It's nearly Christmas

I couldn't write because I have had to work really hard at feeling in the Christmas Spirit.  Merry Christmas to all. May God bless us - everyone, including dear Dr. X

The Beginning of the End

Mid-2007 saw the beginning of the real estate collapse. X needed to pay off the IRS because his tax debt had finally caught up with him. He wanted to borrow $50,000 from me to work out the finances with the bank to refinance a piece of property so that he could use the funds to pay the IRS. Luckily I secured the loan with stocks. Unfortunately they were bank stocks.

I made the loan in July after I had a promissory note from X (due in Nov. of 2007 with interest) and possession of X’s bank stocks. Unfortunately, by the end of 2007, only $20,000 had been repaid. Since the loan was in default I asked when the remaining would be repaid and was told that he would pay it back soon. However, instead of paying me back, in January 2008 he bought an interest in a health magazine, for $25,000. That was it; I decided that I had to totally separate myself from him financially.

In February 2008 I sat with X and discussed the situation and told him that I was going to begin the financial separation of our agreements and that all of his accounts with my company were going to be terminated and that he would have to open his own vendor accounts. I even agree to help with the leg work and also had my assistance do all of the paperwork with each of the vendors to open X’s credit lines. That was a very long process.

At this point he owed me over $140,000. So I decided to sell the other business I had opened and apply 50% of the profit against his outstanding debt. That I did and reduced his outstanding payables but it still wasn’t enough.

I went even further to help him by developing a very detailed plan for eliminating his entire debt in over a one year period. He agreed to it and told me to put it in place.

By June 2008 I had sold my business to another doctor and applied 50% of the profits to X’s outstanding debts to my company.

At this point I was no longer leasing employees to him and was only handling his accounting and payables.

At the end of June X was about to leave on another month long trip to Europe. I received word that he was on hold with a number of his vendors and he was telling his employees that it was my fault. So I let him know that I wasn’t going to put up with him lying about me and that I was ending the entire relationship. Have fun in Europe.

Next blog – the aftermath and what I should have done.

2003 to 2006

I will try to make this quick.  The doctor (let's start calling him X) after seeing what I did for his business thought I could do the same for other doctors wanting to opening their practices and as a benefit, we would ask them to refer over to X for specific procedures. This is called co-management in the health care business.  So I put together a whole co-management program for doctors in the area.

But the real kicker was that we decided to create a separate corporation to provide a whole group of services to these other doctors, and X and I would split the profits.  There were two big problems that came about from this arrangement, and something I did not foresee.  First, this didn't end up being a 50/50 effort on X's part, as I did all the work.  Secondly, following our attorney's suggestion we provided a variety of services but I took it a step farther and formed an internal buying group for purchasing supplies for the doctors.  I arranged all of the contracts and placed them under the corporation we had formed but I also personally loaned the corporation the hard cash to fund the buying group purchases.

Finally, under my own separate corporation I funded the opening of an additional practice and contracted with X to put his name on it.  I hired doctors and staff to work there and they were all paid out of my corporation. 

After about three years I had 33 employees and 8 doctors under contract.  I was working night and day. Unfortunately the doctors were over reaching on their credit through my buying group on which I was making no profit and I was getting no support from doctor X. All of the credit for the corporation was being shouldered with my personal credit.

So I woke up near the end of 2006 and turned to my wife and said "I am tired of being the doctors bank and I am going to kill the buying group."  I let all of the offices know that they had 60 days to arrange their own contracts with the suppliers.  However, I keep doctor X on and one other doctor. I wish I hadn't.

About this same time the state board began asking questions of a couple of my doctors about the arrangement they had with our corporation and whether X was involved.  That is when I found out from X that CA state law actually prohibited him from being in this type of business because it would be seen as control over another practice.  He and the other doctors were sweating bullets. So they all started telling the board that they had no connection with X in their business.  In other words, they lied.  I on the other hand did not have such a restriction and was told by my attorney that the board could do nothing because I was not governed by the board.

Doctor X resigned from the corporation and released all of his interest in it.  He was glad to get out of it and this is when things began to get really interesting.  At least I now had complete ownership of the corporation, and why not, I shouldered all of the financial risk.

Getting it under control

By the end for 2001 the doctor asked me to take over management of his operation. I let him own that I would do it but not as an employee, but as a company offering a fee for service.  At this point I was making major operational changes in every aspect of the office except for medical issues. The office wasn't fully computerized & the office was running all of its appointments on an appointments book.

Account was brought into the modern age by a huge amount of hours and late nights to get a handle on the businesses financials. The doctor's wife actually thanked me because the doctor was now getting some sleep since he didn't have to spend every night trying to figure out his bills. (no kidding)

I also had taken over payroll.  That was how I found out he wasn't paying his Workman's comp insurance and that he had outstanding state taxes on the business too.  Getting him reinstated with State Fund was not fun.



Needless to say, I spent 2002 getting these areas straighten out, however, 2003 is when the real trap begins.  See you tomorrow.

Happy birthday Scott

Just as a side note my son Scott is 25 today. Scott have a great day & enjoy your time at Disney World.
Happy birthday little boy. Here is his blog site - http://skoticus.blogspot.com.  I think you find it entertaining.

How it all began

Back in 2001 I ran into a doctor in town I’d done some consulting for in 1995 on a very different matter.

He invited me to come visit him and I did so about a month later.  We went to lunch and he began to tell me about his business problems and asked if I would like to look into these and see if I could straighten out his accounting.  I told him I would need to have access to him financial records.  He told me that I could look at anything I needed.  One week later I meet with the doctor again after having gone through what was a real mess in his financial record keeping. Actually he had no system at all.  He was running 2 seven figure businesses and had no idea where his money was going.  If you work with doctors this is probably not any thing new. 

I asked about the absence an accounting system and asked how he possibly could pay his bills.  He asked if I had seen the bag he carried around.  I had observed that ever day he arrived and left his practice with a large bag that he carried all of his mail in.  He explained that he would take his bills home in that bag, spread them out on his pool table and try to figure out who to pay.  (You can stop laughing now because it gets worst) I asked how he knew if he had enough money to cover the checks.  He tells me “I call the bank everyday to see if there is money in the account.”  I asked about checks that have not yet cleared.  I think there was a long silence after that.  

Over the course of the next several weeks I find out his wife is stealing checks from the business, he has no accounting filing system, paid his bills based on statements from his suppliers and not from invoices and credits and to top it all off the IRS is after him for under reporting his income. So began a long seven year ordeal of getting him out of financial hot water. 

Why me? My personal woes of litigating a debt collect

I am beginning this blog for about three different reasons.

First, it is a place where I can vent some of my frustrations with how the CA legal system works (or doesn't if you prefer) in regards to getting some dishonest business people to pay for products they have received but use the slowness and many costly legal system to bleed others financially, and refuse to pay for products they have received, while they continue to operate their business and move on to other vendors and do the same thing to them.  As my business attorney, Jay Henderson , is always telling me - "You're not special, you're just next." Well unfortunately its true and over the next few hours, days, weeks and months I will bring you up to speed on my case (please not years). Actually I am more frustrated with a society where these people can do these things with impunity.

Second, is for others, such as yourselves, to learn from my experience with the very inexact science of litigation. If you haven't been through it or if you are about to go through, especially against someone who finds no problem with creating lies to avoid payment of debts, you are in for a really lesson in life. It is a terrible drain on your time and financial resources. Believe me it impacts every aspect of your daily life, business and personal.  This blog should be a great cathartic experience for just about everyone who has faced or is facing a similar situation.

Thirdly, I am hope to gain enough followers and sympathizers to have them donor to my legal cost.  If no other reason you can donate a dollar and get some great entertainment from my personal woes as together we weave through the legal tangles of the CA legal system and you can also get a very cheap lesson on how the law really works. It is not how you see it on TV.   So that you know it is a legit donation request, all donations will go into a special escrow account that will be handled by my business attorney Jay Henderson.  Click on the link if you want to check me out with Jay's office.

Although I have placed Google Ads on this site, it isn't because I  want this to be a commercial blog site, I don't, but I need to do just about anything to raise funds for this protracted legal struggle. Your donations will make it possible for me to drop Google Ads once enough funds are in place. The quicker the better.


In closing I would remind all of us that it is Christmas and in the words of Henry Longfellow who proclaims in "I heard the Bells on Christmas Day":

Then pealed the the bells more loud and deep:

"God is not dead nor does he sleep;

The wrong shall fail, the right prevail

With peace on earth, good will to men"

May you have peace during this season and though out the entire new year.

(Look for my next blog update later tonight and please do me the favor of signing on as a "follower" of this blog site.)