COMPANY CONVICTED IN "CREDIT REPAIR" SCHEME
October 2, 2006
Master Credit Corporation and Santi Khamvongsa last week each pleaded "no contest" to the criminal charge of false advertising in a settlement reached with prosecutors in Santa Monica Superior Court. The Santa Monica City Attorney’s case involved 12 victims who had paid the defendants a total of $10,775.
Prosecutors charged that the defendants had advertised that they would help repair individuals’ credit records when, in fact, they were actually doing nothing to help improve clients’ credit. Master Credit Corporation also claimed non-profit status, but in a separate action, the Internal Revenue Service stripped Master Credit of this status.
The defendants’ sentence included the following:
The City Attorney’s Consumer Protection Unit began investigating the defendants earlier this year after receiving a complaint from a consumer who had paid Master Credit to perform credit repair work. Master Credit was using a Santa Monica mail box to conduct its business.
The Consumer Protection Unit filed the first criminal charges on June 29, 2006. The unit’s investigators discovered that Khamvongsa was operating a similar business in Las Vegas. After the defendants failed to appear in court for their August 2, 2006 arraignment, the City Attorney’s Office obtained arrest warrants and contacted the defendants at their Las Vegas office. The defendants then voluntarily appeared in court and entered the plea agreement.
Under state law, it is a crime for a person to engage in false advertising. Gary Rhoades, an attorney with the Consumer Protection Unit, said that there is a long history of self-styled “credit repair” companies defrauding consumers. “Credit records are important to everyone, and so these credit repair services can be very tempting,” Rhoades said. “This case puts consumers on notice that they should research companies before paying for such services. This case also tells ‘credit repair’ companies that they will face criminal charges if they don’t obey the law.”
Consumers who are considering credit repair should check any company’s name with the Better Business Bureau and the California Department of Justice.
This page was last updated on 02/28/11.