Bill Bartmann's fast rise and fall in the debt-buying industry is an epic tale that many thought ended nearly a decade ago. But Bartmann is determined to keep the story going.
On Wednesday, he visited Boston as part of his "50-state 'Stop These Criminals' campaign where he testified on collection abuses at a hearing before Massachusetts Attorney General Martha Coakley.
"Consumers go to jail over less than $100. Collectors threaten violence and demand sex for repayment. Abusive language is the status quo. As an industry insider, I’ve seen clear patterns of abusive behavior by other bill collectors and I know how to stop them," says Bartmann, president and CEO of CFS II. "I’m not afraid to pick a fight with abuse in this $40 billion industry even if I’m all alone. My goal is to shine light on abuse in this barbaric and out-of-control business. I’ve been a debt collector for decades, so I’m just the guy to do it."
Let's review:
Twelve years ago Bartmann's revolutionary debt-buying firm, Commercial Financial Services, closed amid a huge fraud scandal,
CFS, based in Tulsa, Okla., bid up the price of bad debt and monopolized forward-flow contracts with major banks in the late 1990s. Described at the time as either a maverick, a genius, a loose cannon or an incredibly kind and generous man (employees were treated, with their families, to lavish perks such as all-expense paid vacations), Bartmann was the first to securitize bad debt on Wall Street. This gave him access to huge amounts of capital that none of his competitors enjoyed, an approach that helped him quickly build his Tulsa, Okla. company into a $3 billion giant.
His peers and rivals questioned Bartmann’s methods from the start, arguing CFS would never be able to sustain the inflated rates he charged for bad debt. Bartmann paid up to twice as much for charge-offs as most of his competitors. The banks that sold to him fell madly in love.
But CFS failed in 1999, putting 3,600 employees out of work. The circumstances surrounding the failure led to a federal grand jury indictment of Bartmann. Along with former CFS executive Jay Jones, he was accused of creating a shell company, Dimat Corp., to inflate the performance of CFS.
Bartmann was acquitted and in 2010 jumped back into the debt-buying industry with CFS II. Jones pleaded guilty to a conspiracy charge and was sentenced to five years in prison. Federal Bureau of Prisons records show he was released in 2007.
He started CFS II with eight former CFS employees and began talks with hedge funds to raise millions to build the debt portfolio for CFS II. It was not clear at press time whether the capital-raising efforts were successful. CFS II reportedly buys debt for cents on the dollar, just like CFS. In November 2010, CFS II - with 103 employees at that time - signed a lease at a new location in Tulsa.
As part of his "Stop These Criminals" campaign, Bartmann says he has talked to attorneys general in 12 states so far, several members of Congress, the Federal Trade Commission and officials at the Consumer Financial Protection Bureau.
"Unfortunately, the collections industry is overrun with bad players who trick, threaten and abuse Americans,” he says. "Consumers go to jail over less than $100. Collectors threaten violence and demand sex for repayment. Abusive language is the status quo. As an industry insider, I’ve seen clear patterns of abusive behavior by other bill collectors and I know how to stop them.”
To comment on this story, contact Darren Waggoner at 815.463.9008 or darren.waggoner@sourcemedia.com.
