Criminals often lie to get into the debt collections industry. Despite a Minnesota law, rapists thieves and other offenders are cleared to work as collectors -- with access to financial data.
Max Ruhland, 10, described the scene when Joseph John Benitz, a debt collector with a long rap sheet showing a history of abusive and reckless behavior, tried to take his mother's car and threw her cell phone when she called her husband. His mom, Sharon Ruhland, had returned the car to the dealership already when she and her husband Joe purchased this new one.
Lee Song had already been caught forging checks when she swindled her former employer out of $127,122 by submitting phony payment vouchers.
Yet, less than four years later, the Minnesota Commerce Department cleared Song to work as a debt collector -- a job with access to people's private financial information.
Song is one of at least 743 criminal offenders in Minnesota who have been registered as debt collectors since 2005, a Star Tribune investigation has found.
When offenders filled out state applications to be debt collectors, 75 percent of them lied about having a criminal past. The Commerce Department, which regulates collectors, routinely approves criminals to work in the collections industry without conducting background checks.
"The system in this state for screening collectors is broken," said Patrick Hayes, a consumer attorney in Minneapolis. "These are people who can find out where you bank, where you live, even where your friends and relatives live, and the state doesn't seem to care if they are hardened criminals. Why even register collectors if you register criminals?"
Their crimes include identity theft, rape, check forgery, assault, and most frequent, serious drunken driving offenses. Most offenders can legally work as collectors because state law excludes only those convicted of fraud or any felony within five years of their application.
Still, some collectors who shouldn't qualify because of their recent crimes are getting jobs. Since 2005, at least 111 registered collectors, including Song, had committed crimes that under state law should have barred them from debt collecting, according to the Star Tribune analysis of registration and court data. About a third of them still are registered as collectors.
Song, 32, went on an illegal shopping spree after the state approved her application to work at Receivables Management Solutions, a collections firm in West St. Paul. She ordered $1,561 in jewelry, car repairs and food using credit card numbers stolen from people she telephoned about unpaid debts. When police in April led Song away from the call center, it was the fourth time in nine years she was arrested for a financial crime.
Not checking the lies
The Commerce Department says it lacks resources to conduct criminal background checks on all applicants and asserts that collections firms must do it or face fines. Yet collections firms often point to state government for registering criminals as collectors, effectively giving them a stamp of approval.
"If there are instances of registered collectors operating in Minnesota with a felony conviction on their record, it is because the collection agencies they work for failed to do a thorough background check," said Nicole Garrison-Sprenger, a Commerce Department spokeswoman.
The department said it reviews the criminal records only of those who check the box admitting to past crimes, or when the department receives information suggesting someone has a criminal history. Criminals who lie don't get a background check.
"It makes absolutely no sense," said state Sen. Sandra Pappas, DFL-St. Paul, who has sponsored legislation to protect consumers with debts. She said she was not aware of the limited screening until the Star Tribune asked her about it. "People can simply lie and say they don't have any convictions and get registered anyway."
One in 12 debt collector applicants cleared to work in Minnesota call centers since 2005 had criminal records in the state. And 120 of the 743 offenders were registered more than once.
Some collections firms say they check every applicant, but offenses can be missed because of errors in criminal databases. Other firms wrongly assume the Commerce Department routinely conducts criminal background checks, according to the industry trade group ACA International, based in Edina.
"In some instances, there is a misunderstanding over who is actually doing the work," said ACA spokesman Mark Schiffman. "I've heard from a few [collection] agencies who thought this was the responsibility of the state."
He said hiring people recently convicted of felonies or fraud is "intolerable."
Theft, and illegal tactics
With so much data at their fingertips, unscrupulous collectors can wreak havoc on people struggling with unpaid bills.
Debt collectors often have access to Social Security numbers and use "skip tracing" tools to identify a person's employer, unpaid loan balances, phone numbers, home address and relatives. They also prowl the Internet.
Last year, a Texas collector with a criminal past telephoned Tosha Sohns, a Shakopee woman who owed money on a car. The collector said she had seen a photo of Sohns' "beautiful daughter" on MySpace. Then the collector asked, "Wouldn't it be terrible if something happened to her?" according to a lawsuit Sohns filed against the collections firm alleging harassment and invasion of privacy. The collector denied making the threat but admitted the rest.
Criminals can be good collectors. For two years before police led her away in handcuffs, Song's nickname "LuLu" frequently appeared on an office white board listing the day's top-grossing collectors.
Then last March, a woman facing collection by Song's employer complained about unauthorized charges on her credit card. The collections firm checked recordings of Song's work telephone. She had ordered food from a St. Paul restaurant using the woman's card number. Soon, other thefts were discovered.
"It didn't make a lot of sense because she was one of our top collectors and was making decent money," said Bob Dunham, president of Receivables Management Solutions, who also said that Song's background check was clean.
Song had lied on a 2008 state registration application by checking a box saying she had never been convicted of a crime, state records show. Song forged checks she stole from roommates in 2001, but a judge dropped the felony charge. A year later, Song asked a co-worker to cash two stolen checks, pocketing $1,162. In a plea bargain, the felony was reduced to a misdemeanor with probation.
In Song's biggest scam, she forged signatures on 32 payment vouchers submitted to her former employer, a medical device company. The company paid her $127,122 before spotting the forgeries. She pleaded guilty in 2005 to felony theft by swindle. It was while she was on probation and repaying the stolen money at a rate of $50 a month that she successfully registered as a debt collector, and began working for Dunham's firm.
Song is back in the Hennepin County workhouse, serving a nine-month sentence for violating probation. She did not respond to messages.
System fails repeatedly
Sherria E. Mustin, 26, of St. Paul, slipped through the collector screening process -- twice.
Mustin, like Song, had a criminal past. In 2005, she stole a friend's identity to buy a $1,460 computer online, then left a message on her friend's answering machine, "By the way, thanks for the computer," according to a criminal complaint. While the swindling charges were pending in court, she checked "no" on the debt collector registration form asking if she had ever been charged with a crime.
In April 2006, Mustin was convicted of gross misdemeanor theft. Two months later, she was approved to work as a debt collector at the same firm that employed Song, state records show.
However, the job did not last long. In August 2007, police arrested Mustin at work and accused her of persuading a co-worker to cash counterfeit traveler's checks, netting $1,029. Mustin admitted to police that she knew the checks were counterfeit, but gave them to a co-worker to cash, hoping to avoid getting caught. She pleaded guilty to a forgery-related felony and was put on three years' probation.
But it didn't end Mustin's career as a debt collector. The Commerce Department had renewed her registration, which lists her new employer as NCO Financial Systems Inc., a Pennsylvania-based collections company with operations in Minnesota. NCO would not comment on Mustin's employment and its hiring practices. Mustin could not be reached.
Violent offenders also have been registered as collectors, including Joseph L. Berntsen. In November 2005, a woman in Braham, Minn., accused him of dragging her into a bathroom and raping her. Berntsen, 28, later pleaded guilty to fourth-degree criminal sexual conduct.
Despite having a felony conviction within five years, Berntsen was registered as a debt collector earlier this year, and went to work for Financial Recovery Services Inc., based in Edina. A company executive said Berntsen passed the firm's background check, but was recently dismissed. An Isanti County judge has sent Berntsen back to jail for methamphetamine use and other probation violations.
In a telephone interview from jail last week, Berntsen admitted lying on his application to get the $12-per-hour job. He said he was fired for not meeting collection goals.
"The biggest problem that we have is that collectors lie," said Terri Shepherd, executive director of the Minnesota Association of Collectors. "We're taking people at their word."
'Somebody should be watching'
The word of collectors often isn't thoroughly checked.
That explains how offender Keisha R. Burrus landed at AllianceOne Receivables Management, a debt collections firm in Eagan, where she allegedly made abusive calls to a partially paralyzed stroke victim in Dassel, Minn.
Last year, Burrus and three co-workers were accused in a federal lawsuit of threatening the elderly woman over her unpaid medical bills. Burrus allegedly told her to "talk right!" and shouted at a home health care aide who picked up the phone. AllianceOne denied the woman's allegations in court documents but settled the suit without trial.
The state had repeatedly cleared Burrus to work in the industry even though she pleaded guilty to felony theft in 2001. She had stolen someone's personal information and illegally charged an expensive diamond ring and bracelet to the unsuspecting victim, a criminal complaint said. The felony charge was reduced to a misdemeanor in a plea agreement.
Burrus, 33, of St. Paul, was still a registered collector when, in 2008, she was arrested again. This time, Target caught her pushing $1,634 worth of goods, including vacuum cleaners, out of a store without paying. Burrus pleaded guilty to felony theft and was sentenced to five years' probation. Even so, the state renewed her collector registration less than a year after the theft, and she remained at AllianceOne until earlier this year. AllianceOne did not return calls seeking comment. Burrus could not be reached.
Joseph J. Benitz, 31, now is a repossession agent, and has worked as a debt collector.
In a 1997 personal feud, Benitz forced a car into a ditch, and then beat on it with a crowbar as the terrified occupants sat locked inside. He pleaded guilty to felony charges that were reduced to misdemeanors in a plea agreement. Two years later, Benitz showed up carrying a baseball bat at a Mahtomedi apartment to confront a woman he'd once dated. He pleaded guilty to disorderly conduct.
Benitz landed a job as a collector in 2008 with AllianceOne, after falsely claiming on his collector application that he had no criminal record. However, he lasted only two months because he "didn't like desk work" and went back to repossessing cars, he said.
That's how he ended up in a Maple Grove driveway last July allegedly ramming his tow truck into a Dodge Caravan with Sharon Ruhland inside, waiting to pick up her son for football practice. Ruhland, who is suing Benitz, pleaded with him to talk to her husband on her cell phone, but Benitz threw it into her car and said he "was not going to talk to her [expletive] husband," according to her pending federal lawsuit.
It turned out that Benitz was trying to tow the wrong vehicle. Benitz insists he didn't know Ruhland was in the minivan when he backed into it because the windows were tinted. He denies the rest, saying "I never touched her phone." Ruhland didn't call police; no criminal charges were filed.
Sharon's husband, Joe Ruhland, said he partly blames the government for letting criminal offenders work in collection-related jobs. "Having violent convicts repossess cars is like letting a sex offender work at 'Children's World,'" he said. "Come on. Someone should be watching over who is hiring these people."
Repossession agents are among the broad swath of collection-related occupations exempt from state registration. Collectors who work directly for lenders, law firms and companies that purchase old debts also are not required to register and declare whether they have a criminal record.
Laws have 'little impact'
Minnesota is one of five states that require individual collectors to register with the state. The others are Idaho, Nebraska, Tennessee and Wisconsin.
It creates a patchwork of collector regulations that may never work, said Mike Larsen, chief of the consumer finance bureau in Idaho. "People move from state to state, and from agency to agency, with a high level of frequency. It's difficult for one state to have an impact," he added.
The same conditions once existed in the U.S. mortgage industry, until disclosures several years ago that thousands of mortgage originators were criminals. Now, all states require them to be fingerprinted and their criminal backgrounds checked. Anyone with a financial-related felony is barred from getting a license.
Some lenders insist on high standards when they hire collections firms to call customers about unpaid bills. Capital One, a leading U.S. credit card issuer, said it won't permit felons to collect customers' debts. J.P. Morgan Chase said it goes a step further, requiring outside collectors to be fingerprinted. When making calls for such clients, some collections firms rely on special teams of collectors with no criminal records, according to current or former employees of three firms.
Only 10 percent of Minnesota's 42,437 registered debt collectors work within the state. Out-of-state firms that collect debts by phone in Minnesota are required to register their collectors, but often are ignorant of the law or just ignore it, according to the Commerce Department.
The screening is mostly data gathering. The application to register as a debt collector includes 14 questions and a box to check if the person committed a crime. The department has fined five collections firms since 2005 for inadequate screening of new hires, most recently Premier Credit of North America, based in Indianapolis, for $500. Officials have denied registration to 58 applicants over the past five years.
In rare cases, rejected applicants appeal. After serving more than two years in prison for possessing 2,000 pornographic images of children, Bobbie L. Radke, 42, wanted to work as a debt collector. The state rejected him in June, but Radke demanded a hearing and proclaimed his "genuine remorse." An administrative law judge denied the appeal. Radke, of St. Paul, did not return repeated calls.
Sen. Ron Latz, DFL-St. Louis Park, who has supported tighter state oversight of collectors, said consumers should have the right to file state lawsuits and seek damages when collection firms hire criminals who harass them. That would shift enforcement to private attorneys and courts.
"The only language that corporations speak is financial," Latz said. "Either they pay for their negligence, or nothing changes."