CorrectiveSolutions' Checkmate

Prosecutors nationwide team up with the San Clemente debt collector to terrorize consumers in ways both highly profitable and usually sketchy

Meanwhile, the letters kept coming, threatening her with arrest. She eventually became part of a class-action lawsuit filed by Arons, the civil-rights lawyer, against the company's owner, Henry Craighead. The suit claimed that District Attorney Technical Services illegally disguised itself as a government entity in order to extort penalties and fees. In 2011, a federal court awarded 36,000 victims nearly $750,000 in damages.

But it was too late. That same year, Craighead declared bankruptcy himself and only paid $160,000. He's now retired and living comfortably in Oregon, says Arons.

"That's what they do," Arons says. "Whenever we win one of these cases, they declare bankruptcy in order to avoid paying out damages. It's absolutely maddening."

The exact same thing had happened a year earlier, when Arons won a similar suit against American Corrective Counseling Services. A federal court ruled that, despite the company's claims of immunity, it had misrepresented itself, made false threats of prosecution and charged exorbitant penalties.

Once again, Arons' clients were unable to collect on their victory. American Corrective also declared bankruptcy, saying it couldn't repay investors—despite having amassed $47 million in fees over the previous four years.

A few months later, it was back in business, re-formed as CorrectiveSolutions and "free and clear" of all liability, according to court records. And today, it's the biggest bad-check collector of them all.

*     *     *

Mike Wilhelms is president and CEO of CorrectiveSolutions. His LinkedIn profile boasts a photo of a fresh-faced surfer in charge of more than 200 employees. His biggest customers are the DAs of Los Angeles, San Bernardino, Riverside and Orange counties, the latter of which signed a two-year contract in 2011. All are within driving distance of his palm-tree-lined headquarters in San Clemente, where it's clear business is booming.

Consumer-rights lawyers estimate the company sends out around 2 million letters annually. (The company did not respond to repeated interview requests.) The CorrectiveSolutions website does its best to imply it's an arm of law enforcement. A slideshow gently fades in and out with statements about "holding offenders accountable for their actions." An interactive map shows its 140 contracts with DAs nationwide.

Nowhere does it say that most of these "offenders" have never been investigated or formally charged with a crime.

The site boasts dozens of quotes from pleased prosecutors, who sing praises of reduced caseloads and crime rates. Yet Contra Costa District Attorney Robert Kochly offers the most telling endorsement, noting he's grateful for "more revenue to my office."

District attorneys don't pay a cent for CorrectiveSolutions' services. Instead, the company pays them to run bad-check programs. All a prosecutor must do is hand over official letterhead, along with a list of bad-check writers and a bit of "case criteria."

Between 2005 and 2008, Los Angeles County raked in more than $1 million. Miami-Dade made more than $375,000.

When asked whether Miami-Dade's program was little more than a moneymaking scheme, Toussaint balks. "Diverting such cases out of the criminal-justice system gives an individual with no prior record an opportunity to avoid having a criminal record," she says. "It makes the victim receiver of the worthless check whole, and it is done with no cost to the taxpaying citizens of our community. Pretrial diversion programs also allow the courts to focus on other types of criminal activity."

But while prosecutors claim they use collection agencies to decrease caseloads, some companies actually promise to expand them—for the sole purpose of generating more money.

Take BounceBack, the industry's second-largest player. It owns Check Connection and makes no bones that generating fees is mission one.

"Is your program suffering from diminishing checks?" asks the company's website. "Visit Check Connection to learn how you can substantially increase the number of checks in your bad-check program."

The site offers examples from places such as Palm Beach County, Florida, which switched to BounceBack in 2006 after "merchants and other victims were complaining that they felt intimidated by the people administering the program. Check writers complained of strong-arm collection tactics."

Since then, Palm Beach has "passed the $1.5 million mark."

BounceBack won't discuss its business practices, believing it has been unfairly vilified by the media. "The press usually doesn't take anything we say seriously, so we've begun to decline to make comments," says company vice president Gale Krieg.

Still, prosecutors eagerly rise to the industry's defense.

"They're not just some debt-collection company," Louis Alvarez, head of the Los Angeles County DA's check program, says of CorrectiveSolutions. "What they are doing is trying to help us recoup money for victims."

The real victims, at least in Alvarez's mind, aren't math-challenged consumers, but merchants who lose more than $120 billion annually to bad checks, according to the Federal Reserve. He argues that CorrectiveSolutions is simply helping his overburdened and underfunded office get restitution—while "rehabilitating" check writers who are likely guilty of fraud.

"We do get people who made a mistake, he says, "but a good majority of the students who take our class say they just procrastinated and didn't intend to pay until they saw the mail from the DA's office."

Yet once again, internal records dispel any notion of rampant criminality. In 2011, CorrectiveSolutions sent out 33,202 letters on behalf of LA County. Fewer than 1 percent of those cases were actually recommended for prosecution. "They've prosecuted more glue sniffers than bad-check writers in a lot of these counties," Arons says. "This is not an overwhelming problem. The feds keep stats on this, and only one in every 200 checks doesn't clear. And of those, about half clear on redeposit, so we're talking about 0.5 percent of all checks written."

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Now this gives more insight as to how thousands of responsible people are becoming homeless. Citizens who've bounced a check are given a choice...jail time or homelessness. Very sad.


I need to clarify that the missed child support payment was not because I was absent-minded, it was because I had been laid off by a real-estate agency, backed by banks which filed bankrupcties that were financed by the U.S. Gov't. So, ultimately, I immediately owed $3,500 for a levy and threatened with jail time that was financed by the U.S. Executive Office.


Please believe her. Stores will not contact you first. And, it's not just happening with stores. It happened to me when I had missed one child support payment. The County levied every penny out of my checking ($700) and savings ($60) accounts, which produced over 21 checks bouncing. I had never bounced a check in my life. Almost immediately, with fees and fines, I owed more than $3,500 for "bounced" checks caused by a levy by the D.A. Then, I was threatened with jail time. The justice system is in the business of framing citizens.


Congress created a loophole in 2006, granting what amounts to immunity from deception charges for collection agencies working on behalf of law enforcement.


Consider it the privatizing of justice. Instead of investigating bad-check complaints, prosecutors simply pass them along to CorrectiveSolutions. The company then uses official DA letterhead to threaten jail time if consumers don't pay up. CorrectiveSolutions also runs the "voluntary" financial-accountability classes, and prosecutors get a cut of the profits while barely lifting a finger. The entire system runs on a one-size-fits-all presumption of guilt. No one's bothering to investigate whether the check writer was working a scam or merely suffering from a momentary lapse of mathematics.


More assaults against poor people -- In 2011, my attorney wrote a bad check for $1500 to me after the Judge ordered him to repay me. I filed a formal complaint to The State Bar of California.  They refused to do anything about it because he eventually made good on the check. He was not required to attend any diversion program.

I say fight it and sue.


From the story "A few days later, while reviewing her bank account, she noticed the check had bounced. Orr headed back to Albertsons to make good on her payment. But she was told the store had already placed her in collections."

While Albertson's certainly has the right to do this, it isn't my idea of good business practice. Why not at least make one attempt to contact the check writer? Have you contacted Albertson's and asked them why they are so quick to refer bad checks for collection?


I noticed that two.  The article also states that in order to open a case in Riverside County, Albertson's had to make at least one attempt to contact the check writer.  Either this lady isn't telling the whole truth or Albertson's didn't follow protocol. 


@gottaknow247"That's when I asked if I was actually talking to someone in the DA's office," she says. "And they said no, that they were a company being paid to represent the DA."

DA sold his letterhead to the highest bidder.


@gottaknow247 The issue is that creditors are turning to prosecutors to collect their debts in order to avoid having to go through the Fair Debt Collection Practices Act. Clearly the woman was at fault for writing a bad check. If Alberston's believed she committed a crime, they should have charged her with a crime. Instead, they used the long-arm-of-the-law to intimidate her into making good on her debt. That's skirting the intent of the Fair Debt Collection Practices Act. (I am not a lawyer so don't quote me on it.)


The issue I raise isn't the debt collection practices, but whether or not we are hearing the whole truth in the way Denise Grollmus tells us.  Did Albertson's try to contact Ms. Orr prior to Ms. Orr reviewing her bank statements or not?  Seems a little extreme on Albertson's part to send a $91 bad check writer to collections.  If Albertson's did try to contact Ms. Orr and those messages were ignored, then I don't see any problem with Albertson's actions.  I didn't read in the story if Ms. Grollmus tried to contact Albertson's for their side of the story.  I think it would be unfair to slander Albertson's based to the testimony of Ms. Orr alone.

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