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State shuts down Rosemount business

Scott Schoaf says he was a victim of the same bad economy that had been keeping him busy the last several years.

Schoaf, a Rosemount resident, has run collection agency Alternative Receivables Solutions, from his home for the past 14 years. But the Minnesota Department of Commerce revoked Schoaf's debt collector's license last month after a random audit found he'd been using the money he collected for clients to pay his own bills.

Schoaf said with the economy down it has been harder for him to collect for his clients. And that has made it harder for him to run his business.

The way things normally run, Schoaf collects money from people who owe, then puts that money in a trust. At the end of the month, he pays his clients and takes a commission for himself. But the commerce department alleged Schoaf had taken money from the trust 44 times during 2009 to pay ARS's own bills and left the trust without enough money to pay his clients. The trust account was overdrawn as much as $20,018 in October of 2009.

The commerce department also alleges Schoaf used money from the trust to pay for lawn service at his home. Schoaf said that was a mistake -- a matter of writing a check out of the wrong account.

"It was just a careless thing," he said.

Schoaf doesn't deny he acted improperly. He calls keeping the trust account balanced a "cardinal rule" of the collection profession. But he said his office was overstaffed and he had guaranteed jobs to his eight employees. He said the business had taken "significant losses" in the last two years.

"I'm not hiding anything. I'm not taking exorbitant trips. I wasn't buying any brand new cars," Schoaf said this week. "It was just stupid decision making on my part."

Schoaf does not face any criminal charges for his actions, though civil penalties are still possible. He could appeal the commerce department's decision, but he said he's done with the collection business. He called the penalty harsh for a business he said has been a model for the industry over the years.

"If it's wrong, it's wrong," he said. "If they don't want to grant leniency, that's their choice.... It seems like anti what we're supposed to be doing right now."

Schoaf is in the process of securing a line of credit to balance the trust account. He said losing his business has been hard on him.

"It's like a death," he said. "My wife worked with me, and my son. I had a lot of people in the community working with me."