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Debbie Dujanovic ReportingErik Olsen: "People are buried in debt, financially buried."
Three quarters of American families are "in deep" and looking for a faster, cheaper way out. Companies promising to do just that are cropping up across the country. Tonight, Debbie Dujanovic goes undercover to investigate one Utah debt relief program, its promises, and the secrets customers never knew.
With salespeople told to push the "spiritual benefits" of getting out of debt, the good news spread fast -- at church meetings, in neighborhoods. Sounds perfect: shave years off your debt, save thousands in interest. Our investigation, reveals for some, the claims were nothing more than empty promises.
#one
Desperate to dig out...
Melanie Millett: "We were in over our heads."
Left homeless by divorce...
Tim Eversole: "I didn't have a desk or anything."
Denise Barney: "The biggest extravagance we have right now is keeping our son in piano lessons."
...A faster way out of debt.
One company seemed to have answers, led by a man offering safe harbor, Mascot Financial president, Scot Stobbe.
Scot Stobbe, President, Mascot Financial: "I sat in people's homes, I'm sorry, and watched them go from despair to hope, just knowing there was a plan."
The road out of debt begins in a Provo meeting room; the pitch promises big things
"I believe we are the most powerful company in Utah for what we do. We're saving families a hundred thousand dollars in interest."
Clients turned over access to accounts, their bills, bought into Mascot's 29 strategies to cut debt. Friends told friends, who told family.
Erik Olsen, Former Salesperson: "I was sold, and I'm not easily sold."
They even went further into debt to scrape together thousands in up-front fees, just to get on board.
Top Mascot brass cruised the Caribbean and vacationed in Hawaii. But back at home was a shipwreck.
Krista Openshaw, Former Customer: "What was I going to do for food for my kids."
The Openshaw's mortgage didn't get paid. Late fees and extra interest piled up.
Justin Openshaw, Former Mascot Customer: "I worked so hard on this house and now I might have the potential of losing it."
The Murdoch's credit card interest rate shot up 22 percent. The mortgage company started calling.
Lee Murdoch, Former Customer: "They were telling us they were going to start us into foreclosure."
With nine mortgage payments missed, the Ballamis' credit rating was destroyed.
Cheri Ballamis, Former Customer: "We went to Sears to get a credit card, sorry."
Mascot sales people were flooded with calls, emails and letters.
Lyman Willardson, Former Salesperson: "There was something fishy going on with the money."
We confronted the company about the problems.
Scot Stobbe, President, Mascot Financial: "I don't know that I'm well enough to determine blame. It's not in my nature to find blame."
He does, however, point to mistakes made by a partner company handling clients' money.
Scot Stobbe, President, Mascot Financial: "The money would come in and there wasn't enough organization as to how it was being paid and there was this effect of a deep dark hole."
Stobbe says Mascot spent 200-thousand dollars to help clients cover unpaid bills. But customers tell us they're still out thousands of dollars, so they complained to state consumer investigators.
The state refused to take action. We were surprised because our investigation turned up 40-unhappy customers in five states. We took our results back to investigators and convinced them to take a second look.
Francine Giani, Director, Utah Department of Commerce: "They haven't received the service they've paid for. We believe that's a violation of the law.
Now on the case, the state has issued a subpoena for Mascot's files.
Francine Giani, Director, Utah Department of Commerce: "We've got a lot of work to do to find out who has to pay up."
However, something we uncovered made us wonder if that ever happen. Remember that first big pitch?
"Scot Stobbe is the president of the company, he is a financial genius."
We found this debt elimination expert has twice eliminated his own personal debt, in bankruptcy court. Records show unpaid bills of more than a million dollars.
Scot Stobbe: "Q- Do you share with your clients the fact that you've declared bankruptcy? A- No, i don't have any clients personally, but no."
Now, Mascot Financial says it has many happy customers, and a salesperson told me today about a new investment plan that promises big returns. In fact, we heard about the plan as well, when we recorded the sales pitch.
"We took the equity out of his home and we turbo charged it with a partner company. They give a 30-percent guaranteed return per year."
We asked investigators to weigh in on those claims.
Wayne Klein, Utah Division of Securities: "The solicitation is illegal, we want to find out about it and put a stop to it before people lose their money."
Tonight the Division of Securities joins the agencies investigating Mascot Financial.
