The seventh and last defendant implicated in the Federal Trade Commission’s largest case of credit counseling fraud has pleaded guilty to deceiving consumers who paid a for-profit company that was acting as a nonprofit organization for credit counseling services, according to a Newsday.com article (”Last Defendant Pleads Guilty in Credit Card Debt Scam,” Sept. 13, 2008).

Louis Mustachio, a former employee of Debticated Consumer Counseling, Inc., admitted to committing conspiracy and mail fraud and could be sentenced to up to 11 years in prison. Mustachio’s attorney, Christopher Cassar, claims his client was “unaware he was doing anything illegal.”

Debticated Consumer Counseling was one of the 11 agencies serviced by DebtWorks, Inc. and AmeriDebt, Inc., the two companies central to the FTC’s case. The FTC accused DebtWorks and AmeriDebt of blatantly violating their nonprofit, tax-exempt status by unlawfully charging fees for credit counseling services between Jan. 31, 1998, and Oct. 7, 2004, and “ostensibly” promising a quick and easy way for consumers to reduce their credit card debt.

The FTC awarded a total of $12.7 million to about 287,000 former AmeriDebt customers who qualified for redress as part of the settlement. An additional $7 million has been returned to consumers of AmeriDebt’s and DebtWorks’ 11 partner agencies as part of a class-action settlement.

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