For Immediate Release:

SAINT PAUL, MN The Minnesota Department of Commerce recently ordered Robert Dunham of Lakeville, Minnesota, the owner of Receivables Management Solutions, Inc. (RMS) to pay a civil penalty of $200,000 for operating without a license and using money collected by his debt collection companies for personal extravagances. The Department also revoked Dunham and his company s debt collection licenses.

We have shut down this fraudulent debt collector to prevent him and his company from harming Minnesota consumers and businesses, said Commerce Commissioner Mike Rothman. This is another example of how we have stopped those who defraud hardworking business owners and struggling consumers in our state.

In the summer of 2013, the Commerce Department launched an investigation into the business practices of Dunham s two collection agencies, RMS and Wentworth Assets. As part of its investigation into the finances of Dunham and his businesses, the Commerce Department uncovered 40 separate dates from June 2012 to January 2013 where RMS s trust account had either a zero or negative balance. Under Minnesota law, collection agencies are required to establish a separate trust account to hold the money they collect on behalf of their clients to ensure that the money collected is not co-mingled with money for operating or other expenses.

The Commerce Department found that Dunham not only violated Minnesota law by comingling money for operating expenses and money collected for its clients in one account, but that the funds in the account were used for personal luxuries. Dunham used client money to pay for season tickets for both the Minnesota Twins and the Minnesota Wild; utility bills, parts for his classic Corvette, meals, and home and cabin costs; and a vacation in Costa Rica including a chartered fishing trip, zip line tour over eleven waterfalls, golf, a Segway tour, horseback riding, and white water rafting while staying at two different upscale spa and golf resorts.

All of this money was spent while RMS, under Dunham s ownership and management, owed nearly a million dollars, including $91,286 to Minnesota Unemployment Insurance, $15,452 to the Minnesota Department of Revenue and $149,500 to the IRS for taxes, employee payroll tax withholdings, assessments, and penalties.

The violations listed in the order, also detail that Dunham and RMS refused or intentionally failed to account to their 4,966 clients (as of May 9, 2013) for all of the money collected on the clients behalf within 30 days from the last day of the month in which the money was collected. The Department found that Dunham ordered RMS staff on at least two occasions to fabricate checks from consumer bank accounts to help cover RMS s payroll. Additionally, upon Dunham s order RMS employees deposited post-dated checks from consumers prior to the check date, which resulted in financial problems for the affected consumers.

During the investigation, Dunham acknowledged that he let RMS s license lapse because the company had a net worth of over a negative million dollars and could not afford the required surety bond to obtain a license. Yet, they continued to operate without a license and entered into at least 1,212 new debt collection contracts with clients between August 8, 2012 and May 2013. The Commerce Department found that Dunham s businesses had almost 5,000 active contracts with Minnesota companies and other businesses to collect unpaid debts from consumers. RMS has been placed into receivership.

By court order, debt collection companies are placed into receivership in order for the court-appointed receiver to manage the business, obtain a full accounting of the total amount of money the businesses collected for clients, the amount of money owed to clients, and the amount of money actually collected from consumers to pay off their debt.

Creditors should contact the Department if they are not getting timely reports from a collection agency. Consumers dealing with a debt collector should monitor their credit reports and make sure that their accounts are being paid and debts are being settled.

Commerce is Here to Help

The Minnesota Department of Commerce Department is here if you have questions, or believe you have been the victim of a scam or fraud. Report the fraud, so that others do not fall victim. If you think you have been a victim, contact the Department s Consumer Services Center at 651-539-1600 or (800) 657-3602.

Complaints can also be sent by email to consumer.protection@state.mn.us or by mail to Minnesota Department of Commerce, 85 7th Place East, Suite 500, Saint Paul, MN 55101.