(FORTUNE Magazine) – Only a year ago Bill Bartmann was one of the richest people in America, 80% owner of an insanely profitable company that bankers valued at as much as $6 billion. He traveled with a coterie of armed bodyguards, entered a Las Vegas arena in a sedan chair to wrestle Hulk Hogan, became one of the nation's top political donors, and even had a state holiday named after him. "I have enough money," Bartmann boasted in 1997, "that if I set it all on fire, I'd be dead before it went out."

There was just one problem with that boast: His wealth was all on paper. And now it's all gone.

Bartmann's privately held debt-collection company, Commercial Financial Services, imploded spectacularly late last year, turning one of America's largest personal fortunes into one of the briefest. Whether or not the allegations of fraud that brought it down are true remains unclear. But at a time when Internet entrepreneurs are amassing paper wealth based on stock appreciation at a pace never before seen, the astonishing reversal of fortune comes as a chilling reminder that paper wealth is just that: paper, apt to vanish even faster than it appeared.

The first thing that visitors to Bartmann's 20-acre estate in Tulsa see is an imposing brick wall, ten feet high and more than a half-mile long. It was built to keep intruders out, but look closely and you'll notice that the spiffy new guardhouse stands empty, its huge cast-iron gates permanently ajar. Inside, the defrocked billionaire acknowledges that few people want to come in anymore. "My fortunes are obviously not what they used to be at one time," he says, lighting a cigarette inside his airy mansion and taking a long drag. Over his shoulder is a plastic model of his beloved Gulfstream jet, sold off some months ago. A statue of Bartmann dressed as Julius Caesar stands, Ozymandias-like, in the corner.

The real Bill Bartmann is a shrimpy, tightly coiled 50-year-old who singlehandedly put a seedy and inefficient industry on the road to respectability. Charismatic, combative, egotistical, both feared and revered by his troops, he built CFS into a formidable debt-collection empire. Yet all the while, he spurned any chance to sell even some of his stock.

Not that he was unaware of the danger this presented. "It's ephemeral," he told me in 1997. "It isn't real until it's in the bank." At the time, Bartmann had been talking about selling a 20% stake in the company to Goldman Sachs for $600 million, which would have given Bartmann all the hard cash he wanted. "Bill Bartmann wouldn't mind having a coffee can [full of money] buried in the backyard," he reasoned then.

But today we're standing in Bill Bartmann's yard, and while there's a driving range and a very attractive pond with a fountain, the coffee can is conspicuously absent. What happened? Bartmann says that he walked away from the Goldman discussions because he thought the numbers were too low. "I remember turning that down with righteous indignation," he says, pausing to turn the absurdity of the statement over in his mind. "If I could go back and undo one decision, that probably would be a good one."

Others would do just as well. In 1997, Norwest Bank chief Dick Kovacevich met with Bartmann to talk about acquiring CFS outright, says Bartmann. (Kovacevich, now CEO of Wells Fargo, confirms the meeting but declines to comment on what was discussed; Goldman also declines to comment.) The offer, according to Bartmann: $400 million in cash, plus an estimated $1.2 billion payout over time. But again Bartmann passed. Later, plans for an initial public offering were scotched.

Most inexplicable of all was Bartmann's decision to take $50 million he had managed to put in the bank (through dividends and his $2-million-a-year salary) and use it to buy...more CFS stock. This he purchased from Jay Jones, co-founder and 20% owner of CFS, who, according to Bartmann, had long been pleading for a way to get liquid. (Jones, through his lawyer, declined to comment.) What was Bartmann thinking? Besides doing a favor for his friend Jay, Bartmann claims, he was beguiled by the prospect of acquiring more CFS stock at a relatively cheap price.

"My fallacy," he says, "is I believed CFS was going to last a long time."

Funny thing is, Bartmann has been here before. After dropping out of high school and leaving home in Iowa at age 14, he moved into a barn and joined a gang called the Manor Boys, apparently destined for a life of poverty and punching people. But he unexpectedly got his act together, moved to Oklahoma, and started an oil equipment company that, at its height, employed 70 people. He grew rich. And then poor again: When oil prices sank in 1985, the company abruptly folded, leaving Bartmann $1 million in debt.

Yet it was from this underwater position that Bartmann began an even more spectacular ascent. His big idea came, oddly enough, from the collection agents who had begun menacing him to pay up. With $13,000 wheedled from lenders, he bought a package of bad loans from a local failed bank for 2 cents on the dollar and began calling the debtors from his kitchen table. He was able to collect nearly 10 cents on the dollar, for a 400% return.

By the mid-1990s, Commercial Financial Services was the largest debt-collection company in the land and still growing at a dizzying pace, eventually filling 50 floors in Tulsa's CityPlex Towers. It bought and collected on more than 50% of America's delinquent credit card debt, opened operations in Europe, and took steps to begin issuing its own credit cards. Through an aggressive use of technology and a collecting approach that could best be described as niceness (debtors were called "customers," not "deadbeats"), the firm produced eye-popping profits; its net margins in 1995, for instance, were 65%.

But Bartmann's boldest stroke of all was on Wall Street, where he pioneered the now-common practice of securitizing bad loans. By bundling together thousands of credit card debts and selling them as bonds, CFS got access to huge pools of cash that could be used to purchase even huger amounts of bad debt. The move effectively put the company on steroids, and it carried risks; should CFS prove unable to collect debts at the pace it promised bondholders, its ratings could sink and the cash flow dry up.

None of this seemed to temper Bartmann's messianic faith in CFS and himself. Associates say his drive to push the company's market value to new heights--and thereby rise on the roster of America's wealthiest--verged on obsession. "There's only one scorecard," Bartmann told a lieutenant, "and that's money."

Bartmann certainly was racking up points on his personal scorecard. In September 1997, BT Alex. Brown estimated CFS to be worth between $5.1 billion and $5.8 billion, placing Bartmann's personal worth somewhere north of $4 billion. Meanwhile, Bartmann was inducted into the American Academy of Achievement, alongside such luminaries as Michael Dell and filmmaker James Cameron. (At the ceremony, he persuaded former CIA chief James Woolsey to join the CFS board.) And per order of Governor Frank Keating, April 30, 1998, was Bill Bartmann Day in Oklahoma.

By this time Bartmann had hired former Secret Service agents to tail him everywhere, including, at times, to the bathroom. He'd also become known for outsized displays of generosity, flying thousands of employees to retreats in the Caribbean and Las Vegas. At one Vegas gathering, Bartmann was carried into the Thomas & Mack arena on a sedan chair dressed as Julius Caesar while 6,000 employees and guests looked on. Legionnaires blew horns at his arrival, and dancing girls threw flowers in his path. "Twelve years from now there will be 30,000 CFS people!" Bartmann bellowed from the ring after Hulk Hogan appeared to wrestle him.

In some eyes the Caesar costume fit Bartmann all too well. "This man is a tyrant," says one ex-employee. "I don't know how many times he called me a dumb bastard SOB." That wasn't the worst of it. On April 21, 1998, Bartmann herded 600 or so employees into a room and accused them of cheating. In a profanity-strewn philippic that likened the employees to Nazis and Klansmen, Bartmann suggested taking a machete to every third person in the room or else placing red dots on their foreheads to "blow [their] fucking brains out," according to a suit filed by 20 of the employees.

Six months later Bartmann's reign was over. And it ended with breathtaking speed. On Sept. 30, 1998, the major bond-rating agencies received an anonymous letter suggesting that CFS, to hide shortfalls in collections from bondholders, had resorted to covertly selling off loan inventory and reporting those sales as collections. Worse still, the buyer of much of that inventory was a shadowy entity called Dimat Corp., which had ties to Jay Jones, Bartmann's 20% partner.

Had Bartmann's $50 million payment to Jones actually been part of a desperate scheme to funnel money through Dimat and prop up a faltering business model? Bartmann insists not. As he tells the story, Jones--stripped of his operational duties by Bartmann and presumably humiliated--had formed Dimat without Bartmann's knowledge to purchase and resell bad loans on the side. It was only after the allegations hit, Bartmann says, that he stormed into Jones' office and demanded to know whether Jones was connected to Dimat. When Jones didn't deny it, Bartmann began to cry.

Many who know Bartmann find the maudlin tale of betrayal hard to believe (if only because it seems lifted wholesale from The Godfather, with Jones playing the role of Fredo). "If a paper clip moves at CFS," one CFS executive told me, "Bill knows about it."

Eyes dry and bravado intact, Bartmann flew to New York sans lawyer to tell a room full of hostile bondholders that he was temporarily stepping down as CEO to let PriceWaterhouse and a law firm conduct investigations. But the death spiral had begun. Within days every rating agency had downgraded or suspended its ratings of CFS bonds, leaving $1.5 billion twisting in the wind. The company's bank lenders responded by cutting off credit. Fearful they'd be left holding the bag, unsecured creditors threatened to file an involuntary bankruptcy petition, causing CFS to file Chapter 11 on Dec. 11. The sudden free fall, says Bartmann, was like a "bobsled to hell." Then, in April, he crashed his motorcycle during a parade, breaking his leg in three places.

Save for a skeleton crew, the last of CFS's 3,900 employees were laid off this month. Whether it was impropriety or just the appearance thereof that felled the company is a question that will be hashed out in the courtroom. NationsBank has sued the company for fraud, and CFS is demanding that Bartmann repay $17 million he borrowed from the company. But there's one thing all parties seem able to agree on: Bartmann came away from the mess nearly broke. "Whatever Bill was doing," says Mike Zarrilli, his former contact at Chase, "it doesn't appear he was doing it to put short-term cash in his pocket."

Staring at a copy of the anonymous letter--the piece of paper that ruined all that paper wealth--Bartmann offers an epitaph that's at once a defense and a self-indictment. "I didn't grab the loot and scoot," he says. "I gave it to Mr. Jones to buy more of a worthless corporation."

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