News for May 2005 - Illinois Issues

News September 2005

State seeks to recover dollars
from collection agency

Gov. Rod Blagojevich’s administration is trying to recoup a $75,000 grant it gave to a Rockford collection agency later declared a scam operation by federal regulators.

In March 2004, Capital Acquisition and Management Corp, or CAMCO, paid $300,000 to settle a federal complaint that accused the company of threatening thousands of consumers who had debts too old to be enforced or who never owed money in the first place.

A month later, Blagojevich’s Department of Commerce and Economic Opportunity gave the company $75,000 to train 150 new employees.

“This grant was part of an agreement that was made by the previous administration and, because of the way that agreement was structured, the fine that the company paid did not violate those terms, so the grant was executed,” says department spokesman Andrew Ross. “But this is an example of why greater corporate accountability is required.”

A federal court shut down CAMCO in December 2004. In the eight months since the March settlement, the company had racked up more than 2,000 new consumer complaints. Up to 80 percent of CAMCO’s collections were bogus, according to the Federal Trade Commission, but the company pried payments from consumers by threatening to “hound you ’til the day you die.”

Prior to those allegations, former Gov. George Ryan, awarded CAMCO $3.7 million in tax credits over 10 years and gave the company $500,000 to purchase its Rockford headquarters. Ross says the additional $75,000 grant was tied to that package.

CAMCO never received any of the $3.7 million in tax credits, Ross says. The state has ordered CAMCO to return the $575,000 in grants, with the Illinois attorney general’s office filing a claim in federal court.

The state also has asked American Trans Air and Winstrom, a Toluca window manufacturer, to return grant money as part of a corporate accountability law Blagojevich signed in 2003.

ATA, which filed for bankruptcy protection last year, is being asked to return $4.6 million in state subsidies. The Blagojevich Administration wants back $857,758 it gave the airline last year to add 168 new jobs at Chicago’s Midway Airport. The state also wants ATA to return nearly $3.75 million in infrastructure grants awarded while Ryan was governor.

Winstrom, the window manufacturer, received a $27,000 job-training grant in 2004, but failed to meet its promise of 24 additional hires.

These are the first collection efforts initiated under the 2003 “Corporate Accountability for Tax Expenditures Act.” The law requires the state to seek refunds from companies that fail to uphold job-creation pledges that accompany state subsidies.

The law was sponsored by Rep. Jack Franks, a Woodstock Democrat. His area lost hundreds of jobs when Motorola closed its Harvard cell phone manufacturing plant in 2003. The company was lured there a decade earlier by $36 million in state assistance.

A new state Web site offer progress reports for dozens of firms that are complying with the corporate accountability law. But the Department of Commerce and Economic Opportunity would not identify the three companies that weren’t complying until Illinois Issues filed a request under the state’s public records law.

Ross says the department has met disclosure requirements in the corporate accountability law. The law does not, however, require the state to post the names of companies that have failed to meet job-creation pledges.

Pat Guinane
Illinois Issues September 7, 2005

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