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

  Brandon interrupted again, saying that he’d always intended to go to Penn State, but that he is dyslexic and ended up on the bus to the state pen instead. In all seriousness, he added, his time in the state pen enhanced his pedigree in a weird sort of way.

  “Part of the package you get of being my business associate or my friend is that I’m gonna protect you from these fucking sharks,” he explained. “I’m not gonna let these fucking sharks victimize us because they think they’re tough and they think they’re scary and they think that no one will do nothing to them. Now, I’m not saying that the reason he”—pausing to point at Aaron—“or other people do business with me is because of that. It’s not. Because it very rarely rears its ugly head. But there are a lot of people who do business with me because they know if somebody’s double-selling a file or if somebody’s fucking up, they know I’m gonna do something about it.”

  Brandon went on, “If you don’t give them a little bit of fear, right—if it’s just the law, if it’s just the attorney general, if it’s just a civil suit—they could care less. So they need someone to go put a stop to that right now. That might not be bashing someone over the head, it might be sitting them down and saying: ‘Look, man, you ever do ten years in the can? I have. You ever sat there for ten years waiting for your fucking date? I have. You think you’re getting away with this shit? You’re not.’ That’s one way of dealing with it. And then you got people who don’t care about that. So okay, then we gotta take it to the street.”

  And the streets are precisely where Brandon spent much of his youth. His mother, Darlene Wilson, recalls, “At age sixteen I already had two kids and a husband in ’Nam.” Brandon was born three years later in 1971. Darlene raised her three kids in and around Boston, including in the notorious housing projects along Mystic Avenue in Somerville, Massachusetts. “Their father was a good man, but he was too young to be [in Vietnam], and he had a hard time transitioning,” she said. “It took him about ten years.” Raising her children essentially alone in rough neighborhoods, she struggled to keep all of them out of trouble. According to Darlene, during his teenage years—throughout the 1980s—Brandon was always running away from school, getting into fights, selling drugs, and passing through various juvenile delinquent facilities. And she was always on his heels: “When he was growing up, I was chasing Brandon around the projects with a bat, and he was throwing stones at me, and I was hitting the stones back at him with the bat—but boy, could he run. He was a runner. He didn’t want to come home. His father was going to kick his butt—his uncles, too—but you couldn’t find him. He was like an imaginary person. A ghost.”

  What made this more frustrating, Darlene says, is that he was so smart. “I had Brandon, I guess you would call it ‘tested,’ when he was three, and he was highly intelligent,” she told me. “It was at Harvard University—they had a baby clinic—and they said that his brain went faster than everyone else’s. He was always a wiseass, always smarter than everybody else.” Although Brandon had never really attended high school, years later, when he was in prison, an official noted in his records that his “assessment scores” indicated that he read at the “highest levels” and that he should start attending “college level classes.” Darlene says that she sensed this potential all along and that—much like Herb Siegel, who had such high hopes for his son—she “expected great things” from Brandon.

  It’s hard to know what exactly derailed Brandon, but drugs were almost certainly part of the problem. Both of Brandon’s siblings struggled with addiction before dying young; and according to his prison records, Brandon was using marijuana by the age of twelve and cocaine and angel dust by fourteen. He ran with a pack of kids who were always getting into trouble. His future wife, Sharon—who knew him since he was roughly thirteen years old—says that, even back then, he was “the leader of his little pack” and that all the kids followed him around and took orders from him. “He wasn’t a good kid, but he was a good kid,” she told me, explaining that he would break the law constantly but that he was never a bully and would always stick up for the underdog.

  Brandon spent much of his youth in custody as a ward of the state’s Department of Youth Services (DYS), but he proved masterful at escaping from their facilities—and from the police—time and time again. Darlene, who kept a detailed journal for years, chronicled his escapes. In February 1986, she wrote that Brandon had run away and had been missing from DYS for ten weeks. At the time, he was fourteen years old. “I feel that the system has failed my son in all respects,” she concluded in her journal. “I have fought tooth and nail to get help for my son, or just to get someone to care what happens to him other than me. No luck.” Often months would go by and she wouldn’t know where he was, until she received word that he was locked up once again. On one occasion, she learned that he was being held at a facility in Springfield, Massachusetts, only when she received a medical bill for the treatment of his broken knuckles.

  Often, in her hastily scrawled journal entries, you can sense Darlene’s desperation. “Brandon is acting weird again,” she wrote in May 1988, when Brandon was sixteen. “I think he is back on the shit.” A month later, in June, she wrote that she believed he was “on the pipe” and that she had “taken out the warrant for him,” but had no sense of when or where he would turn up. In July, she wrote that the police had found him: “They caught him with crack! Oh God! Help him.” A day later: “DYS just called. Some girl named Debbie called to say Brandon ran!” A week after that, Darlene drove around looking for him, searching the projects and lamenting that he was “nowhere to be found” and “yet you know he’s there!” Eventually, she received word that the police had him in custody and that they had beaten him thoroughly. Her only desire, throughout all of this, she says, was to get “the devil” out of him and spring him from his “self-inflicted hell.”

  Darlene also wrote about how, at various times, she relied on Brandon for help: “Big turnaround for Brandon and for me. This past weekend he had to bail me out of jail for a change! Poor kid! And poor me! Right? Well, I certainly can’t say that I didn’t know better. ‘O.U.I.’ they call it—operating under the influence … A.A. here I come. Brandon has been calling me every day to give me pep talks, telling me to read certain pages of the Big Book.”

  By the time he was in his early twenties, Brandon had amassed a criminal record that read like the footnotes to an academic article. His many offenses included trespassing, assault and battery, knowingly receiving stolen property, armed robbery (three counts), possession of mace, larceny, armed assault in a home (two counts), reckless driving, operating under the influence, and—for good measure—swimming in a restricted area. An attempt to rob a vault ended in a high-speed car chase and a spectacular crash. And these, of course, were only the times he was caught. He was never busted for robbing night deposit boxes or toy stores, both of which he claimed to have done repeatedly.

  While in prison, Brandon didn’t break his stride. His prison records indicate that he gambled, smoked marijuana, fought other inmates, and kept a dirty and cluttered cell—one of his jailers once noted an “open can of tuna fish dumped out on the floor.” These infractions repeatedly landed him in solitary confinement. “He was viewed as a management problem,” one report notes. “He was suspected of strong-arming other inmates and possible drug dealing.” He also appears to have tolerated no disrespect from his fellow inmates, and prison records indicate that he “assaulted another inmate during the course of a game of Monopoly.” The dispute, as Brandon recalls it, began on the opening roll of the game when one of the players landed on a property, bought it, and demanded to put up a hotel. “You can’t buy a hotel until you have all three properties,” Brandon told him. The man—whom Brandon described as a steroid-using, muscle-bound racist with lightning bolts tattooed on each arm—then called Brandon a “p.c. punk.” The p.c. stood for “protective custody,” which is where a prisoner was sent if he was a “rat.” This was the gravest of insults. Accor
ding to his records, Brandon proceeded to beat the man with his fists.

  On another occasion, his records note that he refused to vacate the prison yard and told a guard: “Call your boys, I don’t give a fuck—you don’t scare me.” This landed Brandon in solitary confinement for five days, and, while there, he says he passed the time by reading all day long and into the night in the dim light of the moon. His favorite books were the Louis L’Amour westerns about the open plains of Texas.

  When he was finally released, in 1998, he moved in with Sharon at her house in Medford, Massachusetts. Brandon started working in construction, building concrete forms for the foundations of houses. One day, he bumped into the sister of an old friend who told him, “Brandon, you are too smart to be doing this. Look at this…” She pulled out a bonus check for $3,500 that she had earned as a debt collector. “As soon as she showed it to me, I said to myself, If this airhead dingbat could make that, I got to get down there, because wait until they get a load of me. You got to understand, there was a time when I would have strangled you for thirty-five hundred dollars.”

  One of Brandon’s first jobs in collections was at a law firm in Boston that had two divisions, one composed of collectors stationed at phone banks and the other manned by lawyers who sued debtors in court. Brandon was appalled by how the office worked. “There was a lot of crooked stuff going on,” he told me. “I noticed it right away and I put a stop to it.” Typically, in collection agencies, collectors earn bonuses by hitting various targets each month—say, a certain number of dollars collected. The top earner on any given month is often given an additional bonus. Brandon noticed that the manager was gaming the system, moving cash from one collector’s account to another’s, so that a certain collector could hit his target and be the agency’s top earner. In this scam, his collector would get paid and then give a kickback to the manager. There were other scams as well, and they all offended Brandon: “Without any hook or crook, I’m putting up fifty grand a month, and then you got these guys that are stealing, putting up eighty, making me look like I’m not the best.” Brandon immediately confronted the manager. “I literally went over to the guy and said, ‘Look, next time you do that, have your hands up because you’re taking money out of my kid’s mouth, and I’m not going to let you do it!’”

  The scamming stopped.

  It wasn’t long before Brandon’s abilities as a collector, combined with his efforts to clean up the office, caught the attention of one of the firm’s owners, a well-regarded lawyer named Jeff Schreiber. On their first encounter, Brandon introduced himself—much as he subsequently introduced himself to Aaron Siegel—by explaining that he was a former armed robber who did “ten years in the can.” Jeff was not impressed. “He made me cringe when he told me about going to prison [and that] he’s a convicted felon,” Jeff told me. “I thought, Oh great, this is what I have on my payroll.” And yet that didn’t stop Jeff from soon promoting Brandon to become a manager. He was impressed that Brandon learned the business so quickly, could do complicated math in his head, and had good leadership skills.

  Jeff told me that working in collections taught him to look beyond people’s appearances. He lost roughly a million dollars when he bought phony debt from a scam artist who seemed to be the very embodiment of respectability, a millionaire with a large home in Greenwich, Connecticut, and an endowed chair in his family’s name at a prominent university. Brandon was precisely the opposite: an apparent criminal whom you could count on. In fact, years later, when Brandon needed a letter of reference, Jeff described him as a “real life Horatio Alger story.”

  During his time at Schreiber’s law firm, Brandon would periodically receive calls from debtors who wanted to pay off debts that did not appear to be in the firm’s computer system. Eventually, he discovered that these accounts were being stored in a gigantic file with tens of thousands of older accounts on which the statute of limitations had expired. In Massachusetts, the statute of limitations on credit-card debt is six years. This means that when a debtor stops paying his or her bills, a creditor has exactly six years to file suit against him or her to retrieve its money. After this, debtors are safe from being sued. Many professionals in collections assume that such “out-of-stat” accounts are worthless, but Brandon quickly saw an opportunity. Some of these debtors clearly wanted to pay, which is why they had gone to the trouble of contacting the original creditor, and subsequently gotten in touch with him. As hardened and cynical as Brandon was, he clung to a belief that most people essentially wanted to do the honorable thing and pay what they owed. It was just a question of whether they could.

  Several years later, in 2003—when Brandon was running his own ten-man shop in Middleborough, Massachusetts—he received a phone call from the co-owner of a large agency where he had once worked. The man, whom I will call Madison, explained that he was embroiled in a heated legal battle with his partner over control of the agency and its assets. Madison was short on cash, and he asked Brandon if he would be interested in covertly trying to collect on a file of roughly 100,000 accounts, the vast majority of which were out-of-stat. The obvious question was: Whose accounts were these? According to Brandon, the answer was unclear. Madison’s agency was funded by a number of investors, and at one time the accounts belonged to them; yet because the accounts were so old, they had essentially been forgotten. Madison suspected that someone might be able to collect on them, and that’s why he called Brandon. They made a tentative deal: Brandon would work the accounts and keep a percentage, or a contingency fee, on whatever he collected and give the rest to Madison. Within a month, Brandon and his employees had collected $180,000, a fact that he kept to himself. When Madison checked back in on him, Brandon offered him $100,000 in a brown paper bag to buy the accounts outright. Madison, who needed the cash, agreed. In the year that followed, Brandon says that he earned roughly $1 million from Madison’s 100,000 out-of-stat accounts and then, amazingly, sold all of the remaining accounts—the ones he couldn’t collect on—for more than what he paid for the original file.

  In addition to collecting on debt, Brandon began buying and selling it as well. He talked to everyone, did his research, and found opportunities that no one else could—like a portfolio of paper that no one had touched for five years, other than an incompetent call center based in Brazil. “I am a bottom feeder,” Brandon told me. “I specialize in finding paper that everyone else thinks is worthless.” As far as Brandon was concerned, the older and more beaten-up that debt appeared to be, the better. People falsely assumed that it was very difficult to collect on old debt, but it all depended on the history of the portfolio—who exactly had tried to collect on it, how long they had been trying, and how successful they had been. Brandon’s specialty became finding old debt that paid. “I buy old crap,” Brandon told me. “I’m the King of Crap.”

  Brandon’s main problem was that he spent money as quickly as he made it. This meant that he often required capital to finance his deals. Aaron was precisely what he needed—a man of means who had the sophistication and polish to court investors with deep pockets. The fact that Aaron had $14 million to spend in the summer of 2008 was very good news for Brandon.

  There was, however, a catch.

  Aaron now wanted to buy paper directly from Brandon’s sources, without relying on him as an intermediary. In the past, when Aaron owned and operated his own collection agency, he would simply buy the paper from Brandon—without knowing all of the details of where Brandon had purchased his paper or how much he had purchased it for. This had worked out well for Brandon. In fact, as Brandon told me, he often bought paper for one penny on the dollar and then immediately sold it to Aaron for two pennies on the dollar, thus doubling his money instantly. Aaron now wanted more transparency and more control. He wanted Brandon to reveal all of his suppliers, help him analyze all prospective deals, and then effectively step aside and let Aaron make the deals directly. In return, Aaron would offer Brandon a 5-percent commission on all of the purchases
that he made from Brandon’s sources.

  In theory, this new arrangement meant that Brandon stood to make a lot of money. Aaron had $14 million to spend, and since he was also authorized to reinvest his profits for a limited time, it was likely that Aaron would be purchasing more than $20 million worth of paper. If Brandon brokered all of these deals, he could make $1 million. He also stood to make an additional 5-percent commission selling all of the accounts that the agencies Aaron hired did not collect on. Despite all of this, Brandon had reservations. The deal meant changing his business model, trusting Aaron, and relinquishing a way of doing business—going all the way back to his days as a criminal—in which you never, ever gave up your sources or suppliers. In the end, Brandon agreed, but not without some misgivings. As Brandon told me: “I feel like I sold out to the corporate suits for five percent. At first, I was like: Fuck you, I am not giving you my sources or my prices—that is how I feed my family. But I did it to make a million bucks.”

  From the very first evening that I spent with them, at the Buffalo Club, I began to glean that the core of their relationship was a mutual curiosity, distrust, and need. They were two men, roughly the same age, from vastly different backgrounds. Each of them was deeply fascinated by the other’s world. Neither of them was so naïve as to trust the other fully. As Aaron put it, “I love Brandon, but if you give him an inch, he’ll take a mile. Any time you show vulnerability—like, ‘Hey I need you’ or ‘Thank you, you really helped me out’—he’ll push it as far as he can go.” Collections isn’t “a gentleman’s game,” he concluded, and “Brandon is one of the best at it.”

  At the end of the day, however, they needed each other. Indeed, as our dinner at the Buffalo Club drew to a close, Brandon returned again and again to his credo: no matter how smart you were and no matter how many good deals you found, sometimes the only person who could check the thieves in the collection business was “somebody who actually fucking threatened them.” Brandon paused, went into character, and then barked, “Do it again and I’ll break your fucking nose.”