a simple yes, or no. You either are, you’re you are not.”
    I mean, really? Come on. That’s like you seeing Chuck Liddell at Starbucks and then telling everybody you train with him. You need to calm down young buck. You’ll be important one day. It’s just not going to be today.
    How about this (obnoxiously long and monotonous) post of yours:
    “It’s as simple as a driver’s license analogy. Let’s say you’re 50 years old and one day you’re driving down the road, and you get pulled over by the police (for whatever reason, the reason is irrelevant). The cop asks for license and registration, upon that request it’s discovered that the driver doesn’t have a license. It’s also discovered that the drive has never, ever had a license in their entire life. They have been driving since they were 16 yrs old w/o a driver’s license. They have never had any type of driving infraction in those 34 yrs, not a speeding ticket, not parking ticket, not an accident….nothing…perfect record, let’s say for the sake of argument they are the best and the safest driver in the world.
    Bottom line, the driver is still not following the law. Period. A rose by any other name is still a rose.
    It’s like the guy that sells hotdogs or pretzels on the street; they too are required to do certain things by law to operate in that city or county. It’s a simple thing, what’s the big deal. It’s pretty simple to follow, all businesses do, and it’s not that hard to do. You put an addition on your house, or even put in a new bathroom, you got to have certain permits. Hell if you put a deck around your house you generally need a permit. What’s so hard to understand?”

    Really? A driver’s license or hot dog sellers permit? First off, every business would need some type of business license. Yes, you are correct. But can you tell me again where I see the info about getting my license for CA operations for a debt settlement company?
    Yet another one of your posts telling people how great you are oh wise one… And this one reveals it: BOOM! Finance industry? What is your profession? A loan officer? A financial planner? You probably work at H&R Block filing electronically for the elderly. Your post:
    “Sorry if you got the idea I work in DS, I do not (but I have given my two cents to some who are very involved, from CEO’s to FTC). My background is in the finance industry, which I have been in since 1988, I hold an MS in management and finance and a double BS in economics and finance (among several other certifications). Part of what I do is deal with compliance in finance and banking, with such agency as the SEC, FINRA, FDIC, NYSE, etc., and state agencies.”
    It’s obvious what your BS stands for, but MS? Got it. Moderately Stupid – Next post of ignorance from you:
    “ the DS is that the industry is made up mostly of people that have a background in sales and virtually no background in finance, or how to run a business from top down.”
    Can I just hire you and make you coffee every day, sir? You seem to be so knowledgeable of this industry. I feel like crying knowing that I don’t have somebody so well versed in all these laws and regulations on my staff. How about 250k/year to start? And all you have to do is talk about how smart you are in meetings and watch the 60” LED in my conference room all day. Yes, we get Nickelodeon, you can watch Sponge Bob.
    This may just be my last example of your inept commentary that has since caused people reading this dialogue to lose brain cells. Here is your post:
    “Let’s be honest, there is no really difference b/w DM and DS, other then DS has made a few adjustments to try to avoid any regulation. Some states have similar statutes and have simply said those rules apply to DS and that’s that…”
    “I’ve honestly never seen an industry so opposed to having rules when it comes to consumers and finance. It’s mind boggling to me.”
    OK, seriously? Learn it: than VS then. What degrees do you have again? If you feel there is no difference between DS and DM, you’d likely agree that there is no difference between males and females. But as ignorant as you are, you have likely not had the chance to learn about human anatomy because men wouldn’t tolerate your stupidity and women wouldn’t listen to you babble about your worthless degrees over a time period long enough to consume a martini.
    No, dear friend, unfortunately, we can’t negotiate your student loans.
    If you don’t mind, I’m going to drink my coffee and run some reports for the day. And as far as your afternoon goes, don’t just crawl under a rock and hide, young friend. Be proud that you finally found your manhood! And now that you know you aren’t quite ready to run with the big boys, calm down, take a norco and review your script for tomorrow when you finally get promoted to drive thru.
    SettleFirst, out.

    PS: Debt Settlement companies have “customers” – law firms have clients. Learn the difference. And if you need to, go back and read my original post that you were so compelled to reply to. I was suggesting the FTC cracks the whip and I love the new regulation. It sets my company apart from the loophole operational approaches.
    So your comment about “I’ve honestly never seen an industry so opposed to having rules when it comes to consumers and finance. Its mind boggling to me” is just plain moronic. SettleFirst is a palpable example of doing things the right way.
    Shape up and maybe you can run for president one day.

  • Looks like I should have gotten in on that bet too, it seems that the company Settle First has not posted any states that they are licensed in, just using the ol’ Kindergarten defense “are not”, “am too”. In order to show you’re actually licensed you’d probably want to name the states you hold licenses in, and post the links for those states for licensing verification.

    For example; Settle First is in the state of CA, so until we see what happens with the current legislation they are required to hold a Check Sellers/Proraters license, even if they don’t take CA clients (which everyone does) they still must hold a license b/c according to Special Administrator Dept of Corps they are a company operating in CA (July 22, 2008 1:52 EDT).

    So they would simply say the following: “Settle First holds a license in the State of CA and you can verify that with the following link.”

    http://www.corp.ca.gov/FSD/lic

    But low and behold, what do we see???? No company by the name of Settle First, nor any company from Santa Ana , or in the 92707 zip code. Now there are 11 companies that hold a license, unless they’re part of CareOne maybe they’re one of the other 10. There is also the possibility that they never bothered to check with the Special Administrator Dept of Corps and don’t take CA clients so they don’t think they need a license in CA (poor excuse, but not surprising of the quality of business knowledge in the debt settlement space), but have licenses in other States. If so I apologize and please list those states.

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