The Richest Man You've Never Heard Of

To make a fortune on America's mountain of credit-card debt, this CEO had to go broke first.

Cover Story

To make a fortune on America's mountain of credit-card debt, Bill Bartmann first had to go broke himself

On an October day in 1985, in Muskogee, Okla., Bill Bartmann--company founder, father, community leader--stood on the floor of his factory and wept. So did his 71 employees. Their final work shift complete, they filed past Bartmann to shake his hand, return his embrace, clap one another on the shoulder, and cry some more. "I've been through some deaths in the family, including my father's," Bartmann says quietly today, "but nothing was more traumatic than that afternoon. It was the most tearful, soul-wrenching experience of my life." Bill Bartmann's business had failed.

The demise of Hawkeye Pipe Services Inc ., a manufacturer of pipes for oil rigs, could not have been swifter. On July 25, OPEC's oil cartel all but crumbled. Prices dove as crude flooded the market, bringing drilling in Oklahoma to a near halt virtually overnight. For thriving Hawkeye Pipe, it was an unequivocal death sentence: July sales were $1 million, August sales were precisely zero. As Bartmann puts it, it was as if a hand had reached out from 10,000 miles away and turned off the faucet. He snaps his fingers: "It was just that quick."

And so, once the company's assets had been auctioned off at yard-sale prices, Bartmann found himself in that most dreaded of entrepreneurial circumstances: ensnared in his personal guarantees, more than $1 million in debt.

That's when the telephone calls started. Surly collection agents rang at all hours of the day and night, promising lawsuits, hurling insults, demanding money the family didn't have. Bartmann's 7-year-old daughter, Jessica, once fielded a call. "Your dad's not there, huh?" the voice growled. "Well, you tell that deadbeat if he doesn't pay his bill, we're going to repossess his car."

As the collectors appeared friends and business associates seemed to vanish. "It was like they were all made of smoke on a windy day," Bartmann says. "People who used to come over to my house Friday night to play poker or go to a ball game--suddenly, they sort of clicked a button and said, 'You don't exist anymore.' It was as if business failure were contagious, and if they hung out with anybody that had had one, they might get some on them."

Personal bankruptcy was an option, of course, but the idea was anathema to Bartmann. "These were people I owed money to," he says. "It was under a corporate name, but it was basically me they were doing business with. To declare bankruptcy would have been to stiff them." Instead, Bartmann resolved to do the implausible: find a way to repay his creditors the more than $1 million he owed them.

The goal was outlandish, considering there were only a few cans of food left to feed his household, which included Bartmann, his wife, Kathy, and two daughters. Clearly, salaried employment would not do the trick. Bartmann decided he needed a truly outsize risk, an absurd long shot, a you'll-never-be-able-to-pull-this-off sort of enterprise. Risk, he knew, was the reciprocal of reward, and the reward he required was very, very large.

He shared that insight with Jay Jones, his former chief of operations ("One of the few people in town who would still associate with me," Bartmann says), and the pair sat down to draw up a list of possibilities. How about a chain of pawnshops, offered Jones. Or what about a franchiser of hot-dog carts? Nothing quite fit the bill--until Bartmann spotted an unusual advertisement in the local newspaper.

The Federal Deposit Insurance Corp. was auctioning off the delinquent loans it had inherited from a failed bank in Tulsa. In so many words, the FDIC wanted people to throw good money after bad debt, a concept that drew howls of derision from Jones and Bartmann. They tossed the ad, only to see it reappear the following day. "Our reaction wasn't quite as venomous" that time around, says Bartmann, but the ad again found its way into the trash. It wasn't until its third appearance that it gave them pause.

Impulsively, the two men hopped into Bartmann's Chevy Blazer to make the one-hour trip to Tulsa. Unable to spare the 40¢ toll for the interstate, they stuck to dusty back roads.

As if to emphasize the absurd nature of their mission, only one other bidder showed up at the auction. Some 200 portfolios of bad loans were for sale, ranging from the mildly delinquent to the long-since-considered-unredeemable. Bartmann began inspecting the latter. "They were the double-uglies," says Jones, "the bottom-of-the-bucket kind of loans," and were therefore the cheapest. As Bartmann perused the files he saw the collectors' records of their unsuccessful efforts: "This deadbeat won't pay, he says go to hell." And then it struck him: "I realized, This is me."

He thought about the gruff voices hectoring him and his family. All the collectors' bluster and intimidation, he felt, "was not fair, was not right, and"--here was his epiphany--"was not productive." He decided he could do better. Not as a standard collection agent who would earn a simple 30% commission. Rather, he'd assume actual ownership of the debts, buying them for 2¢ on the dollar and hoping to collect more. Nobody had done that before.

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