How I Lost $5000 Trying To Make A Quick Buck.
August 2014 I moved back home to Toronto after 3 years away working in Windsor, Chicago and New York. Just after turning 25 I made the toughest life decision to date. I quit a very promising job with Diageo North America to return home to my family, recover from burnout, and invest in myself and a passion,Football for the World Foundation, an NPO which I helped build from the ground up. I was confident (and still am) that going down this path of uncertainty would be the right decision long term.
September 2014 I received a message via LinkedIn from an old acquaintance, “Mike” (actual name not used), who requested that I call him urgently. He requested to meet in person that night as he had a personal matter that he needed my help with. It had been 2 years since I directly spoke with Mike but from what I remember he was an honest and successful individual so I agreed.
He advised that he had just purchased a new home and that the buyer of his current property backed out last minute. He needed to pay 20% down towards the new home by noon the following day or he would have to let the house go. He claimed to have maxed out his line of credit, personal savings and was still $21K short. He had managed to secure $16K from others and needed another $5K by noon (the ask) the next day to secure the house.
He guaranteed my principal back in 30 days with 10% interest.
In all honesty, I was a bit skeptical.
Something didn’t sit well deep down but I discounted this feeling when he repeatedly hit hard that his wife and three kids really liked the house and he wanted to get it for them to make them happy. He got the best of my emotions and leveraged the fact that he knew I loved to help and be a hero, one of my greatest weaknesses. Here I was unemployed with savings sitting in the bank collecting 2% interest. I had an opportunity to make a family happy and make $500 in 30 days. The expected ROI also justified the purchase of a new suit that I bought in anticipation of a fat $5,500 check coming in 30 days (another poor call, great suit though).
I agreed to loan him the money only if he let me draft up a formal promissory note on my terms. He agreed. When I got home that night I told my parents about the opportunity, they expressed some reservations about loaning someone I have not spoken to in two years $5,000. They said, “You trust too many people.”
I didn’t ask him to show me the terms of sale for his purchase as I believed he was telling the truth at face value. In hindsight, exploring this one step of due diligence and getting over the fear of asking would have halted this whole ordeal.
Some say that life is all about timing; within 10 minutes of handing him $5K in cash I got a call back from a mutual friend I reached out to and conversation went like this:
Don: Hey Nibin, I got your message, what’s up?
Me: Hey Don! I hear you are also helping Mike out with his house?
Don: What are you talking about Nibin?
Me: Mike said you also loaned him some money to help him secure his new home.
Don: Nibin (firm tone), did you loan him any money?
Me: Yeah man!
Don: Oh my God….
Me: (Heart beating at Mach 3)
Don: I didn’t know he was buying a new house, he didn’t ask me for any money. I have heard he has been asking a lot of people for money and they are calling me up and checking if it was OK.
Me: WTF…What does this mean!? What is he using the money for!?
Don: I don’t know man, but I have been advising people against lending him money as he still has not paid me over $15,000 that I loaned him 3 years ago. FYI he filed for bankruptcy last year.
Me: He owes you $15K!? BANKRUPTYCY!? Oh f*ck me!
My heart sank. I've never been more anxious and embarrassed. I got hustled. I acted on emotion, I wanted to help which felt right in the moment (selfish reason in hindsight) and made a decision without looking behind the curtain.
Without getting into details the money was never used to buy a house. I got taken advantage of. This hurt and affected me for months in a negative way. I lost a lot of confidence and I developed a short temper. It affected my relationships with my family, my friends and even with complete strangers. I was different. I trusted no one.
I made a poor investment decision and paid a $5K price tag for being naive and not completing my full due diligence. I took everything for face value when I should have consulted someone with more experience in these types of investment and just stepped back and asked if this was too good to be true.
I ended up taking this to small claims court and received a judgement in my favour. To those who this is great, it really isn't. It's only one step in a slow and painful process. If the person you are trying to collect from does not have a job or any liquid assets it's a long, hopeless road to reclaim anything. Say goodbye to your money.
I truly believe that I have no problems in my life, just annoying inconveniences. This was the most annoying of those inconveniences to date.