When not writing a newspaper column, I work as a lawyer, and the premise of one of my more interesting cases is that the private student loan asset-backed security pushers euphemistically called the National Collegiate Student Loan Trusts are committing fraud by collecting loans they do not own.

Representing student borrowers against big banks and private investors is challenging enough; proving fraud is arduous. The magnitude of resources available to defend claims is vast and hunger for profit fierce, so you can imagine my delight when a recent New York Times story about the scourge of student debt collection by these trusts revealed common ground with my clients’ nemesis: Delray Beach, Florida, billionaire Donald Uderitz, the private equity guy who essentially owns all of them.

“We don’t want National Collegiate to be the poster boy of bad practices in student loan collections,” Uderitz, founder of Vantage Capital Group (the trusts’ beneficial owner), told the Times. “It’s fraud to try to collect on loans that you don’t own,” he conceded.

Hear, hear!

And here, in Maine. Documents filed with the Securities and Exchange Commission show that over 3,800 such private loans were made to Maine students between 2004 and 2007. Some would argue these loans were predatory to begin with – laden with fees, high interest rates and not calculated to generate a responsible return on the investment, like when proceeds went to private colleges that lacked credentials to award degrees – but that’s a case for another lawyer.

Maybe you’re one of the 372 people in Maine who have been sued in state court by National Collegiate Student Loan Trusts and got hope Monday reading the Times story, which suggested your alleged debt might get “wiped away because critical paperwork is missing.”

Fake news alert: There was no real “paperwork” to begin with, and there’s a good chance there’s no debt, either. Many of the loan “documents” used in these collection lawsuits brought by the trusts against students and their families are just packaged screen shots of questionable data printed out from a computer by people in cubicles in Georgia. Many of the loans in question, including my clients’, were paid off by the guarantor – making the guarantor the owner of the loans, not the National Collegiate Student Loan Trusts, as they allege in their collection lawsuits.

“National Collegiate is an umbrella name for 15 trusts that hold 800,000 private student loans, totaling $12 billion. More than $5 billion of that debt is in default, according to court filings. The trusts aggressively pursue borrowers who fall behind on their bills. Across the country, they have brought at least four new collection cases each day, on average – more than 800 so far this year – and tens of thousands of lawsuits in the past five years,” the Times reported.

The litigation rampage against students is being compared to the mortgage foreclosure crisis because now, as then, the entities bringing lawsuits often can’t prove they are the rightful owners of the debt when pressed to do so at trial. A big problem for students, of course, is that most of them can’t afford a lawyer and their cases never go to trial. In debt collection cases against student borrowers representing themselves in court, they are routinely defaulted or otherwise coerced by circumstances to accept an inflated judgment or pay an exorbitant amount to “settle,” whether the trusts own the loans or not.

Billionaires Uderitz and Tom Gores – Beverly Hills, California, resident and founder of Platinum Equity – have their own troubles. Their problem is they have so much money they don’t know where to put it. Banks pay measly interest rates and stuffing wads of cash under mattresses is impractical, especially if you own a dozen homes. For people who don’t care to mingle among shareholders of publicly traded companies under the glare of public scrutiny, the answer is “private equity,” a polite way of describing super-rich guys gobbling up and spitting out companies and their multiple iterations, all in righteous pursuit of the mighty dollar.

“Equity” sounds nice, like “justice,” and privacy is a right embedded in our Constitution, so it’s hard to see private equity being problematic, but sometimes it is. Tom Gores’ problem is that one of the companies Platinum Equity gobbled up is Transworld Systems, Inc., a business hired to collect most of the National Collegiate loans, but the “paperwork” supposedly documenting these loans is apparently fake or non-existent. Whoops! Employees at Transworld sit around in cubicles printing self-serving data to make “loan documents” like kids at a Build-A-Bear shop in the mall.

Platinum Equity, founded by Gores in 1995, is a global investment firm with more than $7 billion in assets, it claims on its website, and “specializes in mergers, acquisitions and operations – a trademarked strategy the firm calls M&A&O®.”

With a strategy like M&A&O® behind student debt collection, what could possibly go wrong?

Cynthia Dill is a civil rights lawyer and a former state senator. She can be contacted at:

dillesquire@gmail.com

Twitter: @dillesquire