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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 10, 1999
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Date of Report (Date of earliest event reported)
CREDITRUST CORPORATION
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(Exact name of registrant as specified in its charter)
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Maryland 000-24619 54-1754916
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
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7000 Security Boulevard, Baltimore, MD 21244-2543
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(410) 594-7000
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Not applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
(a) On December 10, 1999, we appointed J. Barry Dumser as President
and Chief Operating Officer. Mr. Dumser has been our Vice President and General
Counsel since 1997 and has supervisory responsibility over a substantial portion
of company operations. Joseph K. Rensin will remain as our Chairman of the
Board and Chief Executive Officer.
Prior to joining us, Mr. Dumser served in management positions with
Chevy Chase Bank, Matterhorn Bank Programs, and First American Bank of Virginia.
At Chevy Chase Bank, Mr. Dumser managed the bank's bankruptcy and deceased
processing units and supervised the litigation unit, which supported the
collection efforts with respect to the bank's approximately $5 billion credit
card portfolio.
(b) In October 1999, we became aware that a management employee who
subsequently resigned misdirected corporate funds of approximately $500,000 by
submitting an unauthorized check request and then seeking to redirect those
funds through our collection payment stream. Members of our senior management
learned that a check in a similar amount was unsuccessfully presented by the
former employee into our collection payment stream. The chief executive officer
sought to recover these funds or have them applied as intended by us. The funds
remained under the former employee's control for approximately seven weeks.
During this period, these circumstances were not reported to the audit committee
of our board of directors or our independent auditors. We have now recovered the
full amount of the misappropriated funds. No improper recording of collections
occurred as a result of these activities.
Upon becoming aware of this situation, the audit committee of our
board of directors directed our outside counsel to undertake an investigation,
with the assistance of our independent auditors. The audit committee, based on
the report of the investigation, believes that this action was an isolated
action by the former employee and that we recovered all funds. The committee,
with the assistance of our outside counsel and auditors, intends to adopt
enhancements to our internal control system that are designed, among other
things, to increase controls over our check authorization and disbursement
processes and to clarify our policies on the authority and reporting
responsibilities of management with respect to matters of this nature.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
CREDITRUST CORPORATION
Date: December 13, 1999 By: /s/ Joseph K. Rensin
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JOSEPH K. RENSIN
Chairman and Chief Executive Officer
