Indiana Attorney General Greg Zoeller announced that his office will file lawsuits against three credit repair companies he believes defrauded three consumers of more than $12,000.

Zoeller named New Beginnings Credit Repair and Credit Collections, both of Merrillville, Ind., and owned by Richard Ornelas and Giovanni Gotti, along with David E. Young Jr., doing business as Young Investment Group, located in Hammond, Ind. At press time, his office had not yet filed any lawsuits against the firms, according to local court officials.

Zoeller said four area residents contacted his office claiming they were defrauded by New Beginnings and Young Investment Group and were unsuccessful in getting refunds. The two companies also are without $25,000 surety bonds that Indiana has required of credit services companies since June, he said.

In one unfiled complaint, the state alleges Young failed to refund $2,400 to a Michigan City woman to whom he promised credit lines that never materialized.

Gotti described himself to the Post-Tribune in Indiana as "a reputable businessman who has put hundreds of people in homes they couldn't afford, in cars they couldn't afford because of high interest rates." He said his company charges a flat fee of $750 to fix inaccuracies in credit reports and find "loopholes and laws to protect them."

Complaints allege New Beginnings defrauded one client of $1,100 in September 2009 and another of $3,200. Gotti said both clients were poorly served by former employees who took the clients' money without adequately explaining the risks, and directed them to so-called "positive tradeline add-ons."

For example, someone with an American Express card that allows multiple users can sell the spots to online firms like Seasoned Trade Lines for hundreds of dollars. The company then sells that access to the credit seeker for high fees, often thousands of dollars, Gotti told the newspaper.

Another complaint alleged that New Beginnings took $6,000 from a man who wanted a debt consolidation plan after his credit card companies wrote him off. New Beginnings obliged, adding at least a 10% fee, but the client did not keep up with the paperwork and New Beginnings kept the money.

Gotti said his company tried to "make good" on the complaints, offering settlement payments, but it did not stop New Beginnings from landing in the attorney general's path. Gotti said he would try again to offer refunds to the three clients.

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