Major Collection Agency Owner Fights Back

Jim Tracey, owner of Diversified Collection Service Inc. (DCS), was more than a little disturbed after a good friend called him last Thursday to tell him about an article he read in a San Francisco Bay-area newspaper. The article, run on Thursday, October 2 in the Tri-Valley Herald under the headline ?Union City Firm Pumps Up Arnold? (click here to read article), began as a straightforward account of corporate contributions in the California Gubernatorial Recall Election slated for today. The article claims that the $60,000 DCS contributed to Republican candidate Arnold Schwarzenegger’s campaign make it the ninth largest donor to the movie star?s bid to become California?s Governor (actually, DCS contributed the money to Schwarzenegger’s efforts to recall Davis before Arnold had entered the race; Tracey and his wife each contributed $21,200 to Arnold?s campaign for Governor). Also, the article makes mention of previous money DCS has donated to various candidates and issues over the past six years. All of these mentions were a bit odd, thought Tracey, but they were fairly accurate. The kicker came near the middle of the article.

Rob Dennis, staff writer for ANG Newspapers and author of the article, asserted that DCS is currently under investigation in Texas for violations of election laws. He claims that the investigation stems from a contribution made in 2002 to a political organization, Texans for a Republican Majority, which used the money to back certain candidates, a move that would be illegal under Texas election law. One of the sources cited in the article was research group Texas for Public Justice (TPJ), the originator of the complaint which prompted the investigation. A representative of TPJ told CollectionIndustry.com that they did file a complainant against Texans for a Republican Majority with the Travis County (TX) District Attorney, but due to confidentiality and other factors, it would be impossible to determine whether an investigation was even underway. The person also said that no private company would ever be named in an investigation such as this and that DCS was not under investigation.

The story did run five days before voters were to head to the polls in California, a fact that is not lost on Jim Tracey.

?This is an attempt to muddy-up the waters in advance of an election. This story was more political than factual,? said Tracey.

It did seem as though the story was looking to link Schwarzenegger to anything negative. He would certainly be a villain for taking money from a dirty, dirty collection agency and even more villainous for taking it from one under investigation. But the fact is that DCS has always maintained a high profile in the political world of the debt collection industry. So it should be no surprise that a reporter could dig up what they thought was dirt on the company.

?We believe in leading things, not waiting for them to happen,? said DCS Chief Operating Officer Jon Shaver.

Indeed, DCS has been on the front lines of the political struggle in this industry. As one of the leading collectors of student loan and other government-related debt, they have to be. In May of this year, Shaver joined colleagues from the industry to testify before a House Subcommittee Hearing in Washington, DC in support of a bill that would allow the IRS?s use of private collection agencies to collect back taxes. He testified that the passage of the bill would benefit the government as well as collection agencies: his and others alike. (click here to view CollectionIndustry.com’s coverage of the hearing)

Jim Tracey points out that DCS does not give money exclusively to PACs and candidates. In fact, Tracey said that DCS has made more charitable donations than political contributions over the years. And not all of the political contributions were to get some Republican elected. Even the Tri Valley Herald story mentions the $100,000 Tracey contributed to the Schwarzenegger-backed campaign to pass Proposition 49 in California, a piece of legislation increasing state funds for before- and after-school programs. Tracey said that his personal contributions, as well as DCS?s corporate contributions are born from a spirit of generosity, not favoritism. ?We have never asked for, nor received, any form of quid-pro-quo,? said Tracey.

DCS has sent a letter (click here to view the letter (PDF)) from their attorneys to the Tri Valley Herald demanding a retraction of the story. As of Tuesday, election day ? or recall day as it were, the story is still posted on the newspaper?s website with no sign of a retraction article. It is a naïve person that believes the retraction will be posted before Californians hit the polls. After all, the story has served its purpose: it cast a questionable light on the campaign finances of its target. Expect a full retraction on Wednesday, buried somewhere under the election coverage.