ATHENS For self-made businessman Dimitrios, the threats began with a phone call from a man who said they knew where his daughter was.
At first the 57-year-old window installer kept quiet about the calls. When his car was torched in front of his house, he hid the blackened metal shell from his family.
But when he awoke to his wife's screams at a huge banner that had been strung across their street, he could no longer hide the truth. "I WANT MY MONEY BACK," the banner read. And Dimitrios knew the illegal loan shark to whom he owed thousands was not prepared to wait.
Greece's economic crisis has forced the government to cut public spending by tens of billions, slash salaries and raise taxes. Greeks have raided their savings. According to small Greek lender Attica Bank, around 50 billion euros ($68 billion) have been taken out of Greek banks over the past two years, much of that by middle class people, says its head of wealth management Theodore Krintas.
Around 185-190 billion of bank liquidity remains, he said.
But as it has become harder for many Greeks to do the weekly shop, let alone pay the rent on their businesses or the mortgages on their homes, there has also been growth in illegal lending.
One academic who tracks Greece's black market says loan sharks turn over around 5 billion euros a year in Greece. The government puts the figure at double that -- 10 billion -- and says activity has more than quadrupled since the crisis began in 2009. Of that amount, more than half stays in the pockets of the lenders, who charge interest rates starting at 60 percent a year.
Half of those who take on such loans have suffered property losses or a breakdown in their marriage, the government says. At least some committed suicide when they could not pay up. And always there is the threat of violence. A high-ranking official in the finance ministry's economic crime department told Reuters many of the operations are connected to Balkan organised crime gangs.
"Loan sharks are usually the last stop for someone trying to save their business from going under," said the official, who refused to be named. "And once you enter into business with them, you enter a spider web."
Dimitrios, who would not give his second name, agrees. "Loan sharks are not clerks in banks," he said, stirring a cappuccino in a central Athens hotel lobby, where he spoke to Reuters through an interpreter. "They are men who lift weights and carry guns. A lot of small businessmen turn to loan sharks. You think it's an easy way out but then your throat gets cut."
THE WINDOW INSTALLER
A tall, large-framed man with a mass of gelled grey curls, Dimitrios set up his window installation business 25 years ago in an industrial zone just outside Athens. Before the crisis his company had turnover of around 4 million euros a year, and made a steady trade using imported materials from Russia.
But after a fire at his factory, the father of two says he received only a third of the insurance money he should have, triggering a long period of financial troubles.
The business was also badly hit by customers using post-dated cheques. Greeks habitually date their cheques as much as six months into the future. They may not have the money now, they say, but they'll get it in a few months. The practice is legal but economists and bankers blame it for contributing to the country's plunge into bankruptcy.
According to credit databank Tiresias -- named for a blind Greek prophet -- cheques worth 3 billion euros bounced in 2009. That's 272 euros per person. Comparisons to other European countries are hard to come by as almost none issue cheques in the way Greeks do. But according to Schufa, Germany's main credit bureau, there were 3.5 billion euros worth of arrears on installment plans in that country last year. Germany's population is almost nine times bigger than Greece's.
The value of dud cheques in Greece slipped to 1.8 billion euros in 2010, but the problem is growing again this year. By September 1.65 billion euros of cheques had bounced, according to Tiresias, which is used by the Greek government to track the level of consumer debt.
Some banks recently stopped issuing cheque books, others have stopped making loans. As traditional sources of credit dry up, more people are likely to turn to loan sharks.
That's what happened to Dimitrios, who says a friend in his neighborhood put him onto his moneylender, saying he knew someone who had talked of people who could help him out. "I can't even bear to say his name," Dimitrios said of the lender now.
He wouldn't say how much he borrowed, but it was enough to pay his 40 staff and buy supplies after post-dated cheques totaling 1.5 million euros from his clients had bounced in 2009.
BALKAN CRIME RINGS
Evidence of loan sharks can be seen along the winding streets of Athens' historic center and the boulevards encircling it, where poorly photocopied pieces of paper asking "Need cash?" are stuck onto car windscreens and the city's yellow telephone booths.
Shaking his head in dismay, the finance ministry official says many have links to organised crime in the Balkans and Eastern Europe. "Everything is fronted by Greeks and it's very difficult to catch them," he said, adding that many sharks fake bank procedures or bribe lawyers for their services.
When Romania and Bulgaria joined the European Union in 2007, their criminal gangs gained easy access to Greece. The official said the gangs' main activity is trafficking women and heroin smuggling; lending cash is a side business. In a July report the Organization for Economic Cooperation and Development said human trafficking contributes to the money-laundering business in Greece, though it did not give figures.
A spokesman for the European Commission's representation to Greece declined to comment, saying loan sharks were not in their remit.
Friedrich Schneider, who tracks Europe's black market economies as chair of the department of economics at Austria's Johannes Kepler University, said loan sharking is a direct consequence of Balkan-originated crime in Greece. But Schneider puts the industry's annual turnover at around 5 billion euros, half the Greek government's estimate.
Greek authorities blame the Balkan crime rings for the proliferation of unlicensed pawn shops in greater Athens, an area home to around half the country's 11 million people. In the last two years their number has tripled to around 250 shops, the finance ministry official said.
While legal pawn shops -- currently numbering around 90 in greater Athens -- charge an interest rate of 3.75 percent a month on pledges, illegal ones charge between 5 and 20 percent. They appeal to the upper middle classes who have valuable jewelry. The official said the upper middle classes are attracted to unlicensed shops -- which are often in rundown areas of town -- to escape the gaze of their neighbors.
"We have tax after tax, and people are left no options," the official said. Loan sharks offer a 5 percent a month interest rate, which seems low compared with the 12-15 percent interest a year that banks and credit cards usually charge. But the power of compounding works quickly -- a rate of 5 percent a month ends up as 60 percent a year.
Most of the lenders deduct the interest before handing over the loan. "So if you've asked for a 10,000 euro loan, you get 4,000 upfront. And most desperate people do not walk away from cash on a table," the official said.
"I ended up paying back my loan 10 times," said Dimitrios, adding that his moneylender would demand a 50 percent interest on missed payments, dramatically increasing his debts. In a sudden twist of fate, the moneylender died earlier this year of a heart attack, ending the campaign of threats. Dimitrios is now struggling to pay off bank loans he took out after his troubles with the loan shark began.
With more cuts on the way in Greece, and the risk increasing that the country will default or even exit the euro zone, the loan shark industry is likely to grow.
"The middle classes are scraping the very bottom of the barrel. All the money they stuffed away is gone," said Phaedon Tamvakakis, managing director of Greek investment services firm Alpha Trust.
More painful austerity measures will mean a crisis "that is no longer on an individual level. It will become a massive phenomenon," Tamvakakis said, warning that an entire stratum of Greek society could become impoverished.
This is taking a high emotional toll.
The health ministry says suicides are up 40 percent through October from the same period last year, most committed by middle-aged men. In a patriarchal society where fathers are expected to be breadwinners and provide for their families, the sense of personal failure and alienation is profound.
"Men experiencing a drop in income are especially affected by depression, leading to suicide or even homicide," said John Kyriopoulos, who heads the department of health economics at the National School of Public Health.
Of those who use loan sharks, only 5 percent manage to pay them back, according to the finance ministry official. But an equal number commit suicide. Around 30 percent -- borrowers such as Dimitrios -- pay part of their loans back.
"The time of the Olympics is over for Greece," Dimitrios said, referring to the 2004 Games which boosted national pride. "In Greece everything works the opposite of how it should. You must beg banks to get a loan, and beg the police to deal with a loan shark. I am a good man, but I am grateful my loan shark died."
(Editing by Simon Robinson and Sara Ledwith)