The Federal Trade Commission has nabbed another web site operator who sold lousy credit repair advice and illegally promised "perfect credit...instantly."

In the settlement of a civil case prosecuted by the United States Attorney for the Western District of Texas, Clifton W. Cross was sentenced to 49 months in prison and ordered to pay nearly $171,000 in restitution as part of a guilty plea to charges that he used the Internet to claim he could help consumers obtain new credit histories by obtaining new identification numbers.

In such schemes, persons who have filed for bankruptcy or whose credit is in shambles are promised a chance to hide unfavorable credit information by establishing a new credit identity. But that process, known as file segregation, is illegal, and if you try it, you could face fines or even a prison sentence.

The case against Cross, who did business as BUILD-IT-FAST, was brought under "Operation New ID -- Bad Idea," an on-going FTC initiative targeting illegal "credit repair" services.

His come-on was the same as most other credit repair scams: You are warned about your inability to get credit cards, personal loans or any other types of credit for 10 years. For a fee, though, the company promises to help you hide your bankruptcy and establish a new credit identity to use when you apply for credit.

Once you pay a fee, you are told to apply for a nine-digit employer identification number from the IRS and use it in place of your social security number when you apply for credit. EINs resemble Social Security numbers, but generally they are used by businesses, not individuals. You also are told to use a different mailing address and different credit references.

To convince you to establish a new credit identity, the credit repair service is likely to make a variety of claims. None of them are true:

• You will not be able to get credit for 10 years (the period of time bankruptcy information may stay on your credit record). Each creditor has its own criteria for granting credit. While one may reject your application because of a bankruptcy, another may grant you credit shortly after you filed for bankruptcy. And, given a new reliable payment record, your chances of getting credit will probably increase as time passes.

• The company is affiliated with the federal government. Uncle Sam does not support or work with companies that offer such programs.

• Everything is on the up-and-up. It is a federal crime to make any false statements on a loan or credit application, which is exactly what you are being advised to do. It is illegal to misrepresent your Social Security number. It also is a crime to obtain an EIN under false pretenses.

• Furthermore, you could be charged with mail or wire fraud if you use the mail or the telephone to apply for credit and provide false information. Worse yet, file segregation likely would constitute civil fraud under many state laws.

In the case against Cross, the defendant sold instructions about how consumers could substitute employee identification numbers or taxpayer identification numbers for social security numbers and use them to build new credit profiles that would allow them to get credit they may be denied based on their real credit histories.

But now, he is barred from representing that other government identification numbers can be lawfully used to conceal actual credit histories or that using alternate numbers is legal. In addition, the settlement bars him from misrepresenting material facts concerning credit-related products or any other product or service.

The settlement also bars violations of the Credit Repair Organizations Act, which prohibits charging or accepting payment for credit repair services before the services are provided and advising consumers to hide their true credit history. The settlement also bars the defendant from using or selling his customer lists.

Finally, the settlement contains record keeping provisions to allow the FTC to monitor compliance. A financial declaration filed by the defendant indicates an inability to provide redress for consumers. But the settlement contains provisions to allow reopening of the issue if the defendant is found to have misrepresented his inability to pay.

Although Cross and BUILD-IT-FAST are now out of business, others are still preying on unsuspecting consumers, not just over the Internet but also in classified ads and on radio and TV. But don't bite: Trying to build a new credit identity to hide previous credit problems in not a good idea.

If you come across such a scheme, contact the FTC. Although the Commission cannot resolve individual credit problems for consumers, it can act against a company if it sees a pattern of possible law violations. If you believe a company has engaged in credit fraud, you can file a complaint online, or send your complaint to: Consumer Response Center, Federal Trade Commission, Washington, D.C. 20580.

In addition, many states have laws regulating credit repair companies, and may be helpful if you've lost money to credit repair scams. If you've had a problem with a credit repair company, report the company. Contact your local consumer affairs office or your state attorney general. Many AGs have toll-free consumer hotlines. Check with your local directory assistance.

For more articles by Lew Sichelman, please press here.