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.