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U.S. Citizen Thinking Of Expatriating? Important Articles on What it Means

May 18, 2012 By Leave a Comment

Due to the nature of our practice with thousands of Americans we have safely helped use a variety of tools including offshore trusts in a safe and legal way, we get lots of questions about expatriation.

Our position remains the same;  the best of usage of these tools is tax neutral and provides surety while allowing you to maintain your life and family inside the U.S. Below are some recent articles that address issues faced by those seeking to flee taxation by abandoning their U.S. citizenship forever.  – Ike Devji

 

FORBES: TEN FACTS ABOUT TAX EXPATRIATION:

http://www.forbes.com/2010/03/23/expatriation-exit-tax-limbaugh-obamacare-personal-finance-robert-wood.html

 

SCHUMER, CASEY ANNOUNCE PLAN TO STOP FACEBOOK CO-FOUNDER FROM DODGING TAXES BY DROPPING U.S. CITIZENSHIP

http://www.schumer.senate.gov/Newsroom/record.cfm?id=336808

Expats Face Steep Exit Tax Courtesy of Facebook

http://www.forbes.com/sites/robertwood/2012/05/18/expats-face-steep-exit-tax-courtesy-of-facebook/

Facebook Co-Founder Saverin Gives Up U.S. Citizenship Before IPO

http://www.bloomberg.com/news/2012-05-11/facebook-co-founder-saverin-gives-up-u-s-citizenship-before-ipo.html?goback=%2Egmr_3694878%2Egde_3694878_member_115647457

THIS IS A LINK TO SOME OF MY PREVIOUS ARTICLES ON OFFSHORE ISSUES INCLUDING THE RIGHT USE OF THE OFFSHORE TRUST AS A POWEREFUL TOOL IN  LEGAL and TAX NEUTRAL WAY: http://www.proassetprotection.com/category/offshore/

Filed Under: Asset Protection, Asset Protection Fraud and Failures, asset protection trusts, estate tax, Expatriation, foreign bank accounts, offshore, offshore banking, offshore trusts, scams, secret bank accounts, taxation, trusts, Wealth Transfer Strategies Tagged With: , , , , , , , ,

Asset Protection for Your Medical Practice or Business , Learning To Fire the Right Way

November 1, 2011 By Leave a Comment

By Ike Devji, J.D.

Imagine that after two decades in business with 100 plus employees and not a single EEOC or employment complaint your business is facing a class action lawsuit by disgruntled former employees discharged for cause. Imagine that these employees call every other employee they can reach and try to get them to join the lawsuit against you. Imagine that many of these employees are currently unemployed or underemployed due to economic conditions and are happy to have a new business, yours. Now wake up, it’s 2011 and all of this is real.

Over the last 45 days I have helped three different clients with issues similar to this fact pattern. In every single case the toxic employee that brought suit and/or encouraged others to do so was employed until the time of the suit, fabricated serious and offensive complaints at discharge or in anticipation of discharge. They also shared one other characteristic, in every single case they had been toxic or had been performing poorly for some extended period of time and should have been fired long ago but were not because of fear of conflict or because the manager of practice owner was trying to “be nice”.

I’m all for charitable giving, but I must be clear on this point; your HR practices are not the place for you to be “charitable” and can cost you and all your other employees your livelihoods. Part of the hesitation we see is based on the fact that most people don’t know how to fire and discipline in a safe and effective way, below is a simple outline we use to help you get a handle on a real “process” just like you have for most other operations in your practice.

Start early, even in the interview process and make all employees aware that you have a specific discipline process and high standards. Encourage them to communicate on any issues related to the workplace and their performance. Be clear about your expectations and requirements and how they will be enforced. Use a written job description that outlines their responsibilities and your performance expectations and then be ready to back it up.

THE FOUR STEP GUIDANCE AND DISCIPLINE PLAN:

VERBAL – Given instructions, corrective feedback and outline your expectations for behavior or performance that is below par or creates conflict with other employees or patients immediately.

WRITTEN – Upon the SECOND incidence of any undesired behavior or shortfall of the performance the position clearly required and which was clearly outlined in the initial interview and written job description (see how it is repeated, re-enforced and most importantly, DOCUMENTED?) provide specific written record of the issue, save it in their file and provide them notice by giving them a copy.

HAVE AN AFFIRMATIVE AGREMENT – As a last salvage attempt and to preserve a record, use an affirmative agreement that specifies the behavior you need to correct and have the employee agree to specific, immediate changes in their behavior and performance to conform to their job description and previous corrections. Use a written  form that they have seen before and that should be in their handbook.

FIRE THEM– If after the three above attempts don’t produce the desired results, you’ve done your part and it’s time to discharge the employee; again it is vital to have a process. Get keys, passwords, building entry keys and other security related issues covered and consider changing key locks and alarm codes. Have a witness if possible and follow a specific discharge process including an exit interview. Record the exit interview if possible so that the interaction is documented. If possible provide the employee with a final check they are due or any severance you may offer as a courtesy at the time of discharge, it takes some of the anger they feel away even if they know that being fired was their own fault. Finally, provide them an opportunity to provide feedback, either during the interview or in writing on a form you can provide; give them a chance to speak their mind and vent anger that might result in a lawsuit.

As always and as covered in my previous articles, get both EPLI (employment practices liability insurance) and a real, customized employment manual from a top employment law resource, not a free form of the internet or an outdated one you copied from another practice and get legal advice from an experienced employment law attorney sooner rather than later if you feel you have an employee that threatens your practice.

For more information, see our index under employmentlaw and visit http://lawsuitfreeworkplace.net/members/ my thanks to Douglass Lodmell and Paul Edwards for their guidance on these issues. This article originally appeared at www.physicianspractice.com, the nation’s leading practice manage,ment resource and appears here with permission.

Filed Under: Asset Protection, business legal planning, business survival, chiropractors, dentists, doctor sued, Employment law, lawsuit awards, liability, physicians, recession lawsuits, recession survival, scams Tagged With: , , , , ,

Incomplete Gift Tax Reporting – A Common FATAL Asset Protection Flaw

September 19, 2011 By Leave a Comment

RELYING ON GIFTING TO RELATIVES AND FRIENDS  (SEE ALSO FAILING TO ACT)

 Transferring all of your assets to your spouse and/or children, especially after something has happened, will not protect your assets from a lawsuit. Even if it did protect those assets from your lawsuits, transferring your assets to your spouse and/or children opens up another Pandora’s Box.

 Keeping in mind that there are thousands of lawsuits filed daily due to employment grievances, “slip and fall” and auto accidents, consider this scenario: Let’s suppose that you transfer all of your assets to your 18-year old son who causes an auto accident. Several other cars are involved in the accident and several injuries are incurred. Chances are high that the other parties will come looking for the driver with the deepest pockets. If your son “owns” your house and business, a sympathetic jury will undoubtedly take the possession away from your son in order to teach him a lesson for his reckless driving. The same holds true for spouses, parents and even friends.

Also, gifting is limited to about $13K annually, per spouse, per donee. Gifts over that amount must be documented with a gift tax return. Failing to do so will result in you having to answer the question, “Are you lying now re: the date and validity of this transfer or did you cheat the IRS?” A bad place to be in a time of need.

Here’s an article on how the IRS is cracking down on gift tax cheaters starting in 15 states, is yours one of them?

http://blog.lbhcpas.com/blog/bid/64304/Gift-tax-cheaters-beware

And an article on other COMMON FATAL FLAWS OF ASSET PROTECTION PLANNING:

http://www.proassetprotection.com/2010/10/common-fatal-flaws-of-asset-protection-planning/

Filed Under: abusive tax schemes, Asset Protection, Asset Protection Fraud and Failures, cpa, estate planning, estate tax, fraud, Gifting - Wealth Transfer, scams, taxation, taxes, Wealth Transfer Strategies Tagged With: , , , , , ,

Shelf Corporations, Nevada, Wyoming and other Asset Protection FAILS

September 12, 2011 By Leave a Comment

 

“Many times when these corporations or LLC’s are sold, the buyer is told that simply because the entity was formed and registered a few years ago, it has more value because it’s an ‘aged’ corporation,” said Ellsworth. “Buyers are sometimes told that the aged nature of the entity makes it more valuable for things like getting a line of credit, or just general credibility. It does not, and so that’s a serious misrepresentation.”

 

I love the quote above from officials from the state of Nevada. Nevada’s fraud problem, especially as related to asset protection and corporation sales is finally being addressed in a very real way, in fact they have a whole new “task force” out looking for people misusing the the state’s laws to commit fraud or sell bogus legal planing under false pretenses.

THIS IS GOOD! 

Why? Because it helps eliminate fraud and misrepresentation by lawyers and non-lawyer “mills” that sell these things with no regulation or consequence and stops the misuse of legal tools by crooks that want you and I to pay their share of taxes, avoid the law and use shell corporations for fraudulent conveyance, the number one requested use.

Q: I thought you always say “old and cold” is better and that you love aged corporations and other entities?

A: I do, but that’s because corporations that you have owned, run, and have properly funded and maintained for some period of time are typically strong, have records and can illustrate business purpose and usage  – THIS MEANS THE LEGAL PROTECTION WORKS.

This is different from the use of a shelf corporation, an old entity that someone recorded somewhere and that has typically been just barely funded and operated if at all by a third party who often promises to pass it to you “in secret”.

THIS SOLVES NO PROBLEMS FOR MOST PEOPLE - as they are typically funded too late, so  even if the corporation itself is old, your assets being inside it is not, and if you are being sold this as a solution to an existing exposure you are still committing FRAUD.

Thanks, Ike Devji

 See the Article here:

Nevada Securities Division Issues Cease and Desist to Wyoming Company

http://www.nevadanewsbureau.com/2011/09/10/nevada-securities-division-issues-cease-and-desist-to-wyoming-company/

Filed Under: abusive tax schemes, Asset Protection, business legal planning, fraud, malpractice, Nevada, scams, secret bank accounts, shelf corporations, taxation, Uncategorized Tagged With: , , , , , , , ,

Physicians Facing Increased Risk as Investment Fraud Targets

March 17, 2011 By Leave a Comment

Ike Devji, J.D.

The amount of fraud targeting doctors is increasing daily as they, like everyone else, are feeling the pinch of current economic conditions, decreasing compensation and stalled or negative investment momentum.

Those of us in legal and financial professions know that markets are primarily motivated by fear and greed, meaning fear of loss and the desire for gain. Given the rather dismal performance of many real estate and investment portfolios the timing of these con game operators could not be any better to take advantage of your perceived need for huge financial gains in what is perversely marketed as a “safe and predictable” way.

In uncertain times people derive a false sense of comfort doing in business with a personal or social contact or a member of their own religious or ethnic community. That comfort level is unfortunately replacing required standards of due diligence and often intentionally sidesteps the professional advisor relationships that a physician may have in place, often with financially fatal results.

Many of these schemes are dressed under broad terms such as private offerings, hedge funds or are related to purchasing intangibles, like deeds of trust. Others, like the currently in vogue Iraqi Dinar trading scheme that we and many other professionals generally consider to be a scam, play upon the desire we all have to not be the last one on board or in the know and are increasingly marketed through churches. One of my professional due diligence resources, Greg George of GTI Advisors, has stopped recent clients from investing in 14 apparent Forex frauds during the past six months alone. Those perpetrating these schemes don’t want your team involved and asking the tough questions they are trained to ask.

Common Reasons Con Men Provide for Exclusion of the Doctor’s Advisors Include:

-        We need you to make a decision and fund immediately because we have other investors waiting for this opportunity;

-        They won’t know how this works;

-        This is a special private deal for friends and family only; your friends are all in the deal and they all had their people check it out;

-        They will say no because we will compete with them;

-        We have an NDA (non-disclosure agreement) you will need to sign and keep this offering confidential;

-        We have our team and they have checked this out with our own high dollar lawyers;

-        We have the “support” of such and such big bank and they already checked us out. They wouldn’t be involved if we were crooks;

-        General (Insert name) and Senator (Insert Name) are part of this as well, they joined us through their church.

Any one or two these elements might be true on nearly any private investment offering, but my associates and I have NEVER seen a legitimate offering where the promoter used multiple tricks on this list. If they really have a deal that is worth being part of they will allow you and your advisors to ask due diligence questions and do your homework. If confidentiality is required your professional advisors typically have no issue signing an NDA on your behalf.

This is the age of buyer beware and due diligence; take responsibility and proactive steps to protect yourself and your wealth. Like with preventative medicine, it’s cheaper and more effective to avoid the harm than to try and fix it.
Greg’s specific recommendations on protecting your business operations and investment activities:

  • Do a little deeper vetting of key players in any deal than is offered on the several thousand Mr.BackgroundScreening.com’s out there – same with suppliers and any private equity placements or business acquisitions you’re planning;
  • Always have trusted, outside subject matter experts like your own lawyers and CPA assist you with concerns and evaluations;
  • Trust but verify claims of licensing or expertise and look for regulatory sanctions and disciplinary actions regarding professional licensing.
  • If you’re seeking funding, beware of brokers requiring ‘up front’ fees and remember that fraud works both ways. Most want your money, but some want to launder theirs. If you’re offered equity funding, financing, a joint venture or other partnership, ‘verify the ‘character’ of the guy who is making the offering, and the source of the money.

 

This article was originally written for and published by www.PhysiciansPractice.Com, The Nation’s Leading Practice Mgmt. Resource, where Mr. Devji is also a regular contributor.

Filed Under: Asset Protection, business legal planning, chiropractors, dentists, fraud, Greg George, GTI ADVISORS, Ike Devji, investment exposure, physicians, scams, Uncategorized Tagged With: , , , , ,

Due Dilligence and Why the Background Check You Used Won’t Work

March 11, 2011 By Leave a Comment

   

Due Dilligence Expert Greg George

Due Diligence is a commonly overlooked or underestimated  tool, and a an essential plan of any business venture or financial entanglement, especially now in the golden age of fraud. One of my top resources for clients is Greg George of GTI Advisors, he shares some exeprt insight on the false comfort of commercially available background checks below.  – Ike Devji  

There is No Such Thing as a ‘National’ Criminal Background Check for $29.95

A comprehensive background investigation is a must do for principals involved with various business transactions, private investments, bringing in new partners, examining suppliers and reviewing key hires for your company.  In spite of what many background screening companies across the country claim and try to sell you, there is no such thing as a “National Criminal Record Database Check for $29.95.”  
Although our firm does enjoy privileged access when undertaking criminal investigations on behalf of corporate clients and working with law enforcement, the data compiled by the National Crime Information Computer (NCIC), maintained by the FBI, the Law Enforcement Information Network (LEIN), maintained by each individual state, and other government information assembled by law enforcement on criminal matters IS NOT AVAILABLE for sale to private industry, and such sale or unauthorized access would violate both federal and state law. 
   

Best [research] methods for decision makers in the private sector to verify identity and achieve optimum results for criminal and civil record research in the U. S. include the following. A different criteria is applied when researching offshore issues, depending upon the country, the culture, and other specifics.  

  • Verify the subject’s social security number. This will show that the SSN was actually issued to this person as well as when and where it was issued.
  • Hand-search county court records in each jurisdiction where the subject has resided based on his or her address history. The statistical example: 85% of all arrests and convictions occur in the county of residence. However, take care when selecting your research supplier – they should be able to provide thorough research coverage extending to all 3,227 (or so, at last count) state counties, independent cities and township or village corporations across the United States.
  • Complete a federal criminal records search. A federal conviction or other information which indicates the subject may be or has been involved with federal authorities will not be revealed in a state county records check.
  • Narrow an online search of the thousands of news feeds for an arrest hit, if found, verify disposition of charges at the court of proper jurisdiction.
  • Become familiar with the Fair Credit Reporting Act – “FCRA”, available online prior to hiring employees. Any background research for employment purposes, (including obtaining a credit report), requires a separate stand-alone written release from the candidate. Most states have adopted the FCRA model in their respective legislation and several states also have further compliance mandates you need to follow. For due diligence review matters regarding private equity closings and other consumer initiated commercial transactions, the rules are a little different.

Specific purpose due diligence and employment background research can take on many forms, requiring various criteria to be addressed. My firm has provided research services ranging from basic criminal records reviews up through full field background investigations. Depending on the specific industry and employment position being filled (primarily corporate-level, financial, scientific, and other key staff positions), we may also recommend conducting additional interviews of past employers, business partners, neighbors, and other associates.
   

Suggested Baseline Criteria for Background Research on Individuals
Regarding due diligence research for investment, joint venture, merger, acquisition, other partnership opportunities or a key hire our recommended research criteria varies depending upon the specific industry.  However, here is what I suggest as a common baseline to examine for all individuals:  

  • Identity verification.
  • Criminal convictions.
  • History of civil litigation as plaintiff or defendant.
  • Bankruptcies, liens, judgments, and other adverse filings.
  • Past business associations, employment verification and reference interviews.
  • Verification of colleges and schools attended and highest degree awarded.
  • Global financial intelligence network lookouts on persons and businesses; alert reporting data: U.S. Treasury Financial Crimes Enforcement Network, Interpol lookouts (Special attention to Asia, Russia, European Union) and comply with U.S. Patriot Act requirements.
  • Check for U.S. Treasury Office of Foreign Asset Control sanctioned/disallowed persons and businesses BEFORE you commit to hiring or to any transaction, anywhere.
  • Verification and review of regulatory sanctions and disciplinary actions regarding professional licensing.
  • When an individual is associated with a company you’re considering doing business with, review the company’s standing, fictitious names found, various filings, and officers listed when doing research on private or closely held businesses as either a separate engagement or along with individuals under review. Utilize the same recommended research strategy for individuals regarding fraud alerts and research for other adverse filings the company may be involved with.
  • Deep media research for articles about the individual or company

Deeper Research May Provide Undisclosed Information You Should Know About
Our firm recently provided due diligence research for a venture capital firm based in Southern Florida. During our engagement, we discovered one principal on the management team of the company seeking funding was a medical doctor under investigation by state licensing authorities regarding several complaints.  This investigation may lead to disciplinary action or criminal charges against the doctor. The existence of the state investigation was not initially disclosed to the venture capital firm.  If the venture capital firm had not ‘looked’ before they closed on the deal, an adverse outcome of the state review could have affected the credibility of the investment firm and become a formidable liability if investment money had already been given to this new medical technology company.  
My experience with government services, particularly consulting on investigations and reviews of candidates applying for sensitive positions requiring U.S. Government security clearances, a clear dis-qualifier for most is when information is not voluntarily disclosed and discussed up front. People make mistakes; this does not mean they’re bad people. And, events do occur in life requiring each of us to face many challenges at times, such as a medical bankruptcy or other factors resulting in unforeseen financial distress.  
Criteria for refusal of a candidate should not be automatic upon the disclosure/discovery of negative or potentially adverse information. A frank discussion with the candidate or potential business partner to review background information is certainly appropriate. If you choose to proceed after these discussions, remember – trust is important, but verify.  


In addition to vetting people and companies before engaging, clients often consult with us to assist with composing appropriate language to include in funding term sheets that address “contingent upon outcome of background review” or other related stipulations. As part of our assistance, we urge our clients to at least seek an initial background reviews before committing much time, resources, and effort to their quest.  All things considered, the costs of background research are nominal and analysis of the results provides a significant tool to support informed decisions.
_______________________________________________________
Greg George is a senior advisor to professional services firms, CxO’s, investors, family office groups, and global banking center directors.  Greg’s firm operates an intelligence fusion center available to private sectors providing investigative and operational due diligence analysis, and guidance addressing security operations, fraud, compliance, internal investigations and countering insider and espionage threats.  Greg can be contacted by email: greg@gti-advisors.com or visit http://gti-advisors.com

Filed Under: Asset Protection, business legal planning, business survival, Due Dilligence, Family Office, fraud, Greg George, GTI ADVISORS, Ike Devji, investing, investment exposure, scams, venture capital Tagged With: , , , , , , ,

Protecting the innocent – Due Dilligence & Investment Fraud

December 8, 2010 By Leave a Comment

Insider threats cost business $4bn each year

  • Hacker skims 35,000 customer credit card numbers
  • 14 Business bank accounts wiped out by phishing scheme
  • Investors scammed out of $14mm in ponzi scheme
  • Man with history of fraud hired as CFO ‘disappears’ Taking $2mm From Company
  • Vendor employees steal client’s proprietary data; sells to foreign government

Guest Author Greg George, Due Dilligence Expert

All familiar headlines we see too often.  At every turn there is someone who wants what you have and will go to extraordinary means to acquire anything they wish.  Moreover, most victims are unaware of how easily they can be taken.

Much of my time, and that of my colleagues working with their own firms, is spent educating professional services advisors and their client’s.  In most cases they have to ask first and unfortunately, it’s usually after a very expensive incident has occurred.

High Net Worth investor’s can be another challenge – they are ‘hot after the deal’ and often won’t stop long enough to think things through – one example, we were able to stop several clients from investing in 14 apparent Forex frauds just during the past six months.

Same rescue package for a few client targeted company acquisitions… offshore.  Numbers were great, threat of a bidding war with a competitor looming… classic get the deal done pressure.  However, none thought to check out the principals of the target company until we got a call from the transaction lawyer a week before closing – two of these guys were on the DHS and FDA hit list, the OFAC radar screen, and under investigation for financing terrorism.

A few thoughts on protecting your business operations and investment activities:

  • Do a little deeper vetting of your management and other ‘key hire’ candidates than is offered on the several thousand BackgroundScreening.com’s out there – same with suppliers and any private equity placements or business acquisitions you’re planning.
  • Always have trusted, outside subject matter experts assist you with concerns and evaluations.
  • If you operate a small business, buy a $300 desktop computer and use it ONLY for online banking and purchases – and use ONE dedicated credit card for purchases.
  • Limit access to critical data – if the employees’ duties have nothing to do with a specific project, they don’t need to know about it.
  • When someone leaves your organization, immediately delete their usernames, passwords, any other access from your systems (you’d be amazed at the number of companies that don’t do this).
  • If you’re seeking funding, beware of brokers requiring ‘up front’ fees.
  • If you’re offered equity funding, financing, a joint venture or other partnership, verify the ‘character’ of the guy who is making the offering, and the source of the money.

Above all, when the time comes for you to make a decision, excuse the MBA’s and lawyers from the room, and just use plain old fashion common sense.

______________________________________________________________

Greg George is a senior advisor to professional services firms, CxO’s, investors, family office groups, and global banking center directors.  Greg’s firm operates an intelligence fusion center available to private sectors providing investigative and operational due diligence analysis, and guidance addressing security operations, fraud, compliance, internal investigations and countering insider and espionage threats.

 

Greg can be contacted by email: greg@gti-advisors.com or visit http://gti-advisors.com

Filed Under: abusive tax schemes, Asset Protection, business survival, Due Dilligence, financial advisors, fraud, Greg George, GTI ADVISORS, high net worth, Ike Devji, investing, investment exposure, physicians, professional athletes, scams, venture capital Tagged With: , , , , ,

SCAM – “Brokers” and ‘Up Front Fees’ for Venture Capital

January 8, 2010 By 1 Comment

This is a guest column by Greg George, a professional due diligence expert that I use as a resource. There are a huge number of people looking for financing due to the current lending climate and the bad guys know it. Here’s what one expert has to say.

Yours, Ike


Risk and Threat Management – Presented by Greg George

Posted in Awareness by gtiadvisors on January 7, 2010

I’ve been monitoring what appears to be the longest discussion string in LinkedIn history (up to 223 comments now) going on at the Private Equity and Venture Capital Group.

The discussion question is: What do you think about ‘up front’ fees..? (for funding a deal)

There has been very good information posted, there has been very bad information posted, smart ass comments and bullying here and there (yes, very professional), those postulating their own ‘expertise’ – “…this is how good I am, I’ve done these $20mm+ deals, and…” etc etc (never tout yourself as an expert, it diminishes your credibility – If you’re worth the recognition, others will do that for you), and I’ve even seen a few spamming in trying to sell their services/deals – astonishing…

A few thoughts on ‘brokers’ and other middle men/women requiring fees ‘up front’ – usually under the guise of due diligence work that needs to be done, we have to better position your business plan and pro-forma’s, along with all the assurances and window dressings of how they will get your deal funded – these are great sales people, and most are frauds.

You’ll never get to a closing, they will stall and stall and stall… for months – and you may never see the ‘up front’ fees you gave them again. If you think an alternative financing or equity funding program might be the right deal for you, at minimum, at least find out:

•Who these people really are
•Talk to several past success deal client references they ’should’ provide
•Who do they represent as potential investors on your behalf
•What are the sources of funds (don’t get sucked in to a money laundering or tax evasion racket)
See if the person and firm are even licensed in the U.S: do a FINRA broker check.

FSA (UK) – also provides alert lists of EU and other international players in the finance and equity funding game not registered or vetted.

Another growing dimension of these economic times, new groups and angel investors charging ‘up front’ fees just to hear your pitch – a good example of what’s going on with these guys see: VentureHype (a great resource for many VC, Angel, start-up and investing topics) – the article also links to a well done ‘rant’ by Jason Calacanis on these practices.

Bottom line 1: If you do not have the expertise and require consulting help to get your business plan, pro-forma’s, your perfect 7-slide ppt for your pitch, and everything else up to speed (and rehearsed many times) to be received as an attractive, fund-able opportunity – set a budget, hire a competent firm or person and pay them to help you accomplish this.

Consulting services to get this right the first time, has nothing to do with capital raise.

Bottom line 2: Assume any “up front ‘broker’ fees” to arrange funding are frauds. Period (I’ve been dealing with these kind of people for a long time).

$4mm in up front fee frauds have come across my desk the past many months, especially since the real financial crash began to fall in September, 2008. In some cases we have been able to get the “up front fees” back on behalf of clients, even those fee’s that were wired offshore before the ink on the check was dry. We continue to work on others (leveraging RICO is a wonderful thing).

I have participated as an advisor to investors and as a decision panel member riding shotgun over the due diligence drill on companies seeking funding… during the past 12 months, the several organizations, equity firms, angels, family offices and high net worth individuals I’ve worked with have funded more than $30mm in start-ups, acquisitions and expansions – not one dime of any ‘up front fee’ was involved.

_________________________________________________

Greg George is Managing Partner of GTI Advisors; Threat Management Practice Group. A senior advisor to executives, business owners, private equity investors, M&A teams and transaction lawyers, Greg provides guidance on matters of enhanced due diligence research, threat analysis, security issues, actionable intelligence, fraud avoidance, and corporate espionage realities. For further information please visit http://gti-advisors.com or contact Greg directly: greg@gti-advisors.com

Filed Under: Asset Protection, brokers, equity, financing, fraud, funding, Greg George, GTI ADVISORS, Ike Devji, scams, startup, up front fees, venture capital