Investor Is Told By Business To Contact Law Enforcement If They’re Not Happy. So They Do And Uncover A Ponzi Scheme.
by Trisha Leigh
If you survey people at a bar, you’ll find that everyone has an idea for a business, a book, or both. Very few of those people will ever follow through on either one.
OP had a business idea, but he didn’t have the money or time to make it happen on his own. So, when he met a like-mind at a bar and they got to talking, a business was born.
It starts as all truly great sagas published on the internet begin… When I met a random guy through a friend at a bar in the city. Let’s call the guy I met “Marc” for the purpose of this post.
My friend had introduced me to Marc because for few years leading up to that introduction I shared an idea I had for a business with anyone who would listen.
I was told Marc wanted to start his own business, had worked in the industry, knew a lot about the subject matter required, and thought my idea was good.
OP would put in what money he could and would work in a part-time capacity. The other guy put in more money and more time.
Marc and I met up for a lunch, we hit it off, he said he’d start the business as the CEO and agreed to me taking a part time operational role. I agreed to help solely in a part time operational role because I couldn’t afford to quit my day job. I put in 15% of the cash for 5% ownership since Marc was going to put in founder hours (80+hours a week) and agreed to put up 85% of the cash which was more money than I could afford to risk on a new venture.
I worked part time, I did what I said I would do, I even tried to be of assistance on things I had no experience with. I connected Marc with a fella I had done business with before, we will call him Paul. Paul and I got into a dispute ourselves (more on this later).
For a while, things seemed to be going well. Then OP and everyone else involved started fighting all the time.
Anyway, lets fast forward a few months and I got into a dispute with Marc over stationery. Yes, stationery not being to his liking caused him to flip out. This was despite him picking the stationery out.
Next up, the contract I got from Marc was not what we agreed. The legal work required a few months to get done and I had expected delays but when I finally got it the paperwork didn’t represent what I had agreed to own.
Not only that, but my investment wasn’t being acknowledged under the terms we had committed to when I put the money in.
Now, as I said, I wasn’t able to risk much and I only invested what I could afford to lose, so this wasn’t a huge sum of money.
I didn’t want to make a big deal about it since the amount was small and he began promising a new contract when the business could pay for the lawyers to make changes.
I signed nothing.
Then it worsened, Marc and I start to fight anytime we are in a room together. As I think back, it’s almost comical how angry he would get in my presence.
OP kept his head down and kept up his end of the bargain, while the other guy started to brag around town about how well the business was going.
I have other things to do with my time than squabble over stuff like stationery so I worked on my areas of the business and hoped things would grow. I stopped in whenever I could and would help out regularly as needed with as little Marc interaction as possible.
Paul would intervene sometimes when Marc would get particularly difficult to be around.
Anyway, fast forward about two years, and Marc can’t help but tell everyone who will listen that the business is going well. I have no idea how well things are going because Marc isn’t giving me any updates.
Then, the other guy told OP he was going to give his investment back and wanted to part ways.
OP said no thanks.
I get a call around Christmas from Marc, he wishes me a happy holiday then drops the bomb on me that he wants to terminate my involvement and refund my investment.
I decline the investment refund and say I’m happy to no longer work with him. In my head I think its kind of hilarious that he thinks this will just end that easily but I say nothing to that accord to him.
Marc and I hang up with him aggravated about my refusal to take the refund on my investment. Marc then sends me an email that I had resigned. This had no basis in fact but certainly was creative about what we had just discussed.
I correct him immediately in a reply stating that he wanted to no longer work together and that I can see that being the case but want to discuss my investment.
A few days later Marc demands I come pickup a check for a reimbursement of my investment. I do not come and get it.
A (bad) lawyer got involved, and after a long argument about what was and wasn’t legal, he ended up telling OP to shut up or call the cops.
Next thing you know the company attorney huffs and puffs and tries to scare me with some strongly worded letter. This is the same idiot attorney who screwed up my contract to work on the business and my investment agreement. Lets call this Attorney Mr. Cohn for the sake of this story.
I send an email response to Mr. Cohn that he screwed up, the company seems to be doing well, that I hear rumors about how well, that I want to be on this for the foreseeable future, and I will not take a 1:1 cash out for what I put in.
The attorney then emails me back, stating in writing, that Marc never accepted my electronic transfer into the company account. Instead, Marc has another company he accepted the money into. A company I’ve never heard of. A company that is different than the name of the recipient on my electronic transfer, a company that would be committing wire fraud to accept the money I sent.
On that note, I did some sleuthing online. I found out Marc had been forming one company every month or two.
Then there were media reports and documents he let slip in shared drives he forgot I had access to from when we agreed to work together (Marc was too cheap and stupid to pay for tech help so he was using my shared folders I had created and I certainly wasn’t obligated to turn off the shares if he wanted to work out of them).
Those documents showed me Marc had recently raised money in the company I sent the payment to at 200X the valuation I had bought into it at, and he didn’t disclose my investment to the new investors. Marc had however put me on documents showing my ownership to previous investors. Not on documents I had ever seen before but documents he had been sending around.
When I share my suspicions that Marc is committing wire fraud with Mr. Cohn I am told I am the one breaking the law by knowing anything about the investment documents the company has used. Mr. Cohn tells me that by not picking up my check I will not be entitled to any money and to contact law enforcement if I think something illegal has happened, he cautions though that I’ll be the one in trouble.
So, OP called the cops.
I let the different respective members of the securities and exchange commission along with law enforcement know what happened to me. I provided them all of the documents I had from the matter.
This ended in jail time for his once-business partner (after a 5 year investigation) and the lawyer being disbarred.
It took about five years for the investigation to conclude, for charges to be brought, for a trial to conclude, and for Marc to go to jail. They say government is slow but they aren’t kidding with just how slow.
Maybe it was slow because Marc was running a large (tens of millions of dollars large) fraud? Anyway, Marc will be serving time for about 30 felony charges they found uncovering the details of his Ponzi scheme. He will be away for a long time.
I never did anything wrong. With the information I was able to provide Mr. Cohn ended up getting disbarred. There were other things Mr. Cohn did outside of what is shared in this post that I cannot share or it could help to identify me to the folks involved.
The investigators credited me with bringing the fraud to their attention.
All’s well that end’s well. For OP anyway.
I lost my money in this ordeal but gained an education and I got to help bring down a crook. The sheer stupidity of Marc is that he didn’t even follow the business plan I had. He just used it as a story to convince investors to give him money. It is a business model that works very very well.
It took a few more years but I’m now in a position to be pursuing this business full time, with people of high integrity, who all work together to ensure each others success.
We expect to have an extremely profitable year in 2023 after proving the business model worked in 2022.
Does Reddit think this long story was worth the read? They’re going to let us know!
The top comment wonders just what the lawyer was thinking, here.
At least OP helped them make a mountain out of a molehill.
They definitely thought they were invincible.
They weren’t counting on OP being so smart. Or angry.
Reddit is high-fiving him for the double whammy.
This was quite the saga, I must say.
It was long, but enjoyable enough along the way.