The Repo Man -- He Can Be A Developer's Nightmare As He Tries To Collect On Debts

It used to be so clean, the world of high-stakes real estate finance. Even the dirty work was never really dirty.

Developers who failed to pay bills were treated respectfully, pressured for months by lawyers and bankers but often let off on a compromise. The players cut deals in mahogany offices and consummated them with signatures and handshakes.

In Seattle, that is changing, largely because of the deft, aggressive and controversial tactics of one real estate Repo Man.

The 47-year-old ex-college linebacker, a full-time developer himself, seizes other developers' houses, taps their bank accounts and freezes their credit lines. He leaves little room for negotiation and doesn't grant extensions to deadlines.

For more than a year, Thomas R. Hazelrigg III has been buying debt-collection judgments from banks and other creditors who have given up hope of collecting. He pays deeply discounted prices, sometimes less than half the amount owed, then collects what he can from his targets. The arrangement means the creditor gets at least a portion of the debt that is owed.

Last year, Hazelrigg paid about $700,000 cash to First Interstate Bank for the right to collect on a $13 million judgment against Dick Clotfelter and Gary Carpenter, developers of the 44-story Pacific First Centre.

Hazelrigg seized both men's houses (along with cash and other property), gave the families 60 days to move out, then moved his own family into Clotfelter's Yarrow Point waterfront place, valued at $3 million. Clotfelter moved to Los Angeles to work for a real estate brokerage company, while Hazelrigg spent a couple hundred thousand dollars remodeling the interior of the Clotfelter house, which Hazelrigg deemed unfashionable.

Hazelrigg also has collected $1 million-plus from two other prominent Seattle developers: Martin Selig, who developed the Columbia Seafirst Center, and Eugene Horbach, whose projects include Boeing office buildings.

And the repo man says he's on the lookout for more judgments to buy, as long as they're worth at least $250,000.

His business is one more sign of the depths to which the real estate market has plunged. And it's creative. National real estate experts say this form of collection is rare even in depressed markets such as Dallas, where creditors use more traditional means of collecting. In Seattle, no one other than Hazelrigg is buying judgments the size he buys. Yet.

Here's how it works:

Say a contractor completes $1 million worth of work for a developer who never pays. The builder sues the developer and, after months of litigation, he wins a court order to collect the $1 million plus interest. By now, the builder is strapped for cash, sees other creditors hounding the developer, and concludes the developer doesn't have enough money to pay everyone.

Within days, the builder receives a call from Hazelrigg, who has noticed the case while scouring court records for customers. The builder is offered $500,000 cash, payable immediately. He takes it and uses it for bills or payroll, transferring the court order to Hazelrigg for collection.

Hazelrigg that afternoon calls either the developer or the developer's lawyer and gives notice that he's freezing the debtor's assets.

Hazelrigg's tactics have drawn angry reactions. Even people who are typically critical of developers say Hazelrigg goes too far. In fact, dozens of lawsuits have been filed against him by investors and others who have dealt with him as a developer and challenge his ethics and his methods.

One real estate agent, who is suing Hazelrigg for an unpaid sales commission, says he harassed her, threatened her, and bilked her out of $873,000, driving her to two nervous breakdowns and into a psychiatric hospital. Hazelrigg calls the claim frivolous.

Hazelrigg says he's simply an investor looking for opportunities. The developers he targets are in a risky business and know they have a lot to lose.

"I have people who find it disgusting that I would go after people's homes. They're not business people, obviously," he says.

Hazelrigg says he's a professional who makes deals with his debtors, then sticks to his word. He operates legally and ethically, he says. If he ran across a "total jerk," he might go after cars, artwork or other valuables, but so far, he says, he's never done that.

"I'm not a shark that goes after every piece of flesh."

He also emphasizes the risks involved in collecting on judgments: paying more than he can collect from someone, realizing too late that other creditors have priority over him, or facing huge payments to remove liens on property he obtains. Despite those risks, Hazelrigg has taken no losses on the large judgments he has bought in the past 18 months. He won't disclose his profits.

Some people who have dealt with Hazelrigg agree that his word is good. He doesn't come back to seize more than he promised. But some also say they're afraid to say much about Hazelrigg because they don't want to make him mad.

Horbach, one of the developers whose assets Hazelrigg has seized, is not afraid. He says Hazelrigg goes after people "with a vengeance." In Horbach's case, Hazelrigg bought every outstanding judgment against the developer, including one worth $1.2 million that he bought for $550,000.

Horbach would not reveal what Hazelrigg seized from him but said the collector immediately froze all of his accounts and property after buying the judgment.

"We had a number of conversations, and they were not kind conversations," Horbach said. Hazelrigg, in response, said Horbach is the kind of guy who begins every conversation by "saying he's going to have to kill you."

In the Selig case, Hazelrigg obtained a $970,000 judgment at about half that price from a contractor who had worked on offices inside a high-rise. In court papers, lawyers say Hazelrigg called Selig the afternoon he bought the judgment, surprising the developer with demands for payment. The two sides eventually agreed on a payment that was not disclosed.

Real estate lawyer Christopher Brain and his firm, Tousley Brain, advised clients in the Clotfelter/Carpenter, Horbach and Selig cases to sell their judgments to Hazelrigg.

"I thought he was relatively easy to deal with," Brain said. "He's cordial. He comes to a price and his terms very quickly, and once that's done it's not a real hassle."

Leo Longo, the contractor who sold the $970,000 judgment against Selig, said, "We could not stomach that debt for as long as it would take to collect it.

"Hazelrigg was just in the business, frankly, to do the collecting. And I'm not. I'm in the business of construction."

Hazelrigg is considered an expert at sorting out liens on property to determine where he stands in a long line of creditors.

As a kid growing up in Olympia, Hazelrigg says, he had an aptitude for math. A high-school football star, he rejected several college scholarship offers to accept one from Stanford. He graduated in political science and economics and excelled on the football team.

Hazelrigg was drafted by the Denver Broncos but never played because of injuries. Instead, he used his signing bonus to begin buying and fixing up duplexes and other small properties. From there, he progressed to larger developments, including the West Olympia Hospital and the Oasis Water Park and Oasis Water Resort Villa Hotel in Palm Springs, which he developed with well-known Seattleite Michael Mastro.

His work has brought him wealth. He owns multiple homes, including one in Palm Springs. He has 11 vehicles and a 51-foot boat, and he vacations in Europe. He prefers to list post office boxes as addresses, and he registers most of what he owns under his dozen or so companies and partnerships instead of his own name, saying he likes privacy.

He would not arrange interviews in person and refused to be photographed, but he talked at length over the phone. He refused to confirm where he lives, until faced with a speeding ticket that showed the address (no other public record listed the home address). Hazelrigg said he insists on privacy because he's received threats of extortion and kidnapping. He fears for his three children, athletic and academic standouts at Mercer Island High School.

Court records show just how many enemies he has made.

He has been the target of dozens of lawsuits dating back decades, including suits from property investors, real estate agents and even the Federal Deposit Insurance Corp., the agency that insures bank deposits. The FDIC case was not detailed in the court file, but other plaintiffs say Hazelrigg either refused to pay them money or backed out of real estate transactions after making a commitment.

Hazelrigg dismisses the cases as commonplace real estate disputes. The business, he said, is tough.

As tough as development is, though, it isn't as tough as collection. For that job, Hazelrigg said, it helps to