The basic way these con men operate — the cheap products they offer, the shoddy service they provide — stems from one reason. They make their money not from satisfied customers or repeat orders or profit margins, but from padded credit applications and inflated interest charges. They are interested in only one thing: "Paper."
"Paper" is the note of credit, sometimes grounded on the equity of a second mortgage on a home. Whatever the business — home remodeling, debt consolidation, aluminum siding — the aim is primarily credit paper. Although this paper is usually of very poor quality — most of the debtors are paying off other loans and those that are homeowners are struggling to meet their first mortgage payments — once one of these fast-buck operators can get enough of it he can peddle the package at a discount to a broker or a commercial finance or even a bank.
The rub is that a lot this paper contains legal defects, and if this were publicized and the debtors found out about it and got lawyers and tied the cases up in courts for any amount of time, these finance companies and banks would immediately lose huge sums of money. Then, with their credit cut off, both the brokers and the fast-buck boys would be out of business.
The legal defects may be based on the manner in which the paper was generated. The field is infested with the most unethical and dishonest salesmen. Fraudulent claims are commonplace. Applicants are usually never told what the total amount of their payments will be. Huge commissions and service fees are sometimes padded into the note and total interest sometimes winds up as high as 80% or 90%. And if there is a service or product involved, it rarely lives up to the promises made for it in the advertising and promotion. In addition, banking regulations are sometimes violated by assuming and charging inflated interest on a debtor’s previous loans.
But as long as the public remains ignorant of such technicalities, as well as unaware of the areas in which the fast-buck artists are operating and the ploys which they are using, this credit house of cards is it very profitable structure.
That is why publicity is the last thing those involved in the business need.
The respected civic leaders and so-called pillars of the community who sit on the boards of some of these finance companies and banks which are involved, would especially not like it known that their institutions are profiting from credit paper generated by the suede-shoe coterie.
SYLVAN SCOLNICK SAYS that he pointed out to reporter Harry Karafin the tremendous opportunities in this situation for public relations man Harry Karafin.
And that is what brought both of them one day to a one-story brick office building at 4711 Rising Sun Avenue. The sign on the front window says: ALBERT KAYTES — REAL ESTATE. At the time, however, it was also the home of a firm called Taylor-Wallace, which was in the business of buying and selling credit paper. In fact, millions of dollars worth of the stuff passed through its hands annually. Most of it was bought, at a discount, from schlocky home repair and aluminum siding companies, and it was sold through Al Kaytes, who had lines of credit at regular commercial banks.