Some nonprofit credit counselors are essentially call centers with sales staff pushing consumers into debt management plans with hidden high fees, a Congressionl report charges.

Debtors seeking help receive little or no counseling. And millions of dollars that debtors pay in fees end up going toward executive salaries or are funneled to for-profit affiliates that provide processing.

Some of the newer nonprofits, which advertise extensively on television, have been designed to enroll as many debtors as possible into plans that charge exorbitant fees that are funneled to affiliated for-profit companies, the report alleges.

"This is abusive, a violation of federal statutes," Sen. Norm Coleman (R-Minn.) said."I want to clean up the industry right away." Coleman is chairman of the U.S. Senate's Permanent Subcommittee on Investigations, which has been holding hearings on the credit counseling industry.

The subcommittee was told that the Internal Revenue Service is considering revoking the nonprofit status of some credit counseling agencies and referring cases to the Justice Department for criminal prosecution.

Commissioner Mark W. Everson said the IRS hopes that with its audits of credit counselors as well as anticipated criminal prosecutions and sanctions "word will get out and people will ... clean up their act."

One of the companies singled out for scathing criticism was AmeriDebt Inc., of Germantown, Md. Andris Pukke, whose Maryland company once provided processing services for AmeriDebt, invoked the Fifth Amendment, declining to testify. AmeriDebt was founded by Pukke's wife.

Also absent was John Puccio, founder and president of Massachusetts-based Cambridge Credit Counseling Corp. He reportedly suffered a stroke Tuesday. A Cambridge Credit spokesman said the subcommittee's "bias" contributed to Puccio's illness.

Cambridge's executive pay has raised eyebrows. Puccio allegedly received $624,000 in 2002. By comparison, a director of a traditional credit counseling agency in Minnesota testified that he earned $60,000.

Credit counseling agencies were developed decades ago to help consumers avoid filing for bankruptcy. They were granted nonprofit status because they provided education to debtors and often operated largely with volunteers. The nonprofits charged limited or no fees for their face-to-face counseling.

In serious cases, consumers were enrolled in debt management plans. Under such plans, the agency negotiated lower interest rates for the debtor and a waiver of late fees in return for the debtor making monthly payments.

Creditors supported the nonprofits by giving them a percentage of the debt they recovered from clients in debt management plans.

But the industry began to change in the 1990s. Hundreds of nonprofits sprung up offering their services over the phone and Internet, promoting debt plans. The new entrants "have developed a business model which is based on generating revenue rather than providing counseling to indebted consumers," said Coleman.

It's estimated that 9 million Americans contact credit-counseling agencies annually; industry officials estimate that 2 million consumers are on active credit-repair programs at any one time.

Many of the 1,215 credit-counseling agencies that have applied to the Internal Revenue Service for tax-exempt status since 1994 are "little more than telemarketing call centers," said Sen. Carl Levin (D-Mich.), the subcommittee's senior Democrat.

The Senate report charged that it found "alarming abuses" in some of the companies it studied, including AmeriDebt, Cambridge Credit Counseling and Baltimore-based Amerix.

The report alleges, for example, that DebtWorks has provided processing services to 11 nonprofit credit-counseling organizations that managed $2.5 billion in consumer debt. Most of the groups were organized by AmeriDebt employees or by Andris Pukke's friends, the report charges.

The subcommittee said Amerix provides processing services to five credit-counseling agencies and had gross revenue of $386.5 million between 1998 and 2002.

Although it does not own any of the five agencies, Amerix exerts its control over them through service agreements, which require each agency to enroll 30 percent of their callers into a debt-consolidation plan, the report alleges.

It added that Amerix set up credit-counseling agencies through existing nonprofit colleges and universities, effectively sidestepping any IRS review of these new organizations. Amerix told investigators it approached colleges because they could educate consumers about finances, but the subcommittee said it could not find any such classes.