The Oklahoma Senate passed a bill on Monday designed to curb consumer abuse by unregulated debt collectors. Senate Bill 1430, known as the Bartmann Ethical Debt Collection Act, passed the Senate 40 to 2 and now moves to the House.
Tulsa-based CFS II CEO Bill Bartmann helped initiate the bill authored by Republican Senator Gary Stanislawski.
"The Consumer Financial Protection Bureau and its director Richard Cordray are attacking debt collection abuse at a federal level, but Oklahomans deserve local protection from our state authorities," says Bartmann. "The overwhelming support of this bill sends a clear message to criminal debt collectors that they are not welcome in Oklahoma."
SB 1430 calls for state supervision and licensing of debt buyers and employees, among other requirements. It is pro-business legislation designed to "create a level playing field that encourages competition between smaller, more ethical state firms and larger out-of-state debt buyers who often cut corners," says Bartmann.
"I built my career around the debt collection business and I know there is a right way and a wrong way to collect debt," says Bartmann. "Unfortunately, our current regulatory system is not stopping criminal debt collectors from abusing helpless consumers."
Bartmann's career in the debt-buying industry is a sweeping story that many thought ended at least 12 years ago. His revolutionary debt-buying firm, Commercial Financial Services (CFS), closed amid a huge fraud scandal in 1999.
CFS bid up the price of bad debt and monopolized forward-flow contracts with major banks in the late 1990s. 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 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 chargeoffs as most of his competitors. The banks that sold to him fell madly in love.
He was described as either a maverick, genius, loose cannon or all three. Employees were treated, with their families, to lavish perks such as all-expense paid vacations.
But CFS failed in 1999, putting 3,600 employees out of work. A federal grand jury indictment of Bartmann followed. Along with former CFS executive Jay Jones, Bartmann was accused of creating a shell company, Dimat Corp., to inflate the performance of CFS.
Bartmann was acquitted and jumped back into the debt-buying industry with CFS II two years ago. 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.
Now, under SB 1430, along with prohibiting the use of threatening or harassing language and techniques, Bartmann believes the measure should help unclog Oklahoma's court system by reducing the number of "knee-jerk law suits filed by collection attorneys against consumers who have not yet had a reasonable opportunity to pay legitimate bills."
