I stopped a ten million dollar robbery recently.
A few weeks ago, a guy claiming to be related to Middle Eastern royalty, (call him “M”), had a representative (a friend of a friend of a friend) call me and ask me if I knew anyone who would lend M ten million dollars.
“He has collateral,” the rep said: “$25 million in restricted shares of [well known private Internet company].“
So I called a fund I used to be an investor in. They were interested and made an offer. Call the fund manager, “Bill”.
Bill said, “We’ll lend $10 million IF we get the full $25 million on any default.” Here were the other terms Bill said.
- 15% interest, paid quarterly
- the full loan is due back in two years
- $600,000 fee paid to Bill up front.
- Bill wanted 25% of all the upside on the full $25 million in shares for the next ten years.
I had never seen a term in a loan like that last one but I give Bill credit. Why not ask for it? In a negotiation it never hurts to ask for anything.
M said, “yes”. He needed the money fast for some real estate he wanted to buy.
Bill began his due diligence. M sent a fax picture of the shares. His lawyers sent over all the contracts M had signed to get those shares. M even wired $15,000 to Bill to pay for Bill’s legal fees. M wanted no hurdles to getting the deal done. Lawyers on both sides were busy every day all day, working out the details.
Bill said to M: I need permission from the internet company that I would be the potential shareholder if you default.
It took a day but M sent over a letter. It was written on the Internet company’s letterhead, signed by the company’s “Director of Investor Relations” giving Bill permission to control the shares in a default and “call me at XYZ phone number if you have any questions.”
By coincidence, I knew the Director of Investor Relations but hadn’t spoken to him in a year or so.
Finally, last Friday, Bill calls me in the morning. He was about to wire ten million dollars to M.
“I don’t know,” Bill said, “I have to tell you, James, something seems funny.”
“The letter from the head of investor relations at the company. It almost seemed too simple. Why didn’t he throw in a line indemnifying the company?”
“I don’t know,” I said. I had no clue. “Is that standard?”
“I don’t know either,” Bill said and he sort of drifted, “I just don’t know. But something makes me feel funny.”
“I have an idea,” I said, “I know the guy who wrote that letter. I’ll write to him and ask him if he wrote that letter. This way he independently verifies.”
Bill said, “ok, do it.” So I did.
I didn’t hear back. Bill called again two hours later.
Bill said, “look, let’s call up the number on this letter. You stay quiet.”
So Bill called and someone picked up and said he was “X”, the head of investor relations for this company. I’ve spoken to X a few times before. The voice did not sound like X but it had been awhile.
Bill and X started talking about the letter. Then Bill said, “hey, by the way, I have your friend, James Altucher on the line to say Hi.”
“We got disconnected,” I said.
Bill started laughing.
“JAMES!” he said.
“This is a total fraud! That was a fake phone number. That guy was an actor! Do you think it was an accident we got disconnected the second I said you were on the phone?”
I felt like an idiot.
“I don’t understand. Why would they go through all of that?”
Bill said, “Holy shit, I almost wired $10 million. That’s why they did it!”
“I don’t get any of this,” I said. I was in denial. I had never seen a $10 million robbery in action.
Then X, the ACTUAL head of investor relations at the company, wrote back to me. He said, “Stop by for coffee next time you are in SF. Meanwhile, I will contact your friend Bill about this letter you sent me.” Nothing else.
I called Bill.
“Yeah, X is all up in my grill about where I got this letter supposedly signed by him. He had never signed it. He wanted to know who was involved, etc. The shares were forged. That guy we called was fake. The contracts were forged. Signatures were forged. This is a total fraud. Authorities are being notified. It’s all bad.”
Meanwhile, M, and his lawyers, had all disappeared at this point. No more contact. Nobody picking up their phones according to Bill.
“Ugh,” I said. I felt sick. “I’m sorry I even introduced you to these guys.”
Bill said, “Don’t worry. We’re in the business of looking at all opportunities. You helped figure this out. Without you I probably would’ve wired. But I’m glad I had a hunch.”
So I have to give Bill credit again. I’ve ignored my hunches many times and paid the price. When your body whispers to you, you have to listen.
There’s a lot of bad people in the world. All they want to do is destroy and vanish. They roam the world like pirates.
A network of lawyers, escrows, fake shares, bank accounts, bogus corporations and banks, all set up to hide them in the shadows. A network of relationships and lies. The dark side of the force.
Sometimes they are fake royalty. Sometimes they are your neighbor. Your friend. Your family. Your whatever.
Sometimes the fraud is your bank account. Sometimes your heart.
I had to go. I went to my daughter’s high school play. I sat outside in the parking lot of the school for a few minutes. I was shaking. We had spoken to Evil on the phone.
I went into the school. I hate plays but I liked watching my daughter on stage.
Then I wrote this post. “Maybe don’t publish it,” Claudia said. “It could be dangerous”.
Sometimes people ask me what I do for a living.
I solve crimes.
- we did verify M's identity. He was royalty.
- the intermediary was someone I had done business with in the past so was a trusted source.
- there was a nuance in the actual company used so it was difficult to verify their side but we did in the end, thankfully.
- you can choose yourself, but make sure everyone around you you choose carefully also.]
[Image: Many Dollar Banknotes by 2bgr8STOCK. CC licensed]
Published 8:48 pm Mon, Jun 16, 2014