One person’s debt is another’s receivable

By Dave Vieser. The owner of a sizable collection agency business has been arrested in Cornelius for violating North Carolina debt collection rules and regulations.

The NC Department of Insurance filed a criminal complaint against Gordon Scott Engle, 55, charging him with operating as a debt collector in North Carolina without obtaining the required state license.

There’s another side to this story.

Turtle Creek Assets, Engle’s company, had a close working relationship with Aaron’s Inc., the furniture and appliance lease-to-own giant based in Atlanta.

At some point the relationship soured.

“During the past 10 years, TCA has bought hundreds of millions of dollars face amount of accounts from Aaron’s relating to hundreds of thousands of customers of Aaron’s,” Engle said.

Aaron’s knowingly sold TCA consumer accounts that weren’t delinquent or valid, Engle said, explaining that bad borrower default data had a negative impact on the company and a collateral effect on thousands of consumers.

In the world of debt collection, accuracy and aging are key.

TCA purchased on the order of 1 million delinquent accounts from Aaron’s.

According to Engle, the problems with the accounts included identity theft issues and bankruptcies.

Somewhere along the way Engle ran afoul of North Carolina debt collection law. Debt collectors in North Carolina must be registered with the state and get a permit to collect money. Engle did neither, according to NC Attorney General Josh Stein. He has accused Engle of writing deceptive notices, hiring police officers to deliver them and using aggressive tactics to threaten debtors.

Side notes: While his companies are in Texas, Engle has a lakefront mansion at 16424 Green Dolphin in Cornelius, according to Mecklenburg County records. Engle gained national attention back in 2013 when he paid for a billboard near Chicago advertising a web site he launched to help him find a wife. On a TV news feature he said he spent a “few thousand” on the billboard. Visit https://www.youtube.com/watch?v=OxyesZQSU-Q

Despite a booming economy, debt collecting is a big business where one person’s problem is another’s opportunity.

Engle’s lawsuit was filed within days of his arrest.

“We bought these accounts with the express understanding that these were valid accounts with true amounts owing, and that they represented only instances in which the customer had not settled his account and the merchandise had not been returned,” Engle said.

Stein said Engle went overboard in his collection efforts.

“He sent the consumers letters, saying they broke the law. While the letters looked like official court papers, the documents were fabricated,” the NC attorney general said.

As part of his debt collection efforts TCA employees threatened to have some people arrested, the NC lawsuit says.

Meanwhile, Aaron’s disclosed late last year it was being investigated by the Federal Trade Commission for possible violations tied to the sale of its consumer debt.

Debt collection procedures do vary from state to state, as does the amount of debt accumulated by residents. According to Forbes Magazine, most of the states with higher than average debt levels are in the south. Texas comes second with 44 percent of its residents in debt while South Carolina rounds off the top-three with 43 percent. North Carolina ranks much lower at 20 percent.

Stein said that Engle’s companies filed hundreds of criminal complaints in court, so courts would issue real criminal summonses against customers.

“Abusing the criminal process in order to collect a civil debt is absolutely unacceptable,” Stein added.

Engle said there were numerous instance where “no valid paperwork existed or perhaps never had.”

“The breadth of the tainted accounts is so pervasive that it threatens to render the entire portfolio uncollectable,” he said.