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The Minnesota Department of Commerce has temporarily suspended the collection agency license of International Collection Services, accusing the Bloomington, Minn.-based company of misappropriating more than $125,000 from clients in the past three years.
According to the department's allegation, ICS used customer funds to conduct business instead of remitting the money to its clients within 30 days of collection, as required by Minnesota law. The office alleges that ICS used the cash to fund operations.
"Consumers have an expectation that when a collection agency collects your money to pay a bill, they actually pay the creditor on your behalf, not spend the money on their own bills," said Minnesota Commerce Commissioner Glenn Wilson in a press release. "When a breech of trust like this occurs, we suspend the license and shut down the agency."
Officials with the Bloomington Police Department and Department of Commerce executed a search
warrant on Tuesday and recovered financial records and computers from the company and its owner, Tim Peters.
The search warrant was necessary because Peters declined to grant access to the company's records, another violation of Minnesota law, according to officials with the Department of Commerce. ICS officials did not return calls seeking comment as of this morning.
The company works on a contingency basis and only is paid if it collects on a client's debt.
The department said it received complaints from two out-of-state clients of ICS, alleging they had not received money owed to them after ICS had collected on accounts due, according to officials with the Department of Commerce.
Based on the complaints, investigators conducted an audit of the company's trust accounts and allegedly found that, in addition to misappropriating client funds, the company also used that money to pay for operating expenses and to pay off Tim Peters' personal credit card bills.
A court hearing is scheduled for June 29 to consider making the license suspension permanent.
