Bad Paper: Chasing Debt From Wall Street to the Underworld Read online

  Eventually, we got to talking about the Package and how it might have gotten into Bill’s hands. Bill and Kenny had an ongoing relationship, said Larry, and it was entirely plausible that Kenny had sold him these accounts. But how, I pressed, would Kenny have obtained the accounts in the first place? Larry seemed amused by this question. He insisted there were countless ways and outlined several possibilities. One scenario was that Kenny simply bought the file from someone else not knowing—or wanting to know—where it came from. In another scenario, Aaron might have sent a portfolio to an agency that couldn’t handle the volume. “A lot of agencies lie about the number of collectors they have,” said Larry. Agencies do this because they are hungry for paper, and if they end up getting too much of it, they can then farm it out to another agency. In this scenario, an overwhelmed agency may have asked Kenny to help with their excess paper; and maybe Kenny did help, but on the side, he slipped a few accounts to Bill surreptitiously. A third scenario was that someone at one of Aaron’s agencies stole the file and gave it to Kenny, at which point Kenny gave it to Bill, who tried to collect on it as quickly and as aggressively as possible, until someone noticed.

  Larry didn’t seem to know—or want to know—which of these scenarios, if any, was true. And I understood why. In this world, it was the knowing that implicated you. Speaking directly with Bill didn’t clear anything up either. When I interviewed him, in 2013, he claimed not to recall implicating Kenny, but said that if he did so, it was only to throw Brandon off the trail. Bill claimed that he bought the accounts from someone at Franklin Asset, who he increasingly suspected was “doing some funny shit” with the accounts “behind Aaron’s back.” In the end, the many possibilities were both endless and dizzying in their complex permutations.

  Yet even if it was impossible to know exactly how the paper had gotten into Bill’s hands, I still wanted to learn more about the manner in which his shop, and others like it, operated. As it turned out, one of Larry’s favorite clients, Jimmy (the former cocaine dealer), had worked as the office manager at Bill’s shop and had then gone on to open his own collection agency, which was—in many ways—a replica of Bill’s. I knew Jimmy because we had briefly gone to school together as kids, and I had already interviewed him about the collections industry. So I called him to arrange a meeting. Jimmy was eager to talk and suggested that we take a drive over to the old factory complex where Bill’s shop had been located, just before it shut down.

  9

  THE WHITE MAN’S DOPE

  Jimmy is an imposing figure. He dresses in low-slung pants, wears earrings in both ears, and has DADDY tattooed across his right arm. When he walks, he does so in a deliberate, powerful, plodding way, almost like a bear. But he isn’t slow: one of Jimmy’s proudest moments was captured by a video camera at a local corner store. The video shows him hustling out of the store, chasing down a criminal trying to steal his car, and then whipping open the driver’s door and throwing the thief from the car. The incident was later immortalized on YouTube when someone posted the video under the heading “Want to steal a car but can’t drive it.” Jimmy exudes toughness. One of his former high school English teachers told me that even though Jimmy is “very, very bright” and has a broad, inviting smile, many teachers were “scared to death of him.”

  When I met up with Jimmy, we soon got to talking about Bill. Jimmy had worked with Bill for roughly a year, back in 2008, and he offered to give me a tour of their old office complex and tell me about all the details of the business. Only we didn’t go there—not right away, anyhow. Instead, we took a meandering drive through the Bailey-Delavan neighborhood where he grew up. Jimmy likes any excuse to take a drive. He spends much of his waking hours in his car, driving around the city, because it invigorates him. He likes to be “just a stone’s throw away from what’s on the other side of the glass,” because seeing the streets reminds him that “this is exactly where I’ll be if I don’t collect.”

  Bailey-Delavan is one of the poorest neighborhoods in Buffalo. Weeds grow knee-high in abandoned lots, trash cans are chained to walls, and many storefronts are shuttered. Two signs hang boldly in the local real estate office window, one advertising foreclosed homes and the other warning that the premises are shotgun protected. The neighborhood’s architectural treasure, a Renaissance-style basilica called St. Gerard’s, was closed several years ago; a group from Georgia plans to disassemble it, brick by brick, and ship its parts to a suburb of Atlanta, where it will be rebuilt. Over the past few decades, as more steel mills, grain elevators, and railroad yards became dormant, roughly half the city’s population fled, and now even its buildings are headed south.

  On almost every block, street signs were adorned with wilting flowers, deflated balloons, and weathered teddy bears. Also attached to these signs were plaques hand-painted with the names of someone who had died. “This is a killer block,” Jimmy told me as we drove down a street with an especially large number of markers. “This is where you get buried and done off.” Jimmy honked the horn and waved out the window at a guy standing on the corner. “What up, baby?” he yelled. I asked Jimmy who the guy was. “That nigger is a fucking murderer … All these little motherfucking niggers around here is—it’s treacherous, dog.”

  Jimmy grew up in Bailey-Delavan and was raised almost entirely by his mother, Patricia—a devout Christian who made her living as a courtroom stenographer. Jimmy’s father was a lifelong heroin addict. As a kid, Jimmy remembered running into the kitchen and glancing down the stairs into the basement, where his father was shooting up. Jimmy stood there, transfixed, watching him nod off. “He was like an extra kid that my mom took care of,” Jimmy said. His mother would bring home what she earned, and, late at night, Jimmy would watch his father rifle through her purse and steal whatever he could. Sometimes there would be no money to light or heat the house. The family just barely survived, said Jimmy, mainly thanks to food stamps.

  One of the few truly happy and lighthearted memories that he had from childhood was going to visit his grandmother, who worked as a maid at a large mansion on Middlesex Avenue—not too far from where Aaron Siegel had grown up. On these visits, no one ever told him that his grandmother worked there as a maid. Jimmy thought it was her house. After all, she had a room upstairs, where she sometimes stayed. And the white children, who lived at the house, even called her “Grandmomma,” just as Jimmy did.

  By the time Jimmy had turned nineteen, he was dealing large quantities of cocaine. He was adamant, however, that none of his siblings follow in his footsteps. His unsaid motto was Do as I say, not as I do. He insisted that his siblings study hard, stay off the streets, and go to college. And the plan ultimately worked. One of his siblings became a social worker and another is the deputy superintendent of a school system in a midsize American city. Jimmy used some of the money that he made on the streets to support his mother and his siblings, so his work served a practical purpose. But he also loved the work itself. “Passion is when you love something so much you blinded by it,” he told me. “I loved these streets so much and was so good at it.” Or, as he told me on another occasion, he knew the East Side of Buffalo so well that someone could “fart over there and I’m going to tell you who did it.” He began making so much money, he says, that he had to bury it in stashes around the city. He also spent it extravagantly. The first football game he ever went to was the Super Bowl—and he went, he recalled, in a hired limousine that drove him all the way from Buffalo to Atlanta.

  Though he loathed his father for becoming a drug addict, Jimmy had become a dealer, a person who enabled addictions. And the irony wasn’t lost on him either. One day he went to see his father, who was ill after shooting up “bad dope,” as Jimmy put it. His father had become so sick that he had fallen out of bed and couldn’t climb back in. “He was sitting there in his underwear, and he had peed on himself,” recalled Jimmy. “So I’m looking at him like, ‘Dad, man, you all right?’ And he kind of gave me a grunt and a moan like ‘Uhhhh.’ I do
n’t know what he was saying, but my phone kept going off.” As the call from a client continued to ring, Jimmy knelt down to pick up his father, and his hefty gold necklace swung down, dangling in his father’s face, obscuring their ability to see each other. And this is the last enduring memory Jimmy has of his father because he died later that very day.

  Eventually, Jimmy was arrested on a felony gun charge. He says he was lucky that this was the only charge against him. Jimmy served six months at the Erie County Correctional Facility, in Alden, New York. Upon his release, he took a job at a big collection agency, which, as he put it, liked to “hire life’s undesirables.” He explained, “They tell you, ‘You know what type of records you got, and you know ain’t nobody else going to hire you, so you shut the fuck up.’” Jimmy hated his work environment, but he was making more than $90,000 a year, which helped him support his five children; and he was determined not to go back to jail. He had a young set of twins, a boy and a girl; another son; and two daughters in their teens. Jimmy was raising the twins on his own, because their mother was serving a four-year sentence in jail, though Jimmy refused to tell me why. “Man, I was Mr. Mom,” he recalled. “I’m breaking down crying, ironing these little-bitty-ass pants at five o’clock in the morning, trying to get these kids ready for school. Like, man, if you let them oversleep they going to have a rough day, man. You got to get them up. That was worse than any street situation I was in, but the reward was so good, man.”

  Jimmy encouraged his older son to excel at school and go to college. But the boy didn’t listen to him. One day, when he was eighteen, he justified his poor grades by announcing that he would be content to work at McDonald’s. “I was hurt more than anything else when he said that,” Jimmy said. “I turned around and walked away. He was like, ‘Dad, you don’t know what it’s like out here, man.’”

  Jimmy was enraged by his son’s suggestion that he didn’t understand the realities of life in the ghetto. He felt that his son had lost respect for him because he was working a nine-to-five office job at the agency instead of “wearing a chain” and “standing up on the corner.” Jimmy said, “I lost it, dude. My son, mind you, is six-two, three hundred and twenty-five pounds. You understand what I’m saying? I picked up a crutch—there was an aluminum crutch around here—and I beat his ass.” Jimmy said that it wasn’t a severe beating; he didn’t “bust him in his head,” and his son wasn’t bleeding. After this incident, the police came and arrested Jimmy and put him in jail for three days. When Jimmy’s bosses at the collection agency learned of his arrest, they fired him.

  It was at this moment, in early 2008, that Jimmy started working for Bill, managing a handful of collectors. The agency made no attempt to hide its aggressive approach to collections; its website even had a section entitled “Why Use a Collection Agency” that made one of the industry’s oft-repeated boasts: “Debtors will often pay a collection agency even though they never cooperated with the original creditor, mainly because collection agencies typically increase the psychological anxiety associated with a debt.”

  Jimmy claims that he was both a manager and the agency’s top collector. He also claims he was supposed to get 30 percent of the shop’s profits at the year’s end but never saw much of the money that he was due and that Bill effectively “robbed” him. Bill denies that they ever had a partnership—formal or informal—and adds that Jimmy was a mediocre collector who was lucky to be making his wage of $26 an hour. It’s impossible to know exactly what their arrangement was. They had no written contract. In early 2009, a woman filed a lawsuit against Bill’s collection agency; she named Jimmy as a defendant and she submitted a letter from Bill’s agency, on company letterhead, listing Jimmy as a “senior partner.” Whatever the nature of their professional relationship, when they parted ways in 2009, Jimmy clearly felt cheated and was determined to become his own boss.

  My driving tour with Jimmy came to an end when we reached a sprawling factory complex that had been converted into a series of offices. This was where Bill’s agency had been located, before Bill shut it down for good in October 2011. The hallways were eerily vacant, and the only person we encountered was an artist locking up his studio. Jimmy paused for a moment by a window near the entranceway to the suite where Bill’s shop once operated. Jimmy recalled that he and Bill used to look out this window together and take in the view—a beleaguered landscape of dilapidated houses. “We used to talk about how we want to build [up] an office, and what we was willing to do to get the fuck up out of here.”

  * * *

  After parting ways with Bill, Jimmy opened his own agency in July 2009. He took what he had learned at Bill’s shop and, to a great extent, replicated it at his own agency. Jimmy’s operation was, in many ways, a typical one for the impoverished East Side of Buffalo. When I first visited, in 2010, it was situated in a former karate academy, and just inside the entrance there was a long check-in counter, of the type found at any run-of-the-mill gym. Mirrors still lined the walls, and marooned exercise equipment cluttered the space. Vinny, a lean twenty-six-year-old with a heavy five o’clock shadow, sat behind the check-in counter. He was the only white employee, and was second in command at the office, though Jimmy occasionally complained about his immaturity. Vinny liked to goof off, and, as Jimmy put it, “holler at broads, which is cool, because I was probably doing the same thing when I was his age.” Jimmy went on, “But it’s hard to have a corporate structure, man, when you don’t have a corporate structure.”

  Jimmy’s point callers were all stationed in a back room. They were mainly young African-American men in their twenties. One of them was a twenty-four-year-old former crack dealer named Jamal. “I really do want to live a law-abiding life,” he told me. “I got a wife and two sons—I am trying to live for them.” Jamal told me that Jimmy was his inspiration: “I always watched Jimmy as a young boy doing the wrong thing, and now I am watching him as an adult do the right thing, and I’m still trying to follow his lead.”

  One morning, a twenty-year-old named C.J., dressed in jeans and a tank top, walked into Jimmy’s office and asked for a job. It was the third time that C.J. had applied. Jimmy paid his employees a base salary of $7 to $15 an hour plus a commission. This prospect enticed C.J. “I see a couple dudes working here, and they are getting their money,” C.J. explained. “I’m trying to get some money, too. I got a mouthpiece on me, you know what I mean?” I asked C.J. if he had any other job opportunities. “Hell, no!” he said.

  Jimmy told C.J. that in order to be hired he would need to learn to talk the way he did “when you were in trouble with the principal at school.” C.J. nodded. Afterward, Jimmy told me, “The lessons that I’m going to give him when he do come in here is not only going to help his little twenty-year-old ass in here, it’s going to help him in life.”

  Part of what Jimmy’s young employees liked about him was that even though he worked in an office, they saw him as tough. “Jimmy was never the kind of person you fucked with, and he still ain’t,” Jamal explained. “Don’t take his kindness for weakness. The street shit is always gonna be in you.”

  When he made a new hire, Jimmy tutored him in the art of debt collection. He usually explained it this way: “You give a fiend five dimes and they don’t pay you for them? How you going to feel?” The standard reply, Jimmy said, was “Oh, man, I’m going in that motherfucker’s house, I’m blowing their phone up [i.e., call them continuously].” The career collector must be less emotional. “You can’t take it personally,” Jimmy said. When his point callers got frustrated by debtors who refused to pay, he offered them this analogy: “When you buy a pound of weed, you know the seeds and the sticks in the weed? You paid for that, right? Well, every account we’re not going to collect. So don’t get discouraged … The buds are the people that want to pay you—that’s what you need to focus on.”

  The point callers’ job was simply to find the debtor, get him on the phone, and then transfer the call to either Vinny or Jimmy. Jimmy explained, “
I can sound a little bit intelligent, or what you would call ‘white,’ on the phone. It would take you a minute to catch on that I’m black.” He gestured to the point callers, all of whom were black, and said that they generally couldn’t do that. (Vinny, for his part, sounds like a cast member of Jersey Shore.)

  “If a nigger call your house, the first thing you’re going to think is he’s trying to steal something,” Jimmy said. “Because that’s the stigmatism for black people. I don’t trust this motherfucker—he don’t sound like me.” Jimmy said that most of his debtors were white, but that even black debtors are more likely to trust a white collector. As Jimmy put it, Vinny had “the complexion for the connection.” The point callers, Jimmy noted, worked on commission, which meant that they got paid only if Jimmy or Vinny succeeded in the talk-off and persuaded the debtor to pay up.

  One afternoon, Jimmy had a talk-off with a woman who had taken out a payday loan for $300. Jimmy would rather not work these types of loans. He would rather buy higher-quality paper—the kind whose debtors have jobs and permanent addresses—but banks and credit-card companies usually won’t deal with operators like him. “I’ll never get hold of that type of paper,” Jimmy told me.

  During his talk-off with the payday debtor, Jimmy confirmed the details of the loan and said brusquely, “You never paid it back.”

  “You don’t need to give me an attitude, okay?” the woman said. “I’m trying to figure out what this is, okay?”