Casinos, Ballroom Dancing and Repo Forwarding Companies


Casinos, ballroom dancing, and Repossession forwarding companies. What do they have in common? Two major repo forwarding companies.

Let’s be honest with ourselves, we’re all in our lines of work for a buck. There’s nothing wrong with that. I’ll go one step further and say it’s noble and the purest form of human nature and at the heart of the free enterprise system. But in our pursuit of profit do we sometimes lose sight of the bigger picture and the long term ramifications? I would definitely venture to say so in the relationship many lenders and recovery agents have with repossession forwarding companies.

I’m from a large Credit Union, the savings by using a forwarding company that only charges $275 for an involuntary repo or $150 for a voluntary equates to a couple of thousand dollars a month compared to using a direct agency assignment might really add up at the end of the year. That’s enough to make my CFO salivate and make me look like a cheap Scotsman as my ancestors were and to some degree I am as well. But, for larger lenders with assets in excess of $5B assigning out as many as 400 to 500 assignments a month or more, the savings are obviously much greater not only by actual repossession fees and the lack of closing costs, as most agencies in forwarding networks work contingent (no repo=no fee). I can clearly see the obvious savings in man hours for assignment as well as the larger savings in actual costs that would give their CFO’s a raging woody to rival any boner pill.

So why not try to save a buck? Times are tough and margins are thin. It’s normal to look for savings and to be applauded. But if you as a lender or repossessor are willing to sell out the future of your organization to save money in the short term is not only short-sighted but insane. There will be a high price to be paid for them later but I’ll get to that later.

Let’s take a look at two “jacks of all trades and masters on none” in the major forwarding company business.

Recently sued owner of Renovo, aka; Renaissance Asset Recovery, Kevin Flynn came from a background in the casino and gambling business with some questionable results from his 2001 investment in a Rosemont, Il ventured denies licensing by the Illinois Gaming Board who stripped  Flynns’ Emerald Casino Inc. of its gaming license, punishing the Flynns for “a continuous pattern . . . of providing false and misleading information to the Board” and citing, among other things, a lack of due diligence regarding prospective shareholders “who are associated with persons who have been identified as members and associates of organized crime.” On March 29, 2002, the Sun-Times editorial page denounced the Flynns as the fiasco’s “marquee villains.” This as well as his long dragged out investment into the multi-million dollar purchase of a $1.8M  Lithuanian military cargo plane with investors ranging from Illinois power brokers to mercenary groups that has been lingering in mothball as his fellow investors started a fight in court as well as his more recent partnership investment in the Chicago Sun Times Newspaper makes me wonder why he would suddenly be so intersted in the recovery industry. Aren’t his hands just a little full already?

NARC of Florida’s founding CEO William Forhan is also the CEO of Casino’s Inc. and a dance exercise company called Ballroom Dance Fitness, Inc. Joe Fahoome, President of NARC is also President of “Casino Rated Players, Inc.” is a 25 year veteran of the gaming industry.  Until the recent addition of Brad Shrader, with a reported 20 years experience in the recovery industry as the COO, it appears as though no one of any reputable experience in the repossession industry is involved in this company until their recent rush to go public into the stock market. This pattern in their previous ventures as well as this one demonstrates a clear focus on gathering investment capital.

Is it me, or does there seem to be a common denominator here?  I suppose in some sense that, a business is a business, and after all, all they are doing is forwarding assignments to a network of repossession and tow companies for a discount rate. But what really seems to be an issue to myself is the act of trusting a company, publicly traded or not, to assign out an always potentially litigious action such as a repossession to a network of repo and tow companies who are accepting contingency assignments for prices that were hard to operate under 20 years ago let alone now. What kind of results are you going to get from that?

Considering the legal requirements and costs of operation vary from state to state, this proposition is a little more feasible in less urban areas, but in California, New Jersey, Florida or New York, how are these agents able to function under this unsustainable pricing structure? Let’s get real, insurance costs have almost tripled in the last few years, gas prices are more than double what they were in the 90’s, locksmithing costs are higher and recovery equipment is far more expensive. This doesn’t even take into consideration the costs of ALPR equipment and office overhead. So, how does anyone working in these networks survive?

There’s only one way I can imagine and that is by cutting their own costs. Suppose they let their insurance lapse, that would save a lot of money, suppose they drain gas tanks on all of the recovered vehicles, that could save thousands. Let’s suppose they aren’t bonded through any of the reputable national or state recovery associations, that would save a buck or two as well. So what kind of company would do this? Simple, a tow company.

The use of a tow company to repossess a car, rather than a recovery professional, is the equivalent to going to a veterinarian rather than a doctor because it’s cheaper. The attempt to save a buck wouldn’t exactly make a lot of sense then would it? Sure they’re both doctors but hey, let’s face it, the physiology and treatment of an animals is very different from that of a human as is a tow from a repossession.

So take a look at yourself. As a recovery professional, sure, the major lenders having moved to the forwarding companies leans hard on you to participate, but how long do you honestly think you can afford to stay in business at this miniscule, if any, profit? You’re shooting yourself in the foot. Many of my friends who own recovery agencies reluctantly participate in this slow professional suicide and even though they know it is killing them in the long run, they feel they have no choice. It’s your call, work now and die later because you can’t compete with some uninsured and unlicensed wanna-be wrestler with a tow truck. The more you contribute to your own demise, the sooner the industry is diminished to nothing but a bunch of tow companies.

As a lender, you’re saving a lot of money now, but how long until you find yourself in court, or even worse, on the national news because some tow monkey shot a member or customer? Do you really feel willing to explain in a deposition, to a jury or the press that you do no diligence on your recovery agents but instead leave it to a company that is run by men better known for their expertise in gambling and ballroom dancing? Don’t get me wrong, many reputable recovery agencies owners and agents come from diverse backgrounds, but these companies seem to suffer from professional  Attention Deficit Disorder or they are just into whatever venture they are into for a quick buck. I tend to believe the latter.

Recovery agents are craftsmen. They have knowledge in locksmithing, skip investigation, tow and understand the point at which to break contact to avoid breaching the peace. Tow monkeys know how to use a tow truck and perhaps intimidation and threats. A responsible lender knows the laws of repossession and their vendors. Everyone has to dance with teh devil from time to time but, pay now or pay later folks, the choice is yours.

Kevin Armstrong


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