> View all news

CHESTERFIELD BUSINESSMAN PLEADS GUILTY TO WIRE FRAUD IN CREDIT SCAM

By: Peter Shinkle, Of the Post-Dispatch
(reprinted from the St. Louis Post-Dispatch (MO), October 26, 2004)

For nearly 15 years, Chesterfield businessman John L. Weigel's schemes for helping people to fix their troubled credit histories have drawn scrutiny -- and lawsuits -- from federal and state regulators. His long path ended abruptly Monday. He pleaded guilty at U.S. District Court in St. Louis to one count of wire fraud, admitting that he had run a credit-repair scam.

Weigel, 58, of Chesterfield, will pay a $160,000 fine and will be banned from participating in a business that extends or reports credit. At his sentencing, set for Jan. 21 with U.S. District Judge Donald Stohr, he faces a maximum sentence of 20 years in prison. Michelle Corey, president of the Better Business Bureau in St. Louis, said Weigel repeatedly deceived consumers over the years but stayed in business by tweaking his operations. "He just kind of changed the names and twisted the scheme a little bit along the way." One of Weigel's attorneys, Scott Rosenblum, declined to comment. In 1987, Weigel began operating American Security Financial, which offered -- for a fee -- a catalog card that enabled people to buy items from its catalog. Once the items were paid for, Weigel promised to report the purchases as a positive credit event to credit-reporting agencies, he said Monday. Weigel also admitted to accepting applications from consumers who had been advised to use a federal employer identification number in place of their Social Security numbers. This practice was aimed at concealing a customer's bad credit history from credit bureaus and establishing a new credit history based on the information that Weigel reported to credit bureaus, prosecutors charged. In 1990, the U.S. Postal Service filed a complaint. Kentucky's attorney general did, too. In Missouri, the attorney general in 1992 won an injunction forcing Weigel and his business, under the name Tri-State Financial Corp., to refund money to 40 customers. Four years later, Missouri's attorney general filed suit again, saying Weigel had violated consumer law by promising customers that they could build a new credit history by using an employer identification number instead of a Social Security number. In 1990, Weigel began operating his company under the name Credit Plus and later under the name National Association of Business Leaders, prosecutors said. In the charges filed in federal court, prosecutors said that from January 2000 through April 2003, he defrauded customers of Credit Plus and National Association of Business Leaders by providing false information to two credit bureaus, TransUnion and Equifax. The average fee for consumers to join Credit Plus was $200, prosecutors said. The false information was reporting a positive credit event under an employer identification number, prosecutors charged. The credit bureaus caught on. In March 2001, Equifax told Weigel that it would no longer accept positive credit events reported by Credit Plus. TransUnion followed suit in August 2001. The lack of positive credit reports alerted at least one of Weigel's customers. Fred Ferrell, who lives in eastern Texas, said he turned to Weigel's business last year after open-heart surgery caused him to fall behind on his bills. He paid $250 for his catalog card and then bought about $400 worth of merchandise from the catalog, including luggage and a leather coat.

"I was satisfied with the merchandise," he said.

> View all news