Black Bill was a local urban legend in Tomahawk, Wisconsin.
In 1907, a folklore story began spreading about a monster, then known as Black William, who lived in the woods and had the head of a goat. Black Bill was known to capture a person once every year, up until 1997. Parents were said to have used the story of Black Bill to warn their kids not to go into the woods in case of Black Bill, who became known as the bogeyman to children.
Despite the yearly disappearance from the town's residents, very few actually believed in the story.
In reality, Black Bill was created by the Bishop Family to cover up their yearly blood sacrifices to the deity Moloch, whom they had kept in their basement and starved in order to receive money. Each generation of the Bishop Family would dress up as Black Bill and hunt down at least one person for sacrifice.
In 1997, the sacrifices ended since Barrett Bishop Jr. refused to continue it. Moloch was left to die in the basement. 20 years later, the sacrifices continued thanks to Barrett's half-brother Pete Garfinkle, who discovered Moloch and began hunting down blood sacrifices for personal wealth.
The resurgence of the sacrifices and missing persons led Sam and Dean Winchester to begin an investigation, and with the help of Sheriff Barrett, they were able to kill both Moloch and Pete, thus putting a permanent end to the legend of Black Bill.
Sheriff Bishop: Well -- well... Yeah. He's right. Look, 'round here, parents tell their kids not to go into the woods or black bill will get 'em. He's the bogeyman. Everyone knows that the bogeyman ain't real. DEAN: Sure about that? Seems like a lot of people go missing in this town. Yeah, one a year every year up until '97.
- Sam compared Black Bill to a local Jersey devil.
- Dean found it weird that "a goat dude" had a name "like a pirate".