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Trouble Follows BlueHippo's Founder

Joseph Rensin Makes His Money from the Poor

By Joseph S. Enoch
ConsumerAffairs.com

January 8, 2007

BlueHippo Funding An Investigative Series by Joseph S. Enoch • BlueHippo: Extreme Layaway • A Short History • The BlueHippo Foundation • Trouble Follows BlueHippo's Founder • What Should You Do? • BlueHippo's Response • BlueHippo Has Many Clones --- News • Buying A Computer With Poor Credit • Gateway at Risk in BlueHippo Class Action • Blue Hippo Pays $5 Million To Settle FTC Charges • Federal Court Strikes Blue Hippo's Arbitration Clause • BlueHippo Funding Settles $1 Million Maryland Case • West Virginia Sues Blue Hippo • Class Actions Target Blue Hippo • Consumer Complaints

Like BlueHippo, trouble seems to follow Joseph Rensin, the company's founder and CEO. He has made a fortune off our nation's poorest individuals and although his businesses occasionally get him in trouble, he always seems to come out with a mostly unscathed bank account.

Rensin was six credits away from graduating from the University of Maryland in 1988. But he left college to start a real estate firm that bought and resold foreclosed real estate and houses repossessed by banks.

Three years later, a banker friend sold Rensin and his business partner some delinquent credit card accounts. Rensin and then-partner Michael Whitlin soon discovered that there is a lot of money to be made off people with mounting credit card debt.

"Next thing we knew, we were out trying to convince banks to sell us their portfolios," Rensin said in a 1998 Baltimore Business Journal article.

That campaign of buying delinquent credit card accounts became Creditrust in 1991. Rensin set up the company on 7000 Security Boulevard -- the same office where BlueHippo is now found.

Credittrust proved to be a huge financial success, especially for Rensin who bought out his partner, Whitlin, in 1993.

With the country's ever-growing credit card debt, Rensin was "on top of the world" in 1998 when he took Creditrust public.

In a 1998 Baltimore Business Journal feature on Rensin and Creditrust titled, "On top of the world," Rensin discussed all the money he made on his company's stock market opening.

With gold-rimmed glasses and a broad smile Rensin told the Journal, "I was very pleased with how things worked out. It's tough to wipe this silly smile off my face."

It's no wonder he was so happy. He became one of Baltimore's wealthiest entrepreneurs overnight.

Rensin offered 2.5 million shares at $15.50 a share in July 1998. By the end of its first day of trading, the shares closed at $16.06, and Creditrust had raised $31 million.

Rensin personally made $100 million from the offering. Roughly $8 million of it was in cash from shares he personally sold, while he made $93 million in the market value of his 68.8 percent share of the company.

As more people fell into debt and Rensin bought up the right to make them pay it back, Creditrust swelled throughout 1998. The company had 900 employees and Rensin was heard shouting, "It's going to be our best year yet!" at a Dec. 22, 1998 holiday party.

But while Rensin's profits were booming, so were his demands for the city of Baltimore and then, his threats to move his company.

According to published reports, Rensin had threatened to leave Baltimore County, saying it reneged on promises to provide training money for company employees. Baltimore County denied ever making Rensin such an offer.

After the county denied those claims, Rensin had a change of heart.

"Our lease isn't up until 2002," Rensin said at the Dec. 22 party. "We're not going anywhere."

But all the profits that had Rensin cheering at the party would soon be questioned after he got in trouble with stockholders the very next year.

In July 1999, Creditrust's stock was soaring at $34 per share but after scandals, defaulted credit and lawsuits, the stock plummeted to 50 cents in May 2000.

In Dec. 1999, the company revealed that "an executive" misappropriated $500,000 that was later recovered, according to the Journal.

On top of the company's inability to get new loans and pay off old ones, a local contractor successfully sued Creditrust for paying only half of a $3 million renovation project.

"If you're short on cash, you pick and choose which bills you want to pay," Derek Derman, an analyst from Wedbush Morgan Securities in Los Angeles told the Journal in June 2000.

Finally on June 22, 2000, Creditrust filed for Chapter 11 bankruptcy and laid off 600 of its 950 employees.

Meanwhile seven securities fraud lawsuits were filed against Creditrust and Rensin in 2000 for allegedly manipulating predictions of how much it would collect on debts and falsified revenues and earnings.

In the end, Rensin and one other Creditrust executive had to pay up to settle the lawsuits. Rensin had to pay the majority of a $10 million dollar settlement, including lawyers' fees.

Creditrust's CEO found himself in the same situation as the millions of people whose debt he had acquired. Like Rensin, a Fort Washington, Md. corporation, the NCO Group, assumed Rensin's mounting debt and bankrupt company in February 2001.

It didn't take Rensin long to recover though. In no time at all, he had launched BlueHippo and was back doing what he does best -- making money off the backs of the poor.

Next: BlueHippo Sounds Tempting? Read This First

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