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Circuit judge says businessman needs to pay back defrauded West Virginians

A circuit judge has decided that a Florida businessman who defrauded hundreds of West Virginians through his debt relief companies must repay them more than $126,000. 

The hard part comes next -- actually getting the money from the elusive James Armstrong and back into their hands.

Assistant Attorney General Norman Googel asked Judge James Stucky to decide the 2009 consumer case in favor of the state, and Stucky did. He ordered an injunction against Armstrong to pay back the illegally collected fees and monthly service charges paid by consumers desperate to get their debts settled.

He operated debt-relief companies under the name of Family Credit Counseling Corp., and others. Armstrong is no longer conducting business in West Virginia.

Armstrong did not appear, and has never appeared here, in court. 

He operated both for-profit and non-profit companies in this state and other states that promised to manage repayments to creditors for debt-ridden consumers. Enrollees paid a monthly amount to him that was to be distributed to creditors, plus monthly service fees. 

Legally, those kinds of companies are permitted to charge up to 7 percent for fees. But Armstrong charged more than he was allowed, and he charged some "upfront" fees that were illegal.

Googel told the judge that the companies took more than $95,000 in illegal upfront fees and more than $30,000 in monthly service fee overcharges. About 250 West Virginia consumers were affected, he said.

Not only did he cheat those consumers, Armstrong cheated his own company. Florida authorities charged him with taking $3 million from a trust account.

And those payments he was supposed to make to creditors? Many times they were never paid and consumers found themselves right back in debt where they started, despite the money they paid Armstrong.

Googel said, "From what I can tell, they were operating properly in the early years. But then he was dipping into the till and it got out of control.

"Collecting the money now is the hard part," he said. "His assets will be well-hidden. But we're certainly going to try."

Googel said the debt-relief industry is ripe for scams, and the state has been very active in investigating those. But he said some do it right and can be a benefit to financially-strapped people. Most are non-profits, he said.

"If people want these services, they should go to companies that have offices in West Virginia," he said. "But people get in trouble when they go on the Internet or call a number they see on late-night TV.

"We call them 'last-dollar scams,'" Googel said. "They are going after people who are already down and out and they swoop in and try to get money out of them. Because people really want to pay their debts.

"So they are vulnerable to anyone who says 'I can help you do that,'" he said.



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