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Howard Ain, Troubleshooter: Startup Business Alert
CINCINNATI (Howard Ain) -- Startup businesses are big these days. Everyone is looking to get in on the ground floor of the next Google or Apple. Howard Ain tells us, one man learned, if you're not careful, you could get burned.
Wayne King 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. He 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 Mr. King that 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 that he should be able to give $400,000 and be fine. but, nothing was fine. The con men lied on the bank application. King felt he had done his diligence, but the bank authorizing the loan didn't do their due diligence on this guy.
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. Both suspects used the money to live off of, to pay personal debt, and to pay all of their expenses. Within nine months, the money was gone and they had filed for bankruptcy.
Mr King says, "You should know the people you are dealing with, find out what their personal finances are." Inspectors say "King's life has been turned upside down, he is devastated, 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 of bank fraud and ordered to pay restitution.