"I Hereby Confess Judgement"
December 3, 2018 6:52 AM Subscribe
Sign here to lose everything How an obscure legal document turned New York’s court system into a debt-collection machine that’s chewing up small businesses across America.
Part 2 and Part 3
No appeals, no rights, no hope. Once you sign this document, an obscure NY state marshal can seize all your liquid assets via an administrative procedure. All that they need is a bank with a branch in NY state.
Part 2 and Part 3
No appeals, no rights, no hope. Once you sign this document, an obscure NY state marshal can seize all your liquid assets via an administrative procedure. All that they need is a bank with a branch in NY state.
Part 4 came out today.
This is a trope
There is a kind of upper middle/middle class white kid from the fancy suburbs around NYC or in South Florida. Bad student, but has some charisma, just wants to sell things and get rich, not too much morality around how. Probably the bottom 10% of my high school who had some drive. There were two guys a few years a head of me who when I got home from college were living in their parents' basements but drove Ferraris
In the early 90's the grift was stocks
When that died, it was subprime mortgages.
Then for a small period of time it was precious metals.
And I suspect this kind of non-bank subprime lending has been the theme of the QE world.
posted by JPD at 7:39 AM on December 3, 2018 [16 favorites]
This is a trope
There is a kind of upper middle/middle class white kid from the fancy suburbs around NYC or in South Florida. Bad student, but has some charisma, just wants to sell things and get rich, not too much morality around how. Probably the bottom 10% of my high school who had some drive. There were two guys a few years a head of me who when I got home from college were living in their parents' basements but drove Ferraris
In the early 90's the grift was stocks
When that died, it was subprime mortgages.
Then for a small period of time it was precious metals.
And I suspect this kind of non-bank subprime lending has been the theme of the QE world.
posted by JPD at 7:39 AM on December 3, 2018 [16 favorites]
Sometimes I forget just how fucking corrupt NY is. Then I remember.
posted by corb at 7:47 AM on December 3, 2018 [4 favorites]
posted by corb at 7:47 AM on December 3, 2018 [4 favorites]
Holy shit. This is crazy.
posted by AugustWest at 7:50 AM on December 3, 2018
posted by AugustWest at 7:50 AM on December 3, 2018
I fundamentally don't grock the premise of "judgement" arising from confessing guilt to a crime that has not yet been committed. The facts do not yet exist. How is it possible to be guilty ahead of that fact?
What next, we will pre-convict people of crimes based on likelihood?
Or that our courts accept that premise, and allow it to be enforced in their (our) name.
posted by Dashy at 7:51 AM on December 3, 2018 [6 favorites]
What next, we will pre-convict people of crimes based on likelihood?
Or that our courts accept that premise, and allow it to be enforced in their (our) name.
posted by Dashy at 7:51 AM on December 3, 2018 [6 favorites]
Maybe the apparent absurdity of it causes the victim-customers of these companies to not appreciate precisely how serious a risk it is?
It sounds like a lot of the victims are running small businesses that are in trouble. They are desperate to not lose them, and vulnerable to magical thinking in the form of taking out loans that will somehow save them instead of just burying them deeper. I think a lot of these people have chosen to suspend critical thinking about contracts in favor of faith that their Hail Mary will work and they will get through the bad patch of road.
posted by thelonius at 8:13 AM on December 3, 2018 [3 favorites]
It sounds like a lot of the victims are running small businesses that are in trouble. They are desperate to not lose them, and vulnerable to magical thinking in the form of taking out loans that will somehow save them instead of just burying them deeper. I think a lot of these people have chosen to suspend critical thinking about contracts in favor of faith that their Hail Mary will work and they will get through the bad patch of road.
posted by thelonius at 8:13 AM on December 3, 2018 [3 favorites]
I think the sales are done in a sufficiently high pressure manner (And most small business don't have outside counsel they are regularly engaged with) that folks don't get a window to have a lawyer look at the contract, and since this particular concept is relatively arcane, the borrowers don't have a shot at understanding it.
I mean this sounds like something that was on the books only because no one bothered to take it off the books, until these guys rediscovered it a few years ago.
posted by JPD at 8:21 AM on December 3, 2018
I mean this sounds like something that was on the books only because no one bothered to take it off the books, until these guys rediscovered it a few years ago.
posted by JPD at 8:21 AM on December 3, 2018
confessing guilt to a crime that has not yet been committed
They are called "confessions" but not paying a debt is not a crime... this is a piece of paper that says "I'm handing you the keys to my bank account, and if I don't pay my loan back exactly as specified, you're allowed to use them and collect the loan with minimal process"
no one bothered to take it off the books
Except in Florida (and I guess other states) they did. But New York hasn't, and apparently these companies can just say "this contract is governed by NY law" and voila, it's valid even though neither the lender nor borrower are in NY.
posted by BungaDunga at 8:24 AM on December 3, 2018
They are called "confessions" but not paying a debt is not a crime... this is a piece of paper that says "I'm handing you the keys to my bank account, and if I don't pay my loan back exactly as specified, you're allowed to use them and collect the loan with minimal process"
no one bothered to take it off the books
Except in Florida (and I guess other states) they did. But New York hasn't, and apparently these companies can just say "this contract is governed by NY law" and voila, it's valid even though neither the lender nor borrower are in NY.
posted by BungaDunga at 8:24 AM on December 3, 2018
The idea that a document stating "I agree that you automatically win any dispute" could be legally binding in any way shape or form is just so utterly alien to me. Maybe the apparent absurdity of it causes the victim-customers of these companies to not appreciate precisely how serious a risk it is?
My background is insurance and finance IT. When I bought my VW Passat years and years ago, the sales-guy was sort amazed that I read everything.
I read it because I have knowledge of WHY NYS requires text to be above a minimum font size, and other regulations of the form of the contract.
You can't fucking trust anyone when there's money to be made.
The Tragedy of The Capitalists.
posted by mikelieman at 8:28 AM on December 3, 2018 [13 favorites]
My background is insurance and finance IT. When I bought my VW Passat years and years ago, the sales-guy was sort amazed that I read everything.
I read it because I have knowledge of WHY NYS requires text to be above a minimum font size, and other regulations of the form of the contract.
You can't fucking trust anyone when there's money to be made.
The Tragedy of The Capitalists.
posted by mikelieman at 8:28 AM on December 3, 2018 [13 favorites]
Except in Florida (and I guess other states) they did. But New York hasn't, and apparently these companies can just say "this contract is governed by NY law" and voila, it's valid even though neither the lender nor borrower are in NY.
From part 1. It's banned from consumer loans, but not business loans.
( Get cracking on this NYS Legislature. Whenever you get back to work... )
posted by mikelieman at 8:30 AM on December 3, 2018 [2 favorites]
From part 1. It's banned from consumer loans, but not business loans.
( Get cracking on this NYS Legislature. Whenever you get back to work... )
posted by mikelieman at 8:30 AM on December 3, 2018 [2 favorites]
So yeah, the crazy part is "requiring borrowers to sign confessions of judgment before receiving their loans". There is no way that should be legal, it's transparently fraudulent. I skimmed through parts 2, 3, and 4 but they don't yet talk about which politicians in New York are in on the scam.
Well there's the small fry, the New York marshals mentioned in part 1. Although maybe they aren't such small fry: part two talks about one state official making $1.7M by shaking down victims. Why the fuck does a state employ debt collectors for collecting private debt? And how far up the political chain do the payoffs go?
posted by Nelson at 8:32 AM on December 3, 2018 [5 favorites]
Well there's the small fry, the New York marshals mentioned in part 1. Although maybe they aren't such small fry: part two talks about one state official making $1.7M by shaking down victims. Why the fuck does a state employ debt collectors for collecting private debt? And how far up the political chain do the payoffs go?
posted by Nelson at 8:32 AM on December 3, 2018 [5 favorites]
My parents gave me a deep discomfort with debt which is irrational and probably harmful to my overall financial prospects and daily comfort levels except that it protects me from all the sick fucks who use debt and the law to destroy people's lives. What a horror show.
posted by clawsoon at 8:52 AM on December 3, 2018 [2 favorites]
posted by clawsoon at 8:52 AM on December 3, 2018 [2 favorites]
As the article points out, Yellowstone appears to have fabricated 'confessions' outright and altered others after they were signed:
Some banks haven't accepted the judgements, and I think none of us should be banking with the ones that did.
posted by jamjam at 9:42 AM on December 3, 2018 [5 favorites]
Borrowers have accused Yellowstone of forgery before. Just in the past year, a Georgia contractor presented evidence in court that a confession used against him was a complete fabrication, and a Maryland trucker complained to Yellowstone that a key term in his confession had been changed after the fact, as had happened with the Duncans. The company backed off from those borrowers but faced no further consequences. Phillips declined to comment on the accusations.I don't see any real reason they couldn't choose a small company out of the phone book and go after them without any relationship whatsoever.
Some banks haven't accepted the judgements, and I think none of us should be banking with the ones that did.
posted by jamjam at 9:42 AM on December 3, 2018 [5 favorites]
...the idea that you can court-shop like that - to a state where neither party necessarily resides - completely blows my poor British mind.
Minor derail, but as a fellow Brit: if you’re aghast about court-shopping then you ought to check out our libel laws sometime! Especially how rich non-British people can use them to sue other non-British people who have written unflattering things about them elsewhere in the world.
posted by chappell, ambrose at 9:52 AM on December 3, 2018 [1 favorite]
Minor derail, but as a fellow Brit: if you’re aghast about court-shopping then you ought to check out our libel laws sometime! Especially how rich non-British people can use them to sue other non-British people who have written unflattering things about them elsewhere in the world.
posted by chappell, ambrose at 9:52 AM on December 3, 2018 [1 favorite]
I can't help but wonder if there's a connection between the recent rise in desperate people buying into pyramid scheme MLM "businesses" relentlessly flogging shoddy merchandise on their friends, this sort of open embrace of fraud, graft, and corruption, and the fact that the economy in general is getting progressively worse and worse for everyone but the billionaires.
People are desperate, and that gives the predators a lot of potential targets. Small business types are no less desperate than people trying to supplement their income with MLM products.
We've been sold this Horatio Alger myth that hard work will be rewarded and the American dream is in the grasp of anyone who has enough of a work ethic and plays by the rules, and its clearly nothing but a lie that the predators spread to make their lives easier.
In an economy that's better for people who aren't part of the billionaire looter class I suspect the number of people desperate enough for this sort of not really a loan but it's actually a loan deal would be low enough it wouldn't really be worthwhile for the Glasses of the world to do it.
posted by sotonohito at 11:05 AM on December 3, 2018 [7 favorites]
People are desperate, and that gives the predators a lot of potential targets. Small business types are no less desperate than people trying to supplement their income with MLM products.
We've been sold this Horatio Alger myth that hard work will be rewarded and the American dream is in the grasp of anyone who has enough of a work ethic and plays by the rules, and its clearly nothing but a lie that the predators spread to make their lives easier.
In an economy that's better for people who aren't part of the billionaire looter class I suspect the number of people desperate enough for this sort of not really a loan but it's actually a loan deal would be low enough it wouldn't really be worthwhile for the Glasses of the world to do it.
posted by sotonohito at 11:05 AM on December 3, 2018 [7 favorites]
Some banks haven't accepted the judgements, and I think none of us should be banking with the ones that did.
If you deposited outside of New York state with a local bank or credit union, the marshal wouldn't be able to slap the TAKE ALL THE MONEY button. (I'm not sure what would happen then, but it might slow down the process so you could investigate any possibility of forgery, error, and misconduct. The lenders seem to back off in those cases—after all, this is a volume business, and every hour disputing in a courtroom could be more profitably spent cold-calling desperate mom-and-pop stores.)
New York’s 35 marshals are government officers, appointed by the mayor, who collect private debts. They evict tenants and tow cars, city badges dangling from their necks. When they recover money, they get a fee of 5 percent. The office dates to Dutch colonial days, formed by a decree of Peter Stuyvesant’s council.
And they're redundant. The NYC Sheriff's Office can apparently handle civil seizures just fine—they just take a little longer than the marshals, because they don't have theperverse incentive motivation of a 5% cut and fees.
Get rid of the marshals then, and this whole scam probably collapses. The sheriff's deputies would have no incentive to process remote seizures on poor bastards in Pocatello and Mason City, not at the speed and volume required to keep Yellowstone's executives in Maseratis.
posted by Iridic at 11:27 AM on December 3, 2018 [4 favorites]
If you deposited outside of New York state with a local bank or credit union, the marshal wouldn't be able to slap the TAKE ALL THE MONEY button. (I'm not sure what would happen then, but it might slow down the process so you could investigate any possibility of forgery, error, and misconduct. The lenders seem to back off in those cases—after all, this is a volume business, and every hour disputing in a courtroom could be more profitably spent cold-calling desperate mom-and-pop stores.)
New York’s 35 marshals are government officers, appointed by the mayor, who collect private debts. They evict tenants and tow cars, city badges dangling from their necks. When they recover money, they get a fee of 5 percent. The office dates to Dutch colonial days, formed by a decree of Peter Stuyvesant’s council.
And they're redundant. The NYC Sheriff's Office can apparently handle civil seizures just fine—they just take a little longer than the marshals, because they don't have the
Get rid of the marshals then, and this whole scam probably collapses. The sheriff's deputies would have no incentive to process remote seizures on poor bastards in Pocatello and Mason City, not at the speed and volume required to keep Yellowstone's executives in Maseratis.
posted by Iridic at 11:27 AM on December 3, 2018 [4 favorites]
In the courtroom I was in today there was a 519.99% APR "loan" they allowed service by mail and the filing attorney for the plantiff was not there. Nor was the defendant. Call out the case number, the two parties, and "granted" then unto the next reading.
Service by mail to the kinds of life that feels a 519.99% ARP loan is a good idea seems a stochatic mixture of Liquid Oxygen and Kerosine.
More "fun" from the kind of people who charge 519.55% APR - granted a $500 "loan" to a guy who has a 2016 felony charge for having over 500 grams of MJ that is not a closed case. Why is it not closed? He was under 18 so the system is trying to have this now adult not have a long-term issue. The "loan" was taken out in May. In October due to under $350 he didn't pay from the 2016 case the system extended his parole. Why is this "fun" - well the parole rules say you have to get approval from your parole officer to borrrow money. He's on the hook for $936.01+court interest to the lender.
Now....how hard would it be to check parole status and ask "do you have a note from your PO saying this is OK?" Oh wait, that cuts into profits.
posted by rough ashlar at 11:55 AM on December 3, 2018 [10 favorites]
Service by mail to the kinds of life that feels a 519.99% ARP loan is a good idea seems a stochatic mixture of Liquid Oxygen and Kerosine.
More "fun" from the kind of people who charge 519.55% APR - granted a $500 "loan" to a guy who has a 2016 felony charge for having over 500 grams of MJ that is not a closed case. Why is it not closed? He was under 18 so the system is trying to have this now adult not have a long-term issue. The "loan" was taken out in May. In October due to under $350 he didn't pay from the 2016 case the system extended his parole. Why is this "fun" - well the parole rules say you have to get approval from your parole officer to borrrow money. He's on the hook for $936.01+court interest to the lender.
Now....how hard would it be to check parole status and ask "do you have a note from your PO saying this is OK?" Oh wait, that cuts into profits.
posted by rough ashlar at 11:55 AM on December 3, 2018 [10 favorites]
sickening
posted by growabrain at 12:11 PM on December 3, 2018 [1 favorite]
posted by growabrain at 12:11 PM on December 3, 2018 [1 favorite]
I started reading this last week but quit halfway through due to my skyrocketing blood pressure. Just awful stuff.
posted by RichardHenryYarbo at 1:11 PM on December 3, 2018 [1 favorite]
posted by RichardHenryYarbo at 1:11 PM on December 3, 2018 [1 favorite]
There's a whole confluence of archaic laws that make this not only possible, but profitable. One of the cute details is that these NY confessional judgments are only enforceable against accounts held with a banks that has a presence in NY – but finance being what it is, that means most of them. I don't think this can be entirely coincidental: people are making a lot of money out of NY's particular legal environment and they're undoubtedly pressuring politicians to keep those provisions in place.
posted by Joe in Australia at 4:41 PM on December 3, 2018 [2 favorites]
posted by Joe in Australia at 4:41 PM on December 3, 2018 [2 favorites]
"( Get cracking on this NYS Legislature. Whenever you get back to work... )"
HAHAHAHAHAHAHA Hahahahaha whew HAHAHAHA
The NYS Legislature ought to be dissolved and all parties in office for more than one term should be thrown in jail just on the merits. What a corrupt constipated clusterfuck.
posted by corvikate at 10:19 AM on December 4, 2018 [1 favorite]
HAHAHAHAHAHAHA Hahahahaha whew HAHAHAHA
The NYS Legislature ought to be dissolved and all parties in office for more than one term should be thrown in jail just on the merits. What a corrupt constipated clusterfuck.
posted by corvikate at 10:19 AM on December 4, 2018 [1 favorite]
To clarify just to make sure I understand here: the NY Marshals are basically the keystone here and the mayor of NYC has the sole power to appoint them?
So while obviously a proper cleanup of the laws of NY is the optimal solution the mayor of NYC could, if he wasn't a corrupt douche, simply fire every single Marshal and refuse to appoint any more and end the whole thing tomorrow?
posted by sotonohito at 1:12 PM on December 4, 2018 [2 favorites]
So while obviously a proper cleanup of the laws of NY is the optimal solution the mayor of NYC could, if he wasn't a corrupt douche, simply fire every single Marshal and refuse to appoint any more and end the whole thing tomorrow?
posted by sotonohito at 1:12 PM on December 4, 2018 [2 favorites]
I think the keystone is the confessions of judgement, not the marshals. Courts need officers to enforce their verdicts (in Australia we call them bailiffs) and if NY marshals didn't exist it would be necessary to invent them. The problem with these marshals is that they're semi-privatised, which gives them an incentive to cut corners. But the fundamental problem discussed in the article isn't the identity of the person recovering the debt, it's that NY laws allow rapacious lenders to shortcut and abuse the normal debt recovery process.
posted by Joe in Australia at 6:40 PM on December 4, 2018 [3 favorites]
posted by Joe in Australia at 6:40 PM on December 4, 2018 [3 favorites]
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The corporate sadism is jaw-dropping, the fact that NY State is an outlier in not banning (or at least heavily restricting) confessions of judgement is obnoxious, and the idea that you can court-shop like that - to a state where neither party necessarily resides - completely blows my poor British mind.
I can't even begin to process the linguistic gymnastics of allowing loans to somehow become un-loans just by giving them a different name.
The idea that a document stating "I agree that you automatically win any dispute" could be legally binding in any way shape or form is just so utterly alien to me. Maybe the apparent absurdity of it causes the victim-customers of these companies to not appreciate precisely how serious a risk it is?
posted by BuxtonTheRed at 7:38 AM on December 3, 2018 [9 favorites]