Colby Stafford learned a hard lesson about trust when his business lost $10,000 in a telemarketing scam.
"At that point in time I was growing so fast, which is a good thing, but you're spending all your cash," said Stafford.
Stafford took out a $50,000 loan to have more money readily available. However, that loan left him vulnerable to telemarketers.
"The telemarketers cold-called prospective clients and promised for a fee they would collect their business debts," explained Camille Hammonds, a US Postal Inspector.
The owner of the debt collection agency was Neil Madison. He threatened bankruptcy and criminal charges in order to collect, but instead of returning the money to business owners as promised, he kept it all for himself.
"The funds were used to buy a yacht, numerous luxury vehicles, a house in Laguna Beach, CA, and occasional prostitutes for top employees," said Hammonds.
For a while, the con was successful. Stafford and more than 600 other victims lost more than $6 million.
"There were numerous, small 'mom and pop' American businesses who were forced out of business," Hammonds said.
Eventually Madison was caught and sentenced to eight years in prison.
You should always carefully check out every company you do business with. The state attorney general's office or the Better Business Bureau are good references for finding information about all companies.
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