The Resurrection of Bill Bartmann

To Bill Bartmann, the image is both memory and metaphor.

There he was, a teenage high school reject, leaning against a parking meter outside a pool hall in his small Iowa hometown. In the wider world, things were changing, propelled by the energy of the 1960s. But in small town Middle America of the day, a dropout from a dysfunctional family who was already in the habit of eating from garbage dumpsters was headed nowhere.

But something happened that day outside that pool hall – something that would change everything.

“Walking down the street, literally right towards me, was the principal who had expelled me from school,” Bartmann recalls.

“He comes right up to me and asks me what I was doing and that he meant what I was doing with my life. I told him that I was working part-time at a packing plant. He told me that I was bright enough that I should go to college. Now, to that point, no Bartmann had ever even graduated from high school in the whole family tree. But he very seriously encouraged me and told me that he could help. He said I would have to take the GED, but that if I passed it, he would help me get into college.”

It was a seminal moment for Bartmann and a formative one for the development of the principle and philosophy that subsequently propelled him through some alpine-high times and desperately low ones.

“I want to instill in the hearts and minds of everyone I come in contact with that you are capable of doing more than you think you can,” Bartmann says.

“I look at is as exactly the same as me standing against that parking meter. And then an opportunity came along.”

The young Bartmann hardly seemed the type to seize that opportunity when it did come along in the form of one committed educator, particularly since hanging out on the street outside a pool hall was a major improvement on the youngster’s life to date.

“I just like to explain it as – we had a dysfunctional family,” Bartmann says. “My parents had eight children, and I think they loved us as much as they knew how. They just didn’t know how. They did the best job they could. With eight kids, though, just getting by took everything they had. There was not a lot left for bonding.”

Although Bartmann’s farming family was hardly The Waltons, he says that contrary to what others might have thought, he was neither kicked out of his house nor did he run away when he was 14 years old. He just left home, and his parents waved goodbye.

“People hear that and they think there has to have been a scandal or that I was some kind of anarchist and that wasn’t the case,” Bartmann says. “I was literally living on the street, and it was an upgrade.”

Bartmann crashed at friends’ houses, ate from dumpsters and was barely skirting by in life when a temp job working at a traveling carnival offered a first glimmer of opportunity. He accepted a job offer and spent the next two years traveling the country with a group of carnies. He grew up fast – and learned the first of the lessons he would carry with him.

“I learned early that there are some good people out there and also that there are people who can hurt you,” Bartmann recollects. “Your job is to learn to evaluate people quickly. At 14, I learned some skills that have served me well. I have a pretty good read on people.”

Bartmann returned to Iowa more mature but no more focused. He was involved with a gang and he washed out of both his hometown’s high schools.

The Fork in the Road

Bartmann took his old principal up on his offer and began working with a tutor to prepare for his GED.

“You have to be slightly brighter than a bottle of water to pass the GED, but for me it was hard. I passed it and for me, that was a new high water point. I’d actually passed a test.”

Bartmann’s mentor kept his word and the younger man graduated community college despite being on academic probation the entire time.

“A couple of things happened,” Bartmann says. “I came to the conclusion that I was not as dumb as they said I was and that I could learn – I just had to work harder than everyone else. I wondered how far I could go. What did I want to do?”

Growing up in poverty, Bartmann says he knew what it was like to feel powerless. It was also the era of Kennedy and of Nader’s Raiders.

“The psyche of the moment was that you could do anything and that you could control your own destiny,” Bartmann says.

So Bartmann parlayed some connections he’d made dabbling in politics to get into law school at Drake University despite initially being rejected by all 48 law schools to which he applied.

“They let me in and I was on academic probation the entire time,” Bartmann says.

After earning admission to the Iowa Bar, Bartmann entered a practice dealing with various consumer issues – yet another brush with the experiences of people struggling to control their own destinies.

However, fate would take Bartmann to Oklahoma when he and his brother invested in the Country Club Apartments off Highway 69 in Muskogee. The real estate project required the brothers to be on-site, prompting the relocation to Oklahoma, where Bartmann has spent most of his time since.

“We did really well,” Bartmann says. “It was really just timing and luck. We bought in the late 1970s and sold in the mid-1980s.”

Having succeeded in real estate, it was little surprise when a local bank, with whom Bartmann did business, asked him to intervene in a problem they were having with a client who was operating an oil field pipe manufacturing company. The bank thought it needed to foreclose on the loan, but Bartmann looked into the situation and had a better idea. Bartmann persuaded the company owner to sell it to him and received financing from the very bank that had been threatening to foreclose.

Initially, driven by oil market forces, the company did well and Bartmann earned his first fortune.

“Over the course of my ownership we grew the company significantly,” Bartmann says.

But market forces give and take and when oil prices dropped, Bartmann was in a bind. He had personally guaranteed more than $1 million in loans for the failed company and just as quickly as he had made a fortune, he had lost it.

Cashing in on Bad Debt

Around the time Bartmann lost his first fortune, he stumbled upon an advertisement placed by the FDIC seeking to sell bad loans.

“At first, I thought who would want to buy bad loans? But I investigated. So many banks in the mid-‘80s were going under that the FDIC couldn’t handle the inventory of bad loans. It was the first time that the FDIC had ever sold bad loans because they just couldn’t handle it.”

Bartmann saw an opportunity and took it. He and his wife became the first people in the United States to buy bad consumer loans from the FDIC. They paid $13,000 for a “box full” of bad loans. Utilizing an approach fueled by Bartmann’s impoverished background and from his belief in opportunity, he parlayed that box into $63,000.

“These were small balance consumer loans – the kind of loans people had for vacations and Christmas,” Bartmann says. “I thought that if you treated people nicely and not harshly, if you used compassion and logic, that it would work. That was certainly not how collection people had conducted business, but that’s how because of my background, I felt it should be done. People will do the right thing if given the opportunity.”

Bartmann continued going back to the same well for the next 12 years, buying loans first from the FDIC and then from the Resolution Trust Company, which was created in the wake of the national savings and loan failure. But he then found what he calls “the mother lode” – charged-off credit card loans. His became the first company to ever buy those types of bad debts too.

In 1986, Bartmann launched Commercial Financial Services, and until the company’s collapse in 1999, he presided over one of the most revolutionary and successful business ventures in recent economic history.

“From the very beginning, I have had the same philosophical approach – that these are customers and not deadbeats. These are people who needed some help.”

Tulsa-based CFS grew to employ almost 4,000 people with revenues in excess of $1 billion and earnings in excess of $182 million. Bill and wife Kathy graced the covers of magazines such as Forbes and Inc. They were listed individually on the Forbes 400 Wealthiest People in America list. One national magazine ranked them No. 25.

Bartmann’s approach to treating people and his belief in the value of seizing opportunities extended to CFS employees too. CFS provided 100 percent free health care to employees and their families – with doctors and nurses on site. Free day care was on site. Salaries were twice the industry standard and the company provided a 250 percent 401k match. Stories of CFS’s magnanimity abounded – company-wide trips on cruise ships and to the Bahamas and Vegas to watch Bartmann wrestle Hulk Hogan.

To Bartmann, it was only logical that CFS’s success meant personal success for employees.

“You treat clients with dignity and respect and you treat employees the same way,” he says. “I had 4,000 amazing employees who did great work and I practice what I preach. They seized the opportunity, did well, helped people get out of bad situations – they deserved the best.”

Fall From Grace

In 1999, Jay Jones, a CFS business partner, committed fraud and sent the company into bankruptcy. Even though Jones told prosecutors he had acted without Bartmann’s knowledge, admitted his guilt and was sent to prison, U.S. Attorney General John Ashcroft indicted Bartmann. Five years later, after a two-month-long trial where the government called 53 witnesses and produced more than 1,000 exhibits, Bartmann rested his case without calling a single witness or producing a single exhibit. The jury acquitted Bartmann on all counts. Only afterward did the bankruptcy trustee declare that CFS was not a fraud.

Bartmann does not speak ill of others easily and even though his excoriation was more publicized then his complete exoneration, he bears no ill will toward the government.

“I choose to think of it as the system working – they took their time looking through everything before they decided I had done nothing wrong,” Bartmann says.

“For every education, there is a tuition. In my case, that tuition was $3.5 billion. I look back on everything that we went through and I remember those days, but those days aren’t us. They are just things that happened along the way.”

Bartmann says everything he learned with CFS mirrored things he already knew but these are lessons it is always good to learn a second time.

“People are inherently good. We’re responsible for our own actions. People will do the right thing if given the opportunity. We get what we deserve.”

A New Day

Bartmann is turning those lessons into yet another opportunity. Just last year in Tulsa he launched his new company, CFS2, which duplicates the business and philosophy of the first CFS – only without any business partners this time. Also based in Tulsa, Bartmann says this is a “chance to do it all again.”

“The economic environment is different,” Bartmann says. “There is a lot more debt, so there is more inventory and it is less expensive to buy. On the other hand, some of it is less collectable because of the environment. We’re going to go at it the same way we did before, treating people with respect and helping them out of bad situations.”

Finding employees has not been a problem. Bartmann says 90 percent of the resumes the company has received are from former CFS employees.

“One guy left a higher paying job in Iowa because he wants to do it all again,” Bartmann says. “He might be making less money today, but he knows if he does what he needs to do, he will do well again.”

Dana Bell is one of the former CFS employees who is happily back with CFS2. The company director of training and development said that when Bartmann finally decided to launch CFS2, she knew she was in.

“Not one single doubt,” she says. “It’s been a roller coaster from the very beginning, but I had no doubt.”

Bell says that working for Bartmann is not for everyone – it requires complete commitment, long hours and total investment in the philosophy.

“It’s all about above average people pushing themselves to limits they didn’t think they could reach,” Bell says. “It is not for the average person. Bill is a very generous person when you deserve it. You’re not going to come here for a job for a year, make some money and then get a slight increase next year for doing well. Bill will reward you. But it isn’t just an individual thing. You’re also helping people and you have to work hard and have a heart. We’re also fast to identify and weed out people who aren’t cut out for it. That’s not cold. We worked on New Year’s Eve…this isn’t for just anyone.”

Bartmann says his goal is to grow the company fast and furious and to, once again, share that success with employees.

“I believe that the more you share, the more you get,” Bartmann says.

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