Posted at: 07/02/2013 4:47 PM
Updated at: 07/02/2013 5:39 PM
By: Brett Davidsen
An I-Team 10 consumer alert. The next time you think you've found an investment that is fool proof, think again. You can never do enough research before investing money you think you can't lose.
One man lost everything. He is 73-years-old and was retired. After taking out a loan to invest in what turned out to be a sham business, he's now had to go back to work.
Wayne King, fraud victim, said, “If the guy is good, you have a good investment. If he's bad, you have a problem.”
Unfortunately, for Wayne King, he had a big problem. The real estate developer decided to take out a loan for $400,000 to invest in a start-up powder coating business.
Tammy Mayle, U.S. Postal Inspector, said, “Mr. King thought it sounded like a great opportunity.”
Powder coating is the process of coating metal with paint in a powder form that is considered more environmental friendly. The con-men told King the bank was also leading them a million dollars to get the business of the ground.
Mayle said, “So, Mr. King thought if the bank and the SBA is backing the loan, it should be okay to give $400,000.”
But nothing was fine, turns out the con-men lied on their bank application.
King said, “I did due diligence on myself, but the bank authorizing this didn't do due diligence on this guy.”
While King was being strung along by excuses and delays, postal inspectors found out the business was never operational.
Mayle said, “There was never one job produced out of the business. Both suspects used the money to live off of, to pay personal debt, to pay all of their expenses and within nine months, the money was gone and filed for bankruptcy."
King said, “You should know the people you are dealing with, find out what their personal finances are.”
Inspectors say King's life has turned upside down.
Mayle said, “He was devastated. This was his livelihood, his retirement, he is 73-years-old and he still works eight to 10 hours a day to repay this loan.”
The suspects were convicted of bank fraud and ordered to pay restitution. Federal investigators say do not invest in anything unless you understand the deal. Con artists rely on complex transactions and faulty logic to "explain" fraudulent investment schemes.