The Utah Division of Consumer Protection has dropped $45,000 in claims and fines pending against Scott McCagno, the former president of the now defunct Consumer Credit Counseling Service of Utah.
In return, McCagno will transfer $20,259.20 from a CCCS bank trust to the division for restitution to CCCS clients.
Jim Bradshaw, McCagno's attorney, called the settlement an "absolute and complete victory" for McCagno.
"He does not have to pay any money," Bradshaw said. "All of the previous findings are vacated, and I think the settlement is a recognition that Scott had not done anything that merited any type of punishment or sanction. . . . It's a complete settlement of any and all disputes with the division."
In September, the division ordered McCagno to cease and desist from operating a debt management company and imposed a $45,000 administrative fine. McCagno appealed the division's decision to the Utah Department of Commerce.
Francine Giani, director of the division, said the $45,000 in administrative fines, even if they had been collected, would not have gone to hundreds of victims who lost money to the credit counseling agency.
"We'll just continue making refunds as we have been for the last six weeks with the balance money," Giani said. "It's good for consumers."
Giani said she does not know whether all the victims will get full restitution.
"This first group that we've been working on is a group of people who sent their money and didn't have their bills paid," Giani said.
"There's another group of people that got their bills paid but got late payments. We haven't gotten to them. We're working through them, and we'll get through every single one of them and hope that we can satisfy everyone with the monies that are available to us."
Bradshaw said the $20,259.20 in trust fund money always had been available for the victims.
"It was a trust account," Bradshaw said. "It was their money. As per the terms of the agreement, it very clearly says that there is no admission of wrongdoing, but he acknowledges that there has been mismanagement within the company. There was a deficit in the trust account before he ever came to work there."
Nothing in the agreement precludes McCagno from restarting a credit counseling business, but Bradshaw said McCagno has no desire to reopen the business.
At least 85 consumers across the Intermountain West who lost money to CCCS are getting their funds back apart from the $20,259.20 trust fund.
Earlier this month, Balance Financial Fitness Program, a private company, disbursed nearly $30,000 in refund checks to individuals who lost money to CCCS of Utah.
Balance Financial, a subsidiary of Consumer Credit Counseling Service of San Francisco, said the financial mismanagement by CCCS of Utah and the subsequent media fallout had hurt the consumer credit counseling industry nationwide.
Bradshaw has maintained that the dysfunction of CCCS was magnified by state regulators, who he said in March obtained an ex-parte court order that handed control of the business to the state, freezing the company's accounts.
In April 2004, a district court judge handed control of the company back to McCagno, but by May CCCS had closed its doors.
Roughly $64,000 in bounced checks has been tracked by state regulators. Francine Giani, director of the division, said several hundred people were affected by the mismanagement of CCCS.