restaurant that makes it as good as i do. [laughter] >> it's time to sign some books i want to thank all of you are watching and livestream land and thank you to political for lecturing it and thank you all for being here in person and thank you for politics and prose for putting this together and what a treat and thank you secretary panetta. [applause] [inaudible conversations] [inaudible conversations]

[inaudible conversations] up next on booktv "after words" with guest host author nomi prins. this week this american life contributor jake halpern in his latest book "bad paper" chasing debt from wall street to the underworld. it tells the story of a former bank executive and a former bank robber going into business together to collect unpaid bank debts by questionable means. the program is about an hour.

>> host: hi and welcome. i'm nomi prins and i'm here today with jake halpern the author of a fascinating and horrifying new book "bad paper" chasing debt from wall street to the underworld. welcome. >> guest: thanks for having me. >> host: thank you. this book is incredible and so is your story. i think that to really mirror each other. it takes place in buffalo new york, a lot of it. you are from there, aren't you? >> guest: that's right. i grew up there and my dad and his wife still live there. i go back there fairly often and it's how i found my way into this world. >> host: you talk about many unsavory characters that are traveling to make their own peace of the world that often have prison records ended than drug dealers and so forth. there's a fella named jimmy that comes out here that seems to be one of the main characters of

this nonfiction story. can you talk to me a little bit about how you connect it with him? >> guest: the way this got started was i talked my mom a few years back and she told me she was hounded by a debt collector. she's that i don't owe the money that he saying oh but i think i'm going to pay him so he will stop harassing me. my mom is no wilting lily so i thought this was bizarre. i started googling it and saw that there was a lot of this kind of going on and actually the epicenter of debt collection in general in those days was buffalo trade i had it in my head that i was going to do a story actually from the collector's perspective and what it's like to collect debts and what are the challenges you face in what is your life why? i pitched the story in "the new yorker" just bare bones saying what you think about this and in buffalo i can get somebody to talk to me. and he said great 5000 words

where can i get a copy? i had nothing so i went to buffalo once and they wouldn't talked to me basically that i want a second time i still have nothing so i started to panic because i was on the hook for the story. i won on facebook and talk to everyone i went to high school with and everyone my brother went to high school with and i get one message back from the sky. i got jimmy on the phone and jimmy said to me basically you had better get down here quick if you want to talk to me because my business has been struggling and i don't know how much longer i will be open. if you can show folks how hard my day-to-day life is that would be satisfying. i hopped down to buffalo, showed up and jimmy was immediately one of these amazing characters eloquent and i'm driving around in his car with him and going to church with him and meeting his family. that becomes my intro into this world. >> host: he had a struggle.

you had growing up as well. you had gotten to him or a set of correspondence through facebook and so forth. what is your history and buffalo in the atmosphere in buffalo and how it's changed from what you knew growing up in your childhood to the kind of place that is one of the capitals of debt collection in the united states. >> guest: yeah so buffalo was once a big industrial powerhouse that had all the steel mills and it is restarting in the late 70's and early 80s basically when i was a kid. that all starts to fall apart. in place of a lot of these old industrial jobs collections kind of the fills that void. someone told me that buffalo is so good that collections buffalo has been in a recession since 1979 people connect with people who are part-time. when i was a teenager he then this was starting to kind of take form but i don't think i

really knew about it and even though i went to high school with jimmy and we went to the same high school and it was supposed to be an integrated high school we were on me at opposite sides of main street. i didn't have any sense of what really life on the east side of buffalo was like her were jimmy was going through even though we could talk about having the same english teacher. we were from totally different worlds and it wasn't until i started reporting this story that i learned in high school he was a heroin addict and after high school he became a cocaine dealer had gone to jail and gun possession and our lives could have been more of a diversion. >> host: he is the entry point into the rest of the story and he's an interesting component of the story for something he called the seems to be the crux of what you are chasing and what the debt collectors are involved in the book. can you talk about his relationship and what the packages and how that opened up the rest of this amazing story?

>> guest: solo yeah the package is one piece of debt that i follow through the book and it's helpful to understand that when i talk about debt being bought and sold here we are talking about an excel spreadsheet so you have the big banks are creditors and they try for say six months to collect on a debt that has not been paid in when i can't they will typically sell it off to the debt buyers. those debt buyers will collect whatever they can then sell it to the next on the next on the next and what they are selling is a spreadsheet with bare-bones information. >> host: they put information on customers balances and where they live? >> guest: if you look at the spreadsheet will have debtors name social security number, address, balance date the account was opened and maybe one or two other deals but that's basically it. they are being bought and sold an e-mail then some by thumb drive. that's the paper that they call paper but that's really all that

it is. if you can imagine it doesn't take much for something to go wrong to get mixed up the amounts in the amounts in the debtors names getting confused there for someone to sell the same excel spreadsheet to multiple unsuspecting buyers who are collecting on it at once. so in my book i followed the package, what i call the package, this one piece of debt that is about $40 million in its face value but bought by a debt buyer named aaron siegel. what happens is this that gets stolen. somehow aaron finds out from his collector, they start calling, aaron something weird is going on these accounts. it appears that somebody else has access to information and is collecting money from the debtors on this package before we get to them. at that point he called his fixer a guy named brandon wilson

who was an unofficial partner who's a fan of former bank robber who i got into this business helped him buy and sell debt but also helped him solve these sorts of problems and its brand into them goes and tracks down the thieves that are gotten ahold of this data and retrieved it and we can talk about the crazy showdown with guns and they get it back. but though thing that he must go through to retrieve that dead is the world the jimmy and habits which is this kind of gray area legality kind of underworld of buying and selling debt in a sketchy manner that exists in buffalo and other places. >> host: and this underworld has that hierarchy you mentioned. you have sort of former thugs to a large extent at the bottom and getting some of this paper that is perhaps being sold and reso resold. you talk about how papers have been stolen and then you sort of level up to aaron siegel.

he's an interesting character. talk about how you got to him to jimmy and also he was not a bug. he grew up on the good side of buffalo. he had a wealthy family upbringing and lived in a mansion. how did he come into the same business? >> guest: the way that i tell the story in the book is as a starts with this guy aaron siegel and aaron grew up a wealthy and well-known and well-respected family in buffalo. he goes to wall street for a while as a banker and he decides he wants to -- with his family and ends up working in an office for bank of america in buffalo. around the time he comes back what's happening is throughout buffalo entrepreneurs are buying some debt. they are buying these spreadsheets and opening up a shop where they hire a bunch of collectors. the profit margin, this is right before the great recession happened greatest profit margins initially went through the roof.

he is buying portfolio data for 30 grand and in three months making 90 grams. he realizes he has found this amazing little niche of the finance world and the key to much of this is he got the supplier who's supplying him with this paper at a really great price that's really lucrative. the weird thing about the supplier is brandon is this former armed robber who spent 10 years in prison and visit debt broker who has a genius for finding paper that pays, it's very collectible and isn't that expensive to buy. even though aaron comes from this more rarified world penthouses thinking past the understands in the center of economy it's not unusual to have shadier connections with guys that are rough around the edges so he and brandon form this unlikely partnership and that's the starting point for the book

in the story. >> host: you talk about how when they are looking for this paper, looking for it for granted he offers a portfolio from his old firm bank of america but you talk about. that's a great portfolio for other reasons than it's been sold as a portfolio. >> guest: the key to make any profit margin in this world is getting good paper. everyone is hunting for good paper and when he buys from his former employer bank of america you would think this would be a respectable and dependable as it could be. he feels bank of america pulled a fast one on him because he spends all this money, millions of dollars buying this piece of debt from bank of america and it turns out they are almost all senior citizens. he feels the bank of america failed him that the former armed robber brandon that he does

business with comes through for him in a way that his former employer doesn't. >> host: what does he do? >> guest: he's living behind the eight ball when he buys this bank of america paper and all the senior citizens. he feels he's not going to turn a profit because he has invested all this money in it. so he throws it back to brennan brandon and brenda and specialty is what he calls craft. craft and brandon's definition of it is old debt that everyone thinks is worthless because it's been around the block a few times and bought and sold the bunch, 10 to 15 years old but it still pays because maybe he was sitting in a call center in brazil for five years and no one was working at or maybe it comes from a debt buyer that's about to go under and needs to sell it off. brandon would find these deals on this paper so after aaron buys this stuff from bank of america that puts him behind the eight ball he turns to brandon a sissy got to come through for me and help me find good deals on this craft and other stuff

defined through the package which we talked about before which was a piece of debt that got stolen, the debt was fantastic paper, really good. he doesn't pay for all awkward and it's paying off for him and then of course it gets stolen and he's like all right brandon go fix this. >> host: how does there and come up with the money to buy the package? he did okay okay. he had a banking job and went back to buffalo. who's behind funding the initial purchases of some of these packages? disco aaron story is he's a banker in new york and comes back to buffalo sets up his own small collection agency and with brandon's help is getting this paper which is paying huge dividends. like any good financier he thinks wow what if i do this on a much larger scale? he makes a few phonecalls and fine save investors to give him $14 million to do a trial run. the thinking is if he can do

with this $14 million what he's done with his own money, this 300% return and what not that he will do it even bigger with the 14 million a 14 million will do it a second round and bigger and bigger. the problem is, there are several problems. one of which the great recession occurred had been many problems along the way including some of the paper which i chronicled in the book. >> host: basically while that's happening he's in a hole. peace out some amount. he has investors on the other side and they want their money back. you've visited a couple of these investors. how are they feeling about it? what was their stake in this and how much were they pressuring him and how much of a portion of their own money and how much do they care what happened really? >> guest: it's funny i wanted to get a sense for what their

take on this was pretty went to dinner one night with one of them. the first thing you have to understand is there's a strange sequence of events. the debtors are owing brandon and brandon is getting the money he owns aaron. aaron then owes the investors he gave them the money so everyone is connected by this same debt. when aaron goes to meet one of these investors this fellow named joseph, he's totally anxious because he feels is going to fail this guy and owe him money and it turns out joseph sees this almost as if half a million dollars and he's also put money into tanning salons and bars. for him aaron said he was hoping he would pay off but it was almost like an amusement. having dinner with joseph i said do you ever think about the people whose deaths you are buying? and he said no, why should i?

they made bad financial choices. is it my fault for wanting to profit on it and he makes the analogy of a baseball game. if a pitcher pitches a bad pitch and it better not to triple is the batter wrong for taking advantage of the bad pitch and that was his feeling about the whole situation. it was kind of crazy to think that i met some of the debtors and a poor single woman living in st. louis and an armed robber from boston connected to this aaron who's connected to this wealthy investor in all of their lives are connected by this chain of debt that none of them know one another. that whole aspect. >> host: yeah in the way you write about it is so clear. it's like we are there in your writing. you are an absolute writer and i'm on the grounds journalist and it helps to bring alive the characters and also the location so much you are meeting some of these people.

you have met the top of the chains like joseph down to the bottom to chain the individuals that could really hurt in this process. yet you talk about some specific individuals that are just numbers in this package, just represented numbers. they have realized a new investigated some of the many mentioned a woman named theresa and joel and i who were at one point taking out credit and paying it. they got involved in this whole vortex. what was that about? >> guest: you are absolutely right. what is being bought and sold here it's easy to think of it as a commodity like coffee shares or something because you are looking at the string of numbers on a sheet and there are thousands met them in this one. and this one didn't pay. if you pause for a second you think this package of several lines on an excel spreadsheet are several thousand stories. people's lives were one reason or another have fallen into financial ruin. i managed to get ahold of the

spreadsheet from the package the gut still when i was looking at it and thinking to myself that these are stories here. these names and numbers represent something that is happen. i started reaching out to some of these people and explaining i'm a journalist and i'm looking into this debt that i believe was stolen i want to hear your stories. most hung up on me but a few that i've found in the book talks and what they said theresa the woman you mentioned was a former marine. she defies whatever stereotypes you have of a debtor. she worked her high school helping helping her pant -- parents pay off their mortgage. her life comes apart after she gets out of the marine corps. she finds out her husband is cheating on her. all of a sudden she goes from two incomes to one income and she's on the hook for vehicle payments and she's behind on their bills. at that point the fees start kicking in on this washington mutual card with late fees and

over the limit fees and eventually she can't pay anymore. unbeknownst to her washington mutual sells these debts to the debt buyer and it ends up in aaron siegel's's hands in buffalo and then it ends up being stolen and in the hands of these guys that don't actually own it. one day she gets a call and they say maam you owe this money needed to pay this right now. they were of some repercussions and this is your chance to do it. the calls get increasingly threatening. meanwhile theresa has a job working a border patrol in southwest and if she doesn't have her credit in order it's hard to have a job like that because you can be blackmailed or there's liability. what am i going to do? i'm going to pay these guys off so she agrees to pay $2700 off. she feels good about it that

she's getting on top of it that when she makes the last payment and she's given -- expecting to get some sort of receiver where she pay there's nothing in when she checks the credit agency reporting there's no record of her credit. she would assume they had all the information that she paid people that stole her debt. these are some of the people that aaron and brandon realized they are paying the wrong guy. you're absolutely right, each one of these names on these packages that were stolen or real people and the states can be much higher. >> host: it seems there are so few rules or abilities for regulators to cover all of these individuals with that moving back and forth when it does. people like theresa don't know what's going on. they are just afraid they are paying because of local call. what kind of tactics are coming from the other side of the phonecall because almost a third

of americans in debt are in collections so they may be getting these phonecalls from some of these people you talk about in your book. >> guest: you are absolutely right. about one third of americans are in debt collection and when you are called by the debt collector basically what you get is the talk off. the collector in one and trying to persuade you to open your wallet and pay your bill. there is the legal talk off send illegal talk often and there's a gray area. a legal talk off would be you otis and your social security number and how can can you arrange a? that illegal tactics are ones that are threatening and lying to the consumer saying we are going to take legal action when that's not true. we are going to arrest you or seizure property. lies and coercion and threats like that are not legal and that

happens a fair amount. if you think about it it happens towards the bottom of the debt food chain so you have this piece of debt that the bank selloff so there are reputable debt buyer. they don't need that to get the money out of it fairly quickly but when that is bought and sold six or seven times what it has whittled down who are the folks that have been paid any of the previous owners. the people that get that debt are usually the people at the bottom of the food chain and that's where they almost feel they have to make these threatening calls in order to squeeze the money out of folks. often these are the small agencies that opened up and they do it in a close back down and open up somewhere else before they are caught by the authorities. i just want to make one other point which is that there is not a lot of regulation and law enforcement because it's changing. with the consumer financial protection bureau, within the

last bunch of years there hasn't been much regulation. that helps explain why a banker like aaron would team up with the former armed robber like branded because not only is branding getting good paper, brandon is offering them a service that regulators and law enforcement can't. when something goes wrong i will solve this problem for you because calling the police and calling the states attorney general in the cfpb is not going to get it done. you need me to straighten it out. i think aaron saw the truth in that. >> host: you made the comparison, you have one side trying to collect data and have desperate individuals were getting these phonecalls and paying because it sounds scary. and you have regulations particularly at the bottom part of the chain. what recourse do some of these individuals have or what can they do?

what can they do what they have paid him at that but it's gone too no one? has gone to basically some of these people. guess who i was in jameis shop one day in buffalo. this was years ago and i was listening to the calls between the collectors and the debtors. the guy gets on the phone and jimmy says hey you owe money on this payday loan. the guy said i just paid this loan of three months ago. by the way that's a 300-dollar loan. i just paid it off and jimmy said well can you send me written proof with a receipt from that agency showing the proof in the guy said i never got that. jimmy censorship censorship i'm afraid you still owe money. he turned to me and he said this is the only way i know that the guys telling the truth. if i'd forget every debtor and said they paid i wouldn't do be at business but you got a sense of the frantic mess up the guy

in the other sideline. he didn't sound like he had much recourse. i think the calls would continue until you pay kind of thing. there are one or two things that are helpful for consumers to know. one which is no statute of limitations for one that debt is no longer legally enforceable and it varies from three to six years but if you are getting a call on a debt on a depth of on a debt that is for your soul the statute of limitations that is three years old and you have no legal obligation to repay that debt. the other thing is after seven years most negative reporting falls off your credit report from the credit reporting agency. >> host: it's safe to say and that's very information -- interesting information for anyone getting calls. is it safe to say that you do get a call on any level that's threatening after five or six years is a safe to say we should ignore that paul? >> guest: there may be more obligation to pay it by yeah

history was made i would probably think twice about repaying it if i know in a year it's been seven years or there is no legal recourse. if it's beyond the statute of limitations. the other thing i would say is i want to want to make sure the person on the other end of the phone actually owned the debt. the problem is there is not an easy way to figure that out but you could get the name of the mott company and check them out on the better business bureau web site and get a sense of whether it's a good company or not. >> host: you actually were on a call as part of the research for this book. you are actually one of these collection centers and you got on the phone to feel like what it was to be a debt collector and had a conversation with a person at the other end of the phone. what was that like? >> guest: i asked brandon wilson's collection agency. i grew up in bangor maine and i was just observing. he said to mean look, you've got to get on the phone and you can

observe only want but you're not going to understand what the job is like a must to collect. i was reluctant. i didn't want to hound people but the other collectors who worked for him started haranguing him saying you've got to try this. so they gave me a headset and i sat in front of one of these terminals. they had it on auto-dialer so debtors whose information has been verified which is routed to me. the first call came to me and it was the woman that owed $450 on her cell phone bill. i said something like maam eyes euo is $900 with interest that we can give you a reduced rate and would you consider paying best? i thought i did wouldn't pay me. eventually we are talking and brandon is trying to narrate the debtor. i have to have such empathy, what's going on with you in your

life? and we will have some sort of connection and she will feel like she can open up and trust me. i'm trying to do this and at one point she says maybe i could write you a check but i don't like seize on that right away. then she hangs up and brandon is right behind me playing the coach. he says look, you fail that this not because you didn't collect. you failed on her because at the moment she offered to make that check you should have said okay. so you are going to send me that check and you were going to send it in the middle of the month because brandon psychology the minute that she promised to make that payment we had kind of gotten her because she committed to this. now we can use that the next time we call her. anyway so there were a few calls like that. i was a very bad collector but

what i realize that the end was i could afford to be a bad collector. i've married to doctor. make a decent living as a writer but if i were some of these collectors i would have gotten wise quickly to what i had have to say due to make folks pay. >> host: they are desperate. they are like sharks. that is basically what you have depicted here and it very clear manner. yes though there are some clusters to do well from the cells working for these customer service type places but a lot of collectors are pretty desperate. i was at one agency and at the payday at the end of the week one guy made $115 the other guy made $85. that's four. >> on the go? "after words" is available via podcast through itunes and xml. visit booktv.org and click podcasts on the upper left side

of the page. select which podcast you would like to download and listen to "after words" while you travel. >> host: you talk about this underworld in buffalo and going up to nine are maine and getting on the phone with a set of characters and you also talk about another pillar of this debt collection world which is las vegas. he went there to do an investigation there in to deal with some of these individuals had discovered new things there. >> guest: solo i wanted to see how brandon wilson was buying this debt and if you remember brandon is a former armed robber who works for an end works for aaron and his finding these deals on paper. those deals are key to the profit margin so in talking to brandon about where he hunted her search for paper he says las vegas. every third word there's a big debt buyers can mention i might

go out there and i can't but feel. i asked him if i could tag along and he said sure. february 2013 i flew out to vegas and spent several days with brandon. he was on the prowl for these deals. he wanted to get a feel for what they called the bucket sets that he could bring home with him to work at his own collection agency or flip and sell to other folks. it was interesting because when we arrived there that year the market for debt was changing for two reasons. one was the regulators were finally starting to crack down a little bit and that was making some of the banks nervous about who was getting ahold of their debt. the other thing is that during the credit boom of the 2000 everyone was getting along. now all of a sudden after the recession people are becoming, predators are becoming more careful of who they issue credit to which means the cost of buying these bad accounts that

no one collects on gaza. brandon had to work that much harder to find deals. when he was there he was hunting for this paper that he called the written con paper. you want me to tell you about that? >> host: that's a really interesting story. >> guest: when he gets there the word on the street of the hotel lobby is that there is a parcel of debt that everyone is calling the written con paper. it's debt that belongs to an agency in california bonus ring con. the federal trade commission shut them down because they were doing all kinds of illegal stuff like abusing debtors. after the shutdown of this agency its assets went into a court-appointed receipt. the same way you would seize the drug dealers car and auction it off to raise revenue. the same thing habits but the asset that this company had were

largely their paper, the debt that they were collecting on some now they were auctioning off this paper. everyone is trying to figure out how much is this worth is a big piece of debt? i'm going with brandon and he's gg his intelligence and talking to folks. what is this word on the rincon papers and how much would you pay for a? i'm with him one day when he meets this woman who is another debt broker. brandon wants to talk to her because she used to sell debt to rincon and she was intimately familiar with the workings of the company. she said don't buy it. brandon said i had a bad feeling about about why gary singer shouldn't buy a? she said well i have reliable information that people at rincon that some of that debt was stolen after the offices were shut down and what's more some of the chains of title

proving legitimate ownership of the debt is not there. and i have this information she claimed directly from people inside the rincon and if you buy that you will bring a world of trouble particularly for what was stolen that means someone else could be working the same paper that you want. i eventually called up the federal trade commission and i said is it possible that some of this paper was stolen after the office was shut down they basically said to me i can't tell you with 100% certainty that some employee did walk out the door with some of the paper before we shut that down. i did a little more digging and i looked at the terms of sale. the court was saying if you want to buy this paper this is a contract you have to agree to in the contract that was in pretty cured -- clear language these are guarantees about the accuracy or the validity of this paper that's being sold. basically to sum this whole thing up you have a federal

regulatory agency shutting down a bad actor in the business handing over its assets, this paper to a court-appointed receiver and there's an auction. they are selling off that paper and there's reason to believe at least possibly they are selling paper that's been stolen. instead of people cracking down on solving problems they inadvertently are creating creating problems and in and brandon decides he just doesn't want to make a bid on these rincon papers owned by this court-appointed receiver. >> host: i find that horrifying that the ftc is closing down a shop, taking that paper not doing anything too i imagine the debtors involved on the other side of that paper because they don't know what's going on with the debt. they don't know what has been shuttled somewhere else.

they are getting calls from collection agencies that bought it and sold it that they have never heard of them that they have never had a transaction with. imagine for example chase washington mutual to banks at the top of the food chain who have papers that are different from rincon but at some point chase stops selling its debt because of regulations that have come into effect after the financial crisis and with the dodd-frank act. how does that impact, first of all why do they do it and where their lawsuits that they didn't want to deal with an how did this impact the whole chain of other characters that were involved in debt collection? >> guest: right, so the title of the book is "bad paper." that paper is paper that there are problems with soderbergh makes it hard to collect and there's a lot of bad paper up it because basically these big creditors like washington mutual

who is now chase or bank of america for years have just this dolby spreadsheets out with not a particularly careful organized way to debt buyers. the contracts that these banks create clearly have these crazy warranties that say we are making no guarantees about the information. there are problems with it. there's all kinds of problems with it i saw it first-hand with some of the people connected to the package. just to give you one click example there was a woman connected to this package to after going through the whole circus of what happened in buffalo ends up in a court down in georgia. it appears on a credit report and she's in danger of being sued over it. i say to this woman okay what's the story with this debt? she said i was hoping you could tell me. i don't recognize this

washington mutual debt that i supposedly owe. i say okay there has to be a solution here. let's call chase bank which has now bought washington mutual and we will ask him directly what's going on with this on with his mountainous debt that we don't recognize. i called chase and i say i have this woman right here in her name is julie. she has a son as her credit report but she doesn't recognize the debt or the amount and can you help us clarify a? when this was sold off maybe it was done with mistakes. the guy from chase calls back and says jake we are going to write off julie's debt as fraud. i said why? he said well we don't have any of the underlying documentation that would give us confidence that this is in fact a valid and accurate debt. they had some statements that they didn't have the original signed contract or people who are paying the debt. i said what you mean you don't have that? you were that bank, should you have a? he said well when chase acquired

washington mutual is a very rapid process and information was lost. when chase acquired washington mutual that was one of the largest financial acquisitions in recent history and you are talking about a pillar in the financial world. basically they are saying you know what we don't have the paperwork. the mistakes that are being made that makes this paperback aren't just happening at the bottom of the food chain, the debt food chain for you have people in buffalo but my assumption going into this is banks don't make mistakes like this. it's not a safe assumption to make. >> host: you come out with this entire story and the writing is just so clear. you are coming at it from a financial component that really from the ground up from this underworld to talk about and from individuals and how people are impacted.

the stories that surround this, the washington mutual chase merger and everything happening during the financial crisis of 2008 have come into focus as being about the this sort of thing happening with mortgages with attachments to mortgage loans being lost with robo-signing and those kinds of things. you actually bring up and this had been going on and has been going on notches with mortgages but throughout this entire credit spectrum with credit cards and other types of data as well. >> guest: that's right. i think at this point people know there's a lot of funny business going on with the way that mortgages were issued they were bought and sold and there was a lot less attention given to the idea of consumer debt whether it's credit card debt or payday loans but there are the same sorts of problems. where you see this in some ways most strikingly as when we get to the courts which is where we

get to at the end of the book. basically all those folks that are calling and saying you've got to pay this they are basically relying on that talk off trade if they can't do that all but ends up in the hands of lawyers who then sue on that debt. this is where it goes to the court and many of the same issues with the robo-signing of the mortgages they are having similar issues in court with credit cards. basically the lawyers that are sitting on this debt, the evidence that they have is fairly thin. there are problems with excel spreadsheets but what is happening is there's a 90% no-show rate with consumers in court. if you think about it here it's pretty simple simple. i'm a guy at jake i can't pay my credit card. a whole bunch of debt collectors have bought and sold my debt and i still can't pay. eventually they bring in a

lawyer and the lawyer sues me. now most likely what they're saying i was much higher than the original principle dallas -- balance maybe three times higher because of the high interest rate. if i go to court i can challenge that and say where did she get this number? do you have proved that this is my debt or what is the breakdown of interest and principle? 90% of americans don't show up in court. they either don't understand what it means not to show up where they feel there's no point and what happens is the numbers on the excel spreadsheet that are highly suspect to begin with then get stamped by a court and it becomes a judgment against you. and then your creditor can now garnish her wages. they don't have to call you up and make you pay. they can go right to your bank account and clean it out. they can get your monthly check. there's a new study out by republican-led shows 10% of americans between 35 and 45 are having their wages garnished every week.

so that is happen, yes. >> host: that's astonishing. you have basically given in this book and interview "bad paper" two important pieces of advice for consumers out there who are involved in the debt collection process. one is if someone calls about it that that's over a certain. of time they should be suspect about that call and likely ignore it and also as you are mentioning you should show up in court if you get called to court because you have a much better chance of writing whatever wrong you have been involved in them if you simply don't show up and it can go against you. >> guest: that's totally true. >> host: that in itself is what you write in "bad paper" the entire american public so thank you for that. you were in court. you were in savannah georgia and the history that georgia has in the debtors prison and the

debtors idea of reinstitution and that sort of thing. just go interesting. the history was that originally georgia was viewed as a utopia that would rehabilitate debtors that would come from the debtors prison in england and come to the new world and get a fresh start and get out of the chains of debt and rebuild their lives. this very upbeat optimistic view of reinvention but the irony is that is really not the case in america these days. we hear a lot about how americans filed for bankruptcy and get out of their debt that there are a lot of people who have horrible credit ratings and pay higher rates on all kinds of loans they take out. they are having their wages garnished in their checking accounts cleared out. it's quite a contrast to this utopian vision that originally

was founded in the state of georgia and the other part of your question which is about going to court and there's a funny thing that happened to me which was that i wanted to see what this process was like so i followed the package of debt in the book and i went to the courthouse for some of the debtors connected to the package had been through. i showed up just to get a sense of it so i'm waiting outside the of the courtroom and i start talking that this couple is being sued over credit card de debt. they don't recognize the people that claim to own the debt and the creditor's name doesn't ring a bell for them and the amount is to make any sense and there's no documentation about the breakdown of that amount. this guy calls up their name, young lawyer calls out their name and a walk over there and he says to them i represent the people that on your debt. let's settle this right now and we can work out an agreement.

you can pay me and we don't need to go before the judge. he reaches into his briefcase and pulls out this document that looks almost like a credit card statement but it's a markup. all it has is the amount they owe their name and address and there's bold print that says this is not an actual credit card statement. they are looking to to see the who the schism may start talking to this lawyer and at some point along the way i piped up and i've typed up and icq have any documentation to prove you do in fact on this debt or any further information to give the breakdown of the debt? he says to me are you a a lawyer? i said no i'm just writing a book. he said you can't represent them and in fact he says i'm going to take you in front of the judge. i returned to the courtroom at this couple and a woman who is on the hook for that the judge calls throughout and she calls me up as well. we get sworn in together as

codefendants in this. it was like a novel or something. sworn in and a lawyer who is suing for the debt has an opening argument and says mr. alpern here appears to be practicing law without a license and can face criminal sanctions for doing it. i say your honor i just asked a question i'm trying to figure out the process with you. as matthew 15 minutes ago. this goes back and forth and finally the judge says to the lawyer what do you want to do about the matter of debt that this woman knows? sea lift said let me consult with my client. he makes a phonecall and he says your honor we are going to drop the case. at this point me in the debtor look like what just happened? we walked out into the hallway and there's a guy from legal services and he said basically to us i will tell you what just happened. he said the magic word and the

magic words are this couple simply by showing up in court and pressing back just a little bit asking for the barest dennis amount of evidence of the legitimacy of the dead in the detail information of that debt was enough to make the pursing suing backoff and the whole thing just kind of crumbled. it was so funny and the whole book i've been chasing this excel spreadsheet to the streets of buffalo into the courts of buffalo and the moment it comes up under the best of scrutiny it vanishes into nothing. >> host: that's amazing. now you mentioned earlier that the whole chasing a paper in the whole debt collection business got to a height during the great recession in the financial crisis because people had less money to pay and they had more

debts that had accumulated. you talk about the economy. i find it very interesting because in the term shadow banking it's usually about cayman islands tax shelter type things. the shadow economy something different and it's something that you discussed with respect to the people at the bottom of this. i want to know if you could talk about where you think those people and how that's going to involve going forward from where we are now. >> host: we -- the reason i stumbled onto this was because i was down in georgia and i started looking into some of these debtors have been sued in court over this debt. i want to get a sense of what their lives were like. one of them told me that she bought her carved from a special car dealership that offered almost exclusively catering to people with bad credit. i went out to this dealership in what became clear was that they

were paying an enormous premium for their bad credit. in the words of this car dealer their money was worth 70 cents on the dollar and a car that should have cost $9000 cost $13,000. in fact another debtor who i followed he had his bank account cleaned out. he was one of these guys that there was a judgment against him. they found him and cleaned out every cent he had in the savings account which caused him to default on this car payment which then compromise his ability to get to work. in his particular situation he had a gps device on the engine of his car from the moment he wanted to default on this car loan in which he was paying this premium on, boom. the engine was shut off in his car would be stuck at the side of the road. this is the world that people inhabit who have really bad credit. i visited this housing complex

with all people who had very bad credit and e they live in this world where they are paying the highest possible rate of interest and there is basically no choice. creditors don't trust they are going to pay the bills so they get stuck with this. i'm the one hand you can kind of understand the creditor's perspective. these are very risky investments but it's pretty hard for people sewer -- you who are so poor having much of their income devoured by this and they are the ones getting the most gouged by it. >> host: when you talk to the consumer protection board have you got a sense that this is an issue whatsoever at all that they are trying to do something about helping people and also just generally the fact that there are such heinous interest rates and payday loans and

credit cards that continue to implode on people that have the least ability to pay that i think you mentioned one instance which was very logical where one of the people in your book said if i hadn't been hit with the extra charge i would have been able to pay. we could have negotiated. there would have not been this chain of shadowy underworld stuff. do you have any understanding of getting to the root of this matter at the washington level? gas go i think consumer protection bureau which was the brainchild of now senator warren was a good move. they are starting to make a difference and they are going to have new rules coming out and about a year that will affect debt collection. they have been aggressive. if i were in charge there would be more funding. a lot of this has come down to how much resources they have to

go after the bad actors. the consumer financial protection bureau might have a budget between three and four of million dollars. if you look at the amount of money that jpmorgan chase set aside for le tigre should -- litigation reserve in 2013 it was money they put aside to defend themselves the consumer financial protection budget is 2% of that. so you get the sense that they are doing good work but they are outgunned here. i think that you know hopefully if anything comes from the book i hope it gives them a shot in the arm. another thing, i was on the phone with the dash department and they have initiative called operation chokepoint. the idea behind this is it's hard to go after these payday lenders that do the worst stuff but what the justice department has started to do is to go after the payment processors so i paid

a collection agency and i'm doing bad stuff i still have to rely on an officer to take the debit and credit card information in the justice department is starting to say hey payment processors if you are dealing with unscrupulous payday lenders we are going to go after you. there has been pushed back about that because there's a strong payday loan lobby present that is pushing back against it. i think that you need initiatives like that on a larger scale took get the change in a the sap in the cleanup industry. >> host: hopefully after reading the book that is illuminated so well and hopefully there will be a catalyst in increasing funding. how many years of research? >> guest: in one fashion or another i would say it's about

40 years. guest. >> host: you go back to buffalo and you do an epilogue on the characters and it the individuals involved on the debt collection side and aaron and jimmy and brandon and see where they are at the end of the most recent period of time. was that like? >> guest: the most surprising thing i encountered in writing this epilogue was what i found from theresa who is the former marine if you remember. she's the one that paid the wrong collector, the collector that had somehow gotten ahold of her debt. so i was curious about how she was doing. just as the book was about ready to go the final version she called me up and said you are not going to believe this but i just got a call from another collector on the same debt which was puzzling because when aaron siegel who is the rightful owner of that had discovered there had been fraud he did the right thing which was he retired the

debt. he didn't sell it or put it in the hard drive and let it rest in peace in theory and yet someone was collecting on this debt still. so i called the agency. i wrote them a letter actually that i contacted theresa and i said i have a quandary about these calls you are baking to this woman because they are threatening to sue her. what is your claim to ownership for this debt? i didn't think i would hear from anyone and if i could hear from someone i would hear from someone who might have a chop shop in buffalo. it turns out i talked to the owner who lived in beverly hil hills. ..