When Tobias "Bags of Money" Boyland went looking for a new career after serving 13 years in prison for armed robbery and drug dealing, he quickly found something that suited his sensibilities: He opened a collection agency.
It was, in some ways, a natural move for a young man in Buffalo. Desperate for jobs, this chronically depressed Rust Belt city has become home to one of the biggest concentrations of debt collection businesses in the U.S.
"Collections is the Bethlehem Steel of Buffalo," said Boyland, 44, recalling the industrial giant that once employed 20,000 people in the region. "You can make a decent living in a town where there isn't a lot of opportunity."
Between 5,000 and 6,000 people earning $30,000 to $40,000 a year now work at roughly 110 collection agencies in and around Buffalo, an industry created with the help of seed money from the state of New York. The industry has been a rare economic bright spot in Buffalo, the nation's third-poorest city of its size, a place where 30 percent of the people live in poverty.
Yet, law enforcement and consumer groups point to a dark side: Buffalo, they say, has also become a center for some of the worst elements in the business. Debt collectors, some of them convicted felons, have illegally posed as lawyers or unlawfully browbeat people _ threatening to have them arrested or stripped of custody of their children _ to scare them into making payments.
"Get some clean clothes because you're not coming home any time soon," one debtor was told.
As the sour economy leaves people less and less able to pay their debts, the collection abuses have become so flagrant and numerous that state and federal authorities have moved to shut down several Buffalo-area agencies where the most heartless and bullying telephone calls originated. At least 20 people have been sued or arrested on criminal charges.
Boyland himself was forced out of business and jailed in June after authorities said they caught him carrying a loaded, unlicensed pistol as they investigated more than 1,000 complaints about abusive tactics at his collection business.
The regional Better Business Bureau said that in the past three years, it has gotten 4,562 complaints about debt collection agencies in western New York. Of 213 agencies it has graded in the region, 104 were given an "F." And of all the complaints about debt collection received by the Better Business Bureau nationwide last year, about 1 in 10 involved a company in western New York.
Collection agencies began sprouting in Buffalo in the mid-1990s as a spinoff of the city's then-growing back-office and financial-services sector. Like other businesses operating big customer-service call centers, the collection companies were drawn to Buffalo by its inexpensive office space and its willing and affordable work force.
A state development agency has sweetened the pot since 2001 with $1.2 million in grants to four collection agencies. It gave an additional $400,000 in October to a collection company that plans to double its work force with 50 new hires.
"Almost everyone knows someone whose son or daughter has worked for a collection agency," said David Polino, president of the Better Business Bureau of Upstate New York. "This is one of the industries that used to be Bethlehem Steel, the Chevy plant _ all the places where you used to get out of high school and find employment 35 or 40 years ago, it's now call centers."
Industry supporters blame many of the worst complaints on small firms operating on the fringe.
Twenty-eight of the region's collection agencies have a grade of "A" from the BBB for generating few complaints while setting up repayment plans for delinquent credit card accounts, medical bills or loans.
"The vast majority are great businesses that benefit the local economy, do a good job, are respectful, and then you've got a few that are just wacko," said John Nemo, spokesman for the Association of Credit and Collection Professionals, a trade group with 3,500 members.
Boyland blamed the problems at his nine companies on unsupervised employees who abused a chance to make good money. Twelve of his former workers have been arrested and charged with offenses including posing as law enforcement officers to intimidate people into paying debts.
When "Dateline NBC" did a segment on Boyland's business in March, Boyland appeared unrepentant, writing on his Web site that he was "laughing all the way to the bank." But in a recent interview with The Associated Press, he was more contrite, saying he wouldn't have condoned such "ludicrous" tactics.
"Who can build a successful business model from that? It's not possible," he said.
Nationally, the Federal Trade Commission received more than 78,000 complaints about third-party debt collectors in 2008 and announced civil judgments of more than $1 million against agencies. The 2008 complaint total, the most recent complete-year figure available, was more than twice that of 2003. No other industry generated more calls.
For the first half of 2009, the FTC logged 45,050 complaints, an increase of nearly one-third from the same period in 2008.
While the bad economy has been partly responsible for the rise in complaints, another factor has been the emergence of companies that buy portfolios of old debts and make another stab at collecting, often more aggressively. Virtually anyone can buy into the business and get access to the personal information needed to collect a debt _ including people with criminal records.
Over the past year, the New York attorney general's office has picked off some of the companies that generated the most outrageous complaints, including threatening debtors with phony lawsuits or trying to embarrass them by phoning employers and neighbors, both illegal under federal law.
"The tactics allegedly used here are some of the worst of the worst in the debt collection business," Attorney General Andrew Cuomo said in announcing a dozen arrests in September. "The defendants' alleged lies, deceit and intimidation caused many innocent people to pay money they didn't owe just to stop the terrifying calls."
Threatening to have people arrested for failing to pay a debt is also illegal, but that has been happening, too.
Michelle Minton of Springville said she was home alone with her two toddlers when someone claiming to be a lawyer for a collection firm phoned her, told her she owed $2,100 and said a warrant had been issued for her arrest. The only way out, he said, was for her to make a payment immediately.
"If your husband can't make it home from work, your children will have to go to Social Services," he told her.
Minton was certain there had been a mistake, but panicked and gave the caller access to her bank account, which was quickly drained of $900. She found out later the debt was owed by someone else.
"Forty-five minutes of bullying and they got $900," she said.
She and her husband tracked the call to a Buffalo company that has been the subject of other complaints. Cuomo's office is suing the business.
David B. Caruso reported from New York City.