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Leaders in car seizures
How many others sued by the Goldstones have had their cars seized? The courts, which authorize the actions, don't keep records that would allow such a tally.
But other official documents strongly suggest that the two firms have been seizing thousands of cars a year. For example, in affidavits filed in a lawsuit involving Norfolk Financial, Chad Goldstone and an employee of Daniel Goldstone estimated that, four years ago, a single constable company was hooking about 1,200 cars a year for the two brothers. In a two-year period, 2004-2005, deputy sheriffs in four counties - Plymouth, Norfolk, Bristol, and Worcester - seized 1,073 cars just for Norfolk Financial, a Globe review found.
That volume makes the two firms the dominant players in car seizures statewide.
Both brothers and their lawyer, John J. O'Connor of the Boston law firm of Peabody & Arnold, defend the propriety of their business practices. ''We work hard to handle all matters with courtesy and fairness, and in compliance with all legal requirements,'' they said in a written statement.
Only Chad Goldstone spoke to the Globe at any length; Daniel Goldstone agreed to a sit-down interview, but then cancelled it. The Goldstones cited state privacy laws and federal statutes that protect debtors as justification for declining to answer most questions about their businesses, or to discuss lawsuits they have filed.
The Goldstone brothers run separate companies, but that wasn't always the case. In 1992, Daniel Goldstone purchased a defunct collection law firm, renaming it Goldstone & Sudalter, and for several years Chad worked for Daniel, proving especially adept at managing computer systems that have made debt collection a highly efficient business. But in 1997 Chad Goldstone left the business to form Commonwealth Receivables. By then, Goldstone & Sudalter had been sued for bilking its largest client, Sears, Roebuck and Co. out of more than $800,000 - a case that would eventually lead to Daniel Goldstone's disbarment. (Read court documents related to this case here.) Daniel Goldstone established Norfolk Financial in 1999.
Even though they parted ways, the brothers remain alike in many respects as businessmen. Both buy delinquent credit card debt. Both employ similar collection tactics. Both work with small staffs from offices so poorly marked and out-of-the-way that they are difficult to find.
And though they are among the top filers of collection lawsuits in Massachusetts, neither company is registered as required by law with the state Division of Banks, which is charged with oversight of debt collection companies. Through their attorney, the Goldstones claim they are exempt because they purchase the debts they try to collect, and do not collect debts for other creditors. But David J. Cotney, chief operating officer for the Massachusetts Division of Banks, said every company in the state that collects defaulted debt, including Norfolk and Commonwealth, must be licensed. ''I don't know what basis they would use to exclude themselves,'' he said.
The Goldstones, as debt buyers, are part of a growing trend that has transformed the collection industry. As the number of deeply indebted consumers has climbed, credit card companies and banks have become increasingly likely to sell off their uncollected accounts in bulk. Purchased by large debt-buying companies, the accounts are then repackaged and re-sold to smaller and smaller firms.
By the time local companies such as Commonwealth and Norfolk pick up this kind of ''stale'' debt, they are buying it on the cheap from firms that have tried and failed to collect. It is their opportunity to make a profit but it also presents a challenge. ''How can [they] be successful where those who went before weren't?'' said Nicholas F. Ortiz, a consumer lawyer with a lawsuit pending against Norfolk Financial. ''That's where we come to seizing cars.''
Chad Goldstone said the debts he buys are typically one or two years old, although Commonwealth lawsuits examined by the Globe were often for credit card debt that was four or even five years old. Goldstone said he pays 6 or 7 cents on the dollar for the accounts he buys - $60 or so for a $1,000 debt - and generally collects 18-20 cents on the dollar.
Both brothers file nearly all their lawsuits in small claims because the filing fee is capped at $40 and judgments come with greater speed and ease. Chad Goldstone, with a staff of only six, estimated he sues as many as 7,800 people a year and almost always prevails - largely because more than 80 percent of the people he sues don't show up in court. ''People ignore the letters and the phone calls, and then we get a default judgment. That's an ostrich mentality,'' he said.
Or, he added, it's a ''game of chicken,'' in which Commonwealth keeps up the pressure until the holdouts give in, scraping together a negotiated amount, to avoid having their cars taken, or to get a vehicle back.
Daniel Goldstone has filed nearly as many lawsuits as his brother - about 22,000 over the last four years. And he appears to have resorted to car seizures at least as often.
Daniel Goldstone did tell the Globe last year that he takes no pleasure in hooking cars: ''I find it distasteful, seizing cars. ..... It is an avenue of last resort,'' he said.
That claim would come as a surprise to many of the debtors he has sued.