Prosecution continues to present its case in Bill Bartmann's federal trial
Thursday, October 2nd 2003, 12:00 am
By: News On 6
Testimony continued Thursday in the trial of former CFS founder Bill Bartmann. Bartmann is accused of selling CFS accounts to a shell company to improve the company's performance.
So what was the company's performance really? As news on 6 business reporter Steve Berg tell us, prosecutors paint a picture of a company unraveling.
During CFS's early days, a witness told the court the company bought and collected on delinquent consumer loans, things that were backed up with collateral, and he says collections went well. But in 1995, CFS began moving almost entirely into buying charged-off credit cards and that's when things apparently started to go sour.
As early as 1996, the head of CFS's collections department Charles Welsh told the court that his staff was, in his words, "struggling", and that overall they were having "difficulties". The prosecution produced charts that showed CFS was missing its daily collection goals and missing them badly, by tens of thousands of dollars.
In 1997, Welsh says CFS was selling accounts to other companies to make up for the collections department's shortfalls. But he says in September, they lost a major buyer. He sent a memo to his staff saying, "we have a challenge in front of us and we haven't risen to it." He also wrote that the more alarming part is that "10% of (the department's) officer had multiple days in which they had zero collections."
But also in September, CFS apparently did find a buyer to sell some of its accounts to. When asked by prosecutors who they sold to, Welsh said, "they sold to DiMat." DiMat is the shell company that prosecutors say Bartmann and his former partner Jay Jones set up to buy CFS's poorly performing accounts. The defense says Bartmann didn't know anything about DiMat and that Jones acted alone.
Collections were not the only source of income for CFS. They also had investors. Another witness told the court Thursday that even near the end, CFS had enough money in the bank to continue operating for another year or year-and-a-half.