In God We Trust

Big banks and desperate debtors have made an East Valley ministry millions

Richard Ellison, founder and president of Help Ministries, says his organization is doing the Lord's work.

In a message on the Mesa-based group's Web site, Ellison says the 28-year-old ministry is "a voice in a hurting world, but more than a voice, a committed group of people ready to make a difference any where in the world God calls." The Web site is replete with feel-good stories about the ministry's efforts to help Christians in Mexico, Romania and Kenya.

"Our call and our ministry is to be a John the Baptist -- to be a voice in the wilderness, saying 'Behold the lamb!'" Ellison proclaims.

"Behold the lamb": Help Ministries founder Richard Ellison wants his ministry to be "a voice in the wilderness."
"Behold the lamb": Help Ministries founder Richard Ellison wants his ministry to be "a voice in the wilderness."
"Credit counseling is not inherently charitable," says IRS Chief Counsel David L. Marshall.
"Credit counseling is not inherently charitable," says IRS Chief Counsel David L. Marshall.


Illustrations by Mark Poutenis

It certainly sounds better than saying the ministry is a collection agency funded by desperate debtors, lining the pockets of big banks while providing ministry insiders, including Ellison, with wads of cash.

In 1997, Help Ministries expanded its charitable operations by entering the credit counseling industry, with a stated goal of educating and assisting debtors. Business has boomed. Before 1997, revenues were typically less than $200,000 a year. Last year, Help Ministries took in $47 million.

And prospects look good.

With credit-card debt in the United States soaring past $730 billion and banks handing out plastic to just about anyone who can sign an application, the credit counseling industry is in a position to continue its steep growth.

Personal bankruptcies have nearly doubled during the past decade; filings last year set an all-time record. And Congress is considering legislation that would require debtors to seek credit counseling before filing for bankruptcy, which could mean millions of new clients for agencies like Help Ministries.

But don't expect Romanian orphans to benefit. For all its growth, Help Ministries hasn't increased charitable spending much. Almost all of the money the ministry has earned from credit counseling has gone directly to a for-profit company owned by a former ministry board member. Marketing budgets dwarf charitable spending by tens of millions of dollars. Ellison's salary has more than tripled.

It might all be perfectly legal -- or it might not. This is exactly the type of enterprise that's raising eyebrows at the Internal Revenue Service, which is auditing 50 of the nation's nonprofit credit counseling agencies with an eye toward yanking their tax exemptions. The IRS won't publicly reveal which agencies are facing scrutiny, and the ministry won't say if it's a target.

If the government decides the ministry is a business instead of a charity, it could levy back taxes against monies left over after the ministry paid its credit-counseling bills, a pool of cash exceeding $3 million.

Even if the ministry keeps its tax exemption, it could be forced to pay stiff penalties if the IRS rules that payments to for-profits were excessive. The ministry's for-profit partner, owned by a former board member, which has received tens of millions of dollars from Help Ministries for marketing and account processing, could also be forced to pay the government twice its windfall if the IRS rules the ministry paid too much for services. How much the ministry would have to pay is impossible to say, but the IRS last month filed a $15 million claim against Ameridebt, one of the nation's biggest credit-counseling agencies, which stands accused of masquerading as a charity while shipping mountains of cash to a processing business controlled by an insider.

Noting that private businesses make millions of dollars, the IRS says credit counseling isn't inherently charitable. Consumer advocates say the credit counseling business has put a black mark on all nonprofits.

"Unfortunately, the term has lost its meaning because of this industry," says Eric Friedman, acting director of the Montgomery County Office of Consumer Affairs in Maryland, one of the first consumer-protection agencies in the nation to recognize that credit counseling is big business.

Help Ministries officials don't like to talk about their finances. Ministry officials declined interview requests from New Times, finally referring questions to a New York public relations firm, which insisted on written queries and written responses. The answers weren't enlightening.

But government documents reveal plenty. Just seven years ago, the ministry told the IRS it was in the red. Since entering the credit counseling business, Help Ministries has taken in more than $109.5 million and spent $1.26 million on charity. Debtors aren't told that most of their money is going to Debt Free Arizona, a for-profit company owned by a former ministry board member. Instead, visitors to, where the ministry posts online debt-management applications, are encouraged to visit the ministry's Web site to see examples of the organization's charitable works in foreign lands.

But the ministry's spending on Romanian causes has remained essentially flat since Help Ministries entered the credit counseling business -- in 2001, when the ministry took in nearly $14.8 million, it spent less than $40,000 in Romania, its only charitable spending that year. In its written answers to New Times sent via its PR firm, the ministry says it hasn't spent more because it wants Romanian operations to become self-sufficient. The focus, the ministry says, is shifting to Kenya and Mexico, where the ministry wants to build a church and community center. It tells potential donors construction will cost $50,000.

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