By Jason Zweig and Rachel Louise Ensign | Dec. 18, 2015 5:14 p.m. ET
Federal authorities in Montana and Washington, D.C. are investigating Howard S. Dvorkin, a prominent advocate for consumer-debt relief, over his business ties to payday lenders that charge high rates of interest, according to a person familiar with the probe.
Mr. Dvorkin and his businesses were the subject of a Page One article in The Wall Street Journal in January.
Mr. Dvorkin didn’t return calls Friday but previously told the Journal that he wasn’t in the payday-lending business.
His attorney, Thomas Katz of Katz Baskies LLC in Boca Raton, Fla., said Friday that Mr. Dvorkin hadn’t been contacted by any federal investigator. “Were there to be any such investigation, we’re confident that there’s no basis for a prosecutor to be involved,” said Mr. Katz.
The investigation is at an early stage, said the person familiar with the matter. It might not lead to any criminal or civil charges by the federal government. The person familiar with the investigation said some recent federal payday-lending cases have alleged racketeering or mail or wire fraud.
Calls to the U.S. Attorneys in Montana and Washington weren’t immediately returned.
Mr. Dvorkin is the founder and former president of Consolidated Credit Counseling Services Inc., a nonprofit that says it has helped more than five million Americans get their borrowing under control. But Mr. Dvorkin also held interests in businesses that provide services to payday lenders, the Wall Street Journal review found.
One of those businesses said in 2009 that it was itself offering payday loans. That lender’s website said it charged annual percentage rates between 235% and 782% on 14-day loans. Its site in 2012 said it was still offering payday loans.
Payday and other online lenders can turn to another of the companies in which Mr. Dvorkin had a stake for software and customer leads, the Journal found; until September 2014 it also offered to help customers set up collaborations with Native American reservations. Some online payday lenders claim immunity from state usury laws by affiliating with reservations.
Mr. Dvorkin told the Journal late last year when asked about such matters: “We’re not in the payday-loan business, period.” Told of documents showing that firms in which he owns interests either had offered payday loans or supplied services to payday lenders, Mr. Dvorkin said he didn’t control these companies and wasn’t familiar with the daily details of their operations.
Gary Herman, president of Consolidated Credit Counseling Services, said on Friday that he was unaware of any federal investigation and the firm has no improper ties to the for-profit companies associated with Mr. Dvorkin. “We’re not doing anything wrong,” he said.
Mr. Dvorkin in 1993 founded Consolidated in what he described as a 10-by-7-foot former janitor’s closet in Fort Lauderdale, Fla.
It grew to be among the country’s largest credit-counseling firms. Its commercials, featuring animated green creatures that Consolidated calls debt suckers, have been common fodder on cable television.
Mr. Dvorkin said Consolidated was among the first to offer credit counseling over the phone. He parted ways with the firm in 2013 though he still is involved in a private company that provides services to Consolidated.
Source: The Wall Street Journal
http://www.wsj.com/articles/feds-investigating-consumer-debt-expert-howard-s-dvorkin-1450476843