Crains New York - July 15, 2013 - (Page 4)

Own a piece of Luxury IN THE MARKETS by Aaron Elstein Own a piece of New York 8,764–17,781 SF Commercial Condominiums Available istockphoto Downtown · Manhattan OVER 60% SOLD ONLY 3 UNITS REMAIN David Lebenstein Stephen Bellwood Edward Kent 212.318.9737 212.318.9785 212.318.9772 David.Lebenstein@cassidyturley.com Stephen.Bellwood@cassidyturley.com Edward.Kent@cassidyturley.com CASSIDY TURLEY 277 Park Avenue, New York, NY 10172 | cassidyturley.com “Depth of knowledge is unparalleled in the health care industry...” Chambers USA Proskauer has one of the leading health care industry practices in the world. Participants across the health care industry rely on us for the highest quality corporate and transactional, regulatory, reimbursement, litigation, labor, and tax representation. Hardball tactics bring hard knocks H ardball tactics are a fact of life in the debt-collecting business, but regulators say the field’s biggest player stepped over the line. In a lawsuit settlement unveiled last week, the Federal Trade Commission said employees at Expert Global Solutions Inc. harassed consumers by calling them repeatedly after promising to stop and tried to collect debts whose amounts hadn’t been verified and which people said they didn’t owe. Expert Global said it would make changes and agreed to pay $3.2 million, the largest penalty ever levied by the FTC against a third-party debt collector. So who owns this charming enterprise? You may be interested to know it’s JPMorgan Chase & Co., which at this point surely wishes that it didn’t. Because embarrassing as last week’s settlement may have been, the cost was tiny compared with the nearly $900 million in losses generated by Expert Global since the financial giant bought it last decade. The bank wouldn’t comment, but JPMorgan’s relationship with Expert Global goes back to at least 2006, when its private-equity investment division,One Equity Partners, arranged a $1.2 billion leveraged buyout of the company, then called NCO Group. Regulatory filings show the bank and senior NCO management financed the deal by putting up $400 million in cash and borrowing the rest.In 2008,JPMorgan invested another $200 million and by last year controlled 81.5% of its shares, according to Expert Global’s most recent annual report. The game plan was to build the business via acquisitions, and snap- ping up rivals did help boost Expert Global’s revenue by about 50%, reaching $1.5 billion in 2011. But the weak economy and huge debt burden stemming from the LBO caused the company to gush red ink. In 2011, after an Expert Global official told Bloomberg News the company was having “collectivity” problems, top management was replaced and a 25-year veteran of JPMorgan was named chief operating officer. For its labors, JPMorgan has reaped little. On the positive side of the ledger, the bank has collected $55 million in management and transaction fees over the years from Expert Global. On the other side, the bank has paid the company the same amount to collect debts from delinquent Chase customers. Worse, Expert Global is on the hook to JPMorgan and other shareholders for about $100 million worth of unpaid dividends. Last month, JPMorgan said it would get rid of its private-equity division. Deals like this dud help explain why. Ⅲ $13B www.proskauer.com Beijing | Boca Raton | Boston | Chicago | Hong Kong | London | Los Angeles | New Orleans | New York | Newark | Paris São Paulo | Washington, DC Proskauer Rose LLP | Eleven Times Square, New York, NY 10036-8299 | 212.969.3000 | Attorney Advertising 4 | Crain’s New York Business | July 15, 2013 bloomberg news JPMORGAN CHASE & CO.’s total profit through the first half of 2013. The bank is on pace to exceed last year’s record earnings of $21 billion by 32%. Although CEO Jamie Dimon said loan growth remains “soft,” signs of an improving economy spurred the bank to release another $1.5 billion in reserves that had been set aside to cover possible loan losses. Such releases have accounted for 20% of JPMorgan’s earnings this year. http://www.cassidyturley.com http://www.cassidyturley.com http://www.crainsnewyork.com http://www.proskauer.com http://www.proskauer.com

Table of Contents for the Digital Edition of Crains New York - July 15, 2013

Crains New York - July 15, 2013
IN THE BOROUGHS
IN THE MARKETS
SMALL BUSINESS
THE INSIDER
BUSINESS PEOPLE
OPINION
STEVE HINDY
GREG DAVID
REAL ESTATE DEALS
REPORT: HEALTH CARE
CLASSIFIEDS
FOR THE RECORD
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - July 15, 2013