Next time you think you've found an investment that's fool proof, think again.
That's the message from Wayne King, a real estate developer who decided to take out a loan for $400,000 to invest in a start-up powder coating business.
Powder coating is the process of coating metal with paint in a powder form that is considered more environmentally friendly.
Scammers told King the bank was also lending them a million dollars to get the business off the ground.
"So, Mr. King thought, 'if the bank and the SBA is backing the loan, I should be able to give $400,000 and be fine,'" said Tammy Mayle, U.S. Postal Inspector.
But, nothing was fine. It turns out the con artists lied on their bank application.
"I did due diligence on myself, but the bank authorizing this didn't do due diligence on this guy," said King.
While King was being strung along by excuses and delays, postal inspectors found out the business was never operational.
"There was never one job produced out of the business," said Mayle. "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."
"You should know the people you are dealing with," warns King. "Find out what their personal finances are."
Inspectors say King's life has been turned upside down.
"He was devastated," said Mayle. "This was his livelihood, his retirement. He is 73-years old and he still works 8 to 10 hours a day to repay this loan."
The suspects were convicted on bank fraud and ordered to pay restitution.
The take away in this story: you can never do enough research before investing money.
Tuesday, September 16 2014 4:54 PM EDT2014-09-16 20:54:59 GMT
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