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FTC MOVES TO FREEZE ASSETS OF AMERIDEBT FOUNDER
SPENT LAVISHLY ON WIFE, GIRLFRIEND AND HIMSELF

The founder of AmeriDebt Inc., the now bankrupt Maryland credit-counseling firm, took $70 million from its operations between 1999 and 2003 and spent lavishly on his wife, girlfriend and himself, including paying $179,000 to an interior decorator, $13,500 to a yachting company and $2,500 on a restaurant tab.

That's what the Federal Trade Commission said in court papers as it sought to freeze the assets of Andris Pukke. A hearing on the matter was held Friday in federal court in Greenbelt, Md. Those assets included $18.3 million transferred to domestic and offshore trusts, and $2 million sent to an account in Latvia for his father, the agency said.

In 2003, the FTC sued Pukke, his wife, the nonprofit AmeriDebt, and DebtWorks Inc., the for-profit private firm Pukke set up to process AmeriDebt customer accounts. The suit alleged that the Pukkes and their companies deceived financially struggling consumers seeking help with their debts by charging high fees -- hiding them by calling them voluntary contributions. They operated falsely as a nonprofit organization while siphoning off money through DebtWorks to make money for the Pukkes, the suit said.

A recent filing in a related class-action lawsuit alleged that Pukke and his girlfriend traveled to Tahiti, Bora Bora, San Tropez, Las Vegas, Aspen, the Cayman Islands and Cabo San Lucas, that he gave her a new Mercedes, and that he spent $15,000 for a mattress and $8,000 for sheets for his Malibu mansion. He sold a Miami Beach home for $7 million, that suit said.

AmeriDebt, based in Germantown, Md., was once one of the nation's largest and most aggressively marketed debt-management firms, advertising heavily on cable TV and the Internet. Also the target of several lawsuits by state attorneys general, AmeriDebt is now bankrupt and its accounts have been taken over by a third-party firm.

AmeriDebt is one of more than 50 nonprofit credit counseling firms under investigation by the Internal Revenue Service for misusing their tax-exempt status for the benefit of their operators. There is little federal regulation of the firms. The bankruptcy bill that passed Congress this week contains a provision that requires debtors to seek debt counseling before filing for bankruptcy protection.

Last month, the FTC settled its lawsuits with AmeriDebt, but its case against Pukke and his wife continues, with the agency seeking $170 million in consumer refunds.

"An individual profiting $70 million on a fraudulent promotion is certainly among the largest we have seen," said Joel Winston, the agency's associate director for financial practices. "The question is where did it go? We're trying to freeze whatever money and property he has, seek repatriation of the money he has put overseas and have a receiver appointed by the court to audit his affairs and determine where all of his money and assets are."

John B. Williams, Pukke's attorney, did not return phone calls. Previously he has said that evidence shows that AmeriDebt benefits to all consumers far surpassed the $170 million that consumers paid the credit-counseling firm because it was able to reduce interest rates and get rid of late fees and interest charges for many of its customers.

In court papers opposing the freeze, Pukke's lawyers said the FTC and the class-action plaintiffs have failed to prove consumers were injured. The monetary transfers, the papers added, occurred in the past "when Mr. Pukke was in much better financial condition. Mr. Pukke now has limited assets and all of his available income goes to the IRS, Mr. Pukke's wife pursuant to court orders in a pending divorce case, and personal living expenses which are not extravagant."

U.S. District Judge Peter J. Messitte said he would rule this week on the request to freeze his assets.

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