Emblazoned in unflattering headlines, grilled before Congress, slapped by attorneys general and sued by customers – it’s safe to say Cambridge Credit Counseling Corp. was going through a rough patch in 2004.

At the time, the owners of the Agawam-based nonprofit, it turns out, were shuffling millions of dollars through affiliated for-profit companies, and overcharging credit counseling customers to boot.

But Cambridge Credit Counseling Corp. (CCCC) is not only still around, its new management says they’re working to be a model for the industry.

The company has since re-gained approval to operate in 45 states, and has finally paid off the last of its court-ordered settlement payments. It can also brandish letters of praise from independent overseers, including former Massachusetts Attorney General Scott Harshbarger, who’ve monitored its transformation.

But the past is tough to shake.

“They have a tremendous amount of baggage. In fact I was surprised they never changed their name – instead they fought their way through it,” said Steve Rhode, writer of consumer blog Getoutofdebt.org. He compared their struggle back to respectability as akin to “climbing Mount Everest in their boxer shorts.”

‘A Bloodbath’

CCCC’s current CEO and President is Christopher Viale, who took the helm after the previous owners, brothers John and Richard Puccio, were ousted following the massive controversies that plagued the company.

Viale, the company’s COO at the time of its troubles, is willing to talk freely about CCCC’s bad headlines – after all, he acknowledges, a quick Google search digs it all up again, and staying mum won’t make it go away.

It’s a dramatic story.

CCCC began as a New York-based company, which a young Viale joined in the mid-1990s as a credit counselor. After a relocation to Massachusetts, the company soon boasted offices in three states, thousands of customers across the nation and roughly 500 employees.

It also had serious problems, although Viale said the Puccios’ secrecy left almost everyone else in the dark.

The brothers operated CCCC as a nonprofit, but according to a 2004 Massachusetts lawsuit filed by then-Attorney General Thomas F. Reilly, they funneled cash from the nonprofit’s fees toward assorted for-profit businesses they also owned, eventually coming away with $60 million from the scheme. Reilly also accused the company of levying large fees and making misleading solicitations to credit-counseling customers.

What’s more, Viale said, the company was operating in a number of states with complete disregard for individual state regulations. The former owners and their attorneys claimed – falsely – that because CCCC didn’t have a physical presence in those states, it didn’t have to abide by those rules. Viale said eventually, a horde of attorneys general were knocking on CCCC’s door.

In March 2004, Viale and CCCC, along with some similarly troubled peers, were called before Congress for a general hearing on debt consolidation agencies and practices. Viale said he wasn’t prepared for the vitriol launched at him by lawmakers, who accused the companies of allegedly bilking customers.

“It was a bloodbath,” he recalled.

Faced with all this trouble, including a class action lawsuit on behalf of customers headed by former New York Attorney General G. Oliver Koppell, Viale cut a deal with the Massachusetts AG to oust the Puccios and act as a witness against them. Meanwhile, through CCCC, he settled about a dozen separate lawsuits.

In the midst of this, CCCC had serious questions to answer about its future. Legal advisors counseled bankruptcy as the only way out, but the company had employees and about 15,000 customers who would have been abandoned, Viale said. He and other managers were unwilling to file bankruptcy and walk away, and so they determined themselves to keeping the company alive.

‘Two Different Organizations’

CCCC was allowed to continue its operations, but had to do so under a giant microscope. The Massachusetts AG’s office appointed accountant Herbert Alexander to closely observe the company for two years, including attending all board meetings and extensively interviewing personnel. In Alexander’s final report to the state, dated Jan. 31, 2008, he praised the nonprofit for its work.

The plaintiff’s attorney in the recently closed, $1.7 million class action suit also requested that Harshbarger, now a partner at Boston law firm Proskauer Rose, act as an independent monitor for CCCC during the multi-year, class action, phased payout.

In an interview with Banker & Tradesman, Harshbarger said he had no problem vouching for the nonprofit’s complete change of culture and structure.

“This is a clearly cleaned-up organization,” he said, adding that he believed CCCC is now far-better behaved than many of its peers in the industry.

Viale said he’s spent the past three years traveling the country, convincing state regulators to let CCCC operate within their borders. Five still bar entry, either because of the company’s past or because it doesn’t have sufficient assets required after its funds were depleted through lawsuits.

Viale and the management team have worked to become compliant and customer-focused. Most customers still get free credit counseling, and about 20 percent qualify for a fee-based debt consolidation program. The fees, which reportedly averaged $300 in 2004, now stand at $45 for entry and $23 per month after that.

Harshbarger said it is a shame the new management should be burdened by problems brought on by the old.

“That’s very, very unfair,” he said. “They’re just two different organizations.