I have thought about writing this post for a while but have always hesitated for one reason or another. I feel now it’s about time to tell my story and help stop other people from getting scammed.
This incident marked one of the most stressful times of my life.
At 18 years old I was finishing my last year of college (high school). Still living at home with around $800USD in my bank, I was really interested in online business and I was hoping I could use my savings to invest in some online businesses.
I started dabbling with a few small online ventures that made me enough to go out in the weekends and cover petrol costs. At the time I was very naive businessman. Nothing could go wrong. Everyone could be trusted. The business world was a fun game filled with rainbows and lollipops.
At the start of the year I was introduced to a guy called Allan Jerman from San Diego, USA. He was referred to me by a mutual friend as a good coder and entrepreneur. My friend also mentioned that Allan was a extremely strong Christian so I shouldn’t cuss in his presence.
For about a year or so Allan and I did some freelance work for people. I would do the design and he would code. It was a small but smooth operation. We got on well.
A while later Allan approached me asking if I would invest in a new venture he had in mind. It was basically creating Myspace layout sites and arcade game sites, placing Yahoo ads on them, sending traffic to them and making profit from the Yahoo ads. He was making great ROI on his own investments so I thought this was great!
Great idea, working business model, trustworthy business partner, what could go wrong?
I was approaching the end of school and University was on the horizon. So this seemed like a perfect time to start picking up business. Allan asked me for some investment money around $xxx. It was big money for me at the time,but there seemed to be minimal risk. The terms were that we each put in 50% each of the money and we each got 50% of the profits. We built the websites together. He gave his secret traffic source contact “Mr Middleman” the funds. Then traffic started.
We sat and watched as money started coming in. Instead of the ROI being 1:2 it came out at around 1:4. Things were looking HOT!
But, payment terms were slow and we only ending up getting paid every 45 days. After the 45 days rolled past we got paid low $x,xxx each. Wow were we happy! So we decided to invest a lot of that money for the next month. 45 days later we must of made high $x,xxx each.
Things were getting exciting.
His initial payment to me gave me confidence. Plus his STRONG repeated references to his family’s religious adherence gave me further assurance. I invested another mid $x,xxx which was the max we were able to spend at the time (so I was told). 45 days later that money turned into around low $xx,xxx.
Wow was it the most amount of money I had ever had under my name! I had enough money to rent out as many DVDs as I could handle!
The big push forward.
I approached my parents, my sister and my girlfriend asking if they wanted to invest in my new profitable business.
My parents said yes and sent me mid $x,xxx.
My sister trusted my parents’ decision so she too invested mid $x,xxx which was a big chunk of her savings.
My girlfriend said yes and put forward mid $x,xxx which was her university fund.
I said I could return them double their investments within 90 days. I felt like a hero! I had the possibility to really help my family and girlfriend.
Allan gave me confidence that we could turn this approx $18,000 (family money) +$17,000 (my money) somewhere close to the $100,000 mark. So based on our previous successes, our solid 2 year relationship, and his “Christian” values I sent him the $35,000 to pay for more traffic.
I was told that it would take a while for Mr Middleman to “tweak” and “optimize” the traffic campaign in order for it to start running. No problem I thought to myself.
Over the span of a month he convinced me that the campaign was not running for one reason or another. Allan was telling me Mr Middleman had a holiday, then attended a wedding, then was tweaking. There was always something new. I started getting stressed about it so I asked for Mr Middleman’s contact details.
That’s when things started going sour.
Allan kept on dodging the question when I asked for Mr Middleman’s contact info. So I took it upon myself to track down Mr Middleman on my own. I finally found his contact info.
I contacted Mr Middleman. He thought I was some CRAZY nutter. He did not want to talk to me at all.
Somehow Allan convinced him that I was up to no good and was crazy. Once I plead my case and started talking about lawyers to Mr Middleman, he came around, but, was not helpful at all. Maybe he knew what was going on and felt scared himself. Who knows?
Anyway I went around in circles for a month trying to knock some sense into the two. Each were blaming each other. I sent out legal letters from New Zealand with no response.
At 20 yrs old I was in my second year of university. In one foul swipe I had no income. I had $18,000 non university related debt ($36,000 NZD at the time) owing to my parents, sister and girlfriend. I also lost $17,000 ($34,000 NZD) of my own money. Topped off with a bunch of grey hairs (literally).
What did I learn?
- Sad to say but, don’t trust anyone with online business. Anyone I work with now have to earn my trust. It’s not there by default.
- Don’t be over accommodating. If you have a problem with something, mention it early. Push back.
It wasn’t all bad…
This scam really built a motivating fire in my stomach. I needed to make something work in order to pay back my family. There was no option.
It resulted directly in leading me to pursuing affiliate marketing, and where got me where I am today.
It is likely everyone will get burned in business. Personally I’ve been burnt a few times, with a lot more money than in this story, but this example hurt the most because of circumstances.
Hopefully timing and price will be kind to you and you can learn from it.
…Oh, and one last thing. Allan if you’re reading this.
Flick me an email sometime. I’d love to talk.