Bad Credit Online Magazine - Daily News and Advice on Credit, Debt and Mortgage : Credit Counseling firm AmeriDebt's Michael Kiefer settles allegations

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September 20, 2005

Credit Counseling firm AmeriDebt's Michael Kiefer settles allegations

Michael Kiefer, a former AmeriDebt official denies allegations but agrees to pay Maryland $235,000 to avoid years of expensive litigation. Maryland Attorney General alleged that Michael Kiefer misrepresented AmeriDebt's debt management plans by saying they would help consumers' credit, when in fact they could hurt it.

The Washington Post goes on into more detail in their article - Credit Counseling allegations settled.
It also sheds some light on what's going on in the industry. What we've found the most interesting is the fact that "Consumer complaints about AmeriDebt prompted the Internal Revenue Service to investigate more than 60 nonprofit credit-counseling firms for possible misuse of their tax-exempt status for the benefit of their owners. So far, the agency has revoked the tax status of at least four firms and is challenging many others. ... Pukke [the founder of AmeriDebt and DebtWorks] has been sued by the FTC and the IRS, which is seeking more than $300 million in taxes and penalties."

Here's an idea... Revoke the tax-exempt status from all Credit Counseling firms and make them to back-pay tax. I'm sure there won't be too many people against it, and the money can be used to pay for Katrina damages and to reduce our budget deficit.

 
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