Busted a stealth wealth magnate today

[Senator]

Quote:

Originally Posted by REWahoo Once again, I don't see how paying cash for a Craigslist transaction is a red flag. And I see nothing in FUEGO's post that indicates the guy has a cash business - that's something you came up with, right?

Quote:

The guy shows up last night, makes me a cash offer for $6500 without even test driving the van, doing nothing more than cranking it up and listening to the engine for a minute.

Most businesses would want to write off a $6,500 transaction and have proof that they paid. They would want to write a check, or have an SSN they could give a 1099 to for the amount paid. Or a solid receipt.

A business would not likely pay $3000 over blue book, when they could go to a dealer and pay $3000 less, but they would be required to have more documentation. After all, the blue book price is the average of what dealers sell the similar vehicle for.

I thin Fuego made a great deal, but I would 1000% make sure the vehicle is transferred out of his own name. In MN, I can go to the DOT website and record the transfer. I think there is a huge risk in it not being transferred.

[travelover]

Quote:

Originally Posted by FUEGO ............the big white panel van popular among self employed construction workers and pedophiles..........

Let's give the guy the benefit of the doubt. Maybe he is not a hard working Hispanic contractor. Maybe he is just a a tax paying pedophile.

[Senator]

Quote:

Originally Posted by travelover Let's give the guy the benefit of the doubt. Maybe he is not a hard working Hispanic contractor. Maybe he is just a a tax paying pedophile.

LOL...

If the guy does have 129 people working for him, and is legitimate, his revenues should be in the (129 ppl * $20 per hr *2000 hrs) $5M range.

Very likely they would have to be in excess of $10M, as if you are only charging $20 per hour, you can only pay ~$12 per hour. The guys take home, after paying his workers, would be at LEAST $2 an hour, per worker. That is over $500K per year, after all expenses. And he is buying a van, in cash, without even a test drive.

But I am sure he is 100% legitimate.

My own experience with Canopy Financial, who I knew Jeremy Blackburn well, was similar. He made $1M+ per year, and lived the high-life. Very much a stealth wealth magnate.

[rodi]

Ok.... Did someone miss the point that the buyer and Fuego met at the BANK to get the balance in cash? So the guy had the money in the BANK.

I suspect that this guy operates a 1099 business. He pays his employees via 1099 (and 1096's to the gov't). He is paid by the large home builders to a corporate name.

Cash transactions are the rule, not the exception on Craigslist. No red flag there. He might not have gotten Fuego to sell to him if he'd insisted on paying by check.

I pay cash to our piano teacher - I also issue her a 1099 (and send a 1096 to the IRS) each year. Pretty typical in her field of work.

[Senator]

Quote:

Originally Posted by rodi Ok.... Did someone miss the point that the buyer and Fuego met at the BANK to get the balance in cash? So the guy had the money in the BANK. I suspect that this guy operates a 1099 business. He pays his employees via 1099 (and 1096's to the gov't). He is paid by the large home builders to a corporate name. Cash transactions are the rule, not the exception on Craigslist. No red flag there. He might not have gotten Fuego to sell to him if he'd insisted on paying by check. I pay cash to our piano teacher - I also issue her a 1099 (and send a 1096 to the IRS) each year. Pretty typical in her field of work.

They met at the bank to notarize the transaction. I see nothing about where the money came from. If it was withdrawn from the bank, then my statements previously might not be as accurate.

If it was my business, I would have written a check, and had the person cash it at the teller line. If I was going to give a 1099, I would need an SSN, or write a check to a business.

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We agree to meet at the bank today to swap cash and title and get the deal notarized.

[rodi]

Why would you write a 1099 for buying a car - it's not labor or service? Why would you need the SS number for buying a car?

It was being titled/notarized... all legal/above board.

[ERD50]

Quote:

Originally Posted by Senator .... A business would not likely pay $3000 over blue book,

More supposition? The OP said "Apparently these things sell like hotcakes because I priced it $1000-3000 above the Kelley Blue Book suggested price, received many inquiries... "

So maybe it was closer to $1,000? And clearly not out of line for the location if he received many inquiries?

Quote:

Originally Posted by Senator ... Most businesses would want to write off a $6,500 transaction and have proof that they paid. They would want to write a check, or have an SSN they could give a 1099 to for the amount paid. Or a solid receipt. ... when they could go to a dealer and pay $3000 less, but they would be required to have more documentation.

OP said "We agree to meet at the bank today to swap cash and title and get the deal notarized". I'd assume the buyer got all the documentation he needed for tax purposes. It could be some kind of 'off the book' transaction, but I see no reason to assume that.

Good story from OP, but I have to agree with an earlier poster, this doesn't look like a 'stealth wealth' story, as the buyer didn't use a 'poor disguise' or the crying baby to get a lower price. Sounds like he spends time working with his crews would be my assumption. And his time and opportunity cost is worth more than a few grand in this transaction. Maybe not even a few grand, as there were other calls at that price - it could be gone soon.

-ERD50

[Sarah in SC]

Quote:

Originally Posted by harley Some assume the worst, some the best. The truth tends to be somewhere in the middle, but people seldom change their minds or preconceptions.

Preach on, my brother!

[Senator]

Quote:

Originally Posted by ERD50 Good story from OP, but I have to agree with an earlier poster, this doesn't look like a 'stealth wealth' story, as the buyer didn't use a 'poor disguise' or the crying baby to get a lower price. Sounds like he spends time working with his crews would be my assumption. And his time and opportunity cost is worth more than a few grand in this transaction. Maybe not even a few grand, as there were other calls at that price - it could be gone soon. -ERD50

It is a great story, but I doubt that it is typical for a company with $10M in revenues, and a CEO? making over $500K per year, would have to borrow $500 from a brother/cousin in order to buy a business van for $6,500 in cash, without even a test drive.

If I were FUEGO, I would make certain it is transferred out of his name. Hopefully he did a notarized bill of sale, in addition to the registration.

I find it much more believable that the guy works with a couple of other guys, as a sub to a sub-contractor, and is barely making ends meet. He may well work with a bunch of other guys that are similar workers. He is likely making $20 an hour or less in NC, and getting either a 1099 or no documentation. He is likely not covered by worker’s compensation, as he is an independent contractor and is working for cash. A company can save money by skipping WC, and not writing off the cash paid. WC rates, combined with other insurance, taxes, benefits, etc. can be quite a bit higher than wages paid.

That fits the construction industry in a much more common fashion. I see it first hand, and even pay people in a similar fashion, when I need extra help.

[Aerides]

I'll guess his total staff numbers include labor pools, not actual salaried employees. Doesn't make that any less valid, "i have X number of ppl working for me" doesn't mean they all get a W2 from him. And I'm sure a lot of those he employs are thankful for the work, and are closer to the category that Feugo initially presumed he was dealing with.

And yeah no way major contractors are gonna sub out to non-legit businesses without license/insurance.

Assuming the positive (i get less wrinkles that way), he knew a good deal as he knows this market - and his competition, and it was worth it to him to have the 1k in cash possibly not deductible, to seal the deal vs. wait.

[ERD50]

Quote:

Originally Posted by Senator It is a great story, but I doubt that it is typical for a company with $10M in revenues, and a CEO? making over $500K per year, would have to borrow $500 from a brother/cousin in order to buy a business van for $6,500 in cash, without even a test drive. .....

Maybe the reason you seem to be jumping to conclusions is that you didn't actually read the OP (but that's not stopping you).

The guy who bought the van did not borrow any money from anyone - that was the OP talking about some of the other types he sees.

-ERD50

[Senator]

Quote:

Originally Posted by Aerides And yeah no way major contractors are gonna sub out to non-legit businesses without license/insurance.

It happens all the time. The real contractors may use legitimate subs, they have a license to lose. The subs use cash/1099 labor when they can. They do not use union labor.

Welcome to the world of construction and cheap labor. It's what is building America. The heart of Entrepreneurism. I did it myself with my siding last year. I hired a contractor, he used a sub that paid other subs. They had to put the siding on three times before it was right... I know a bit about construction, so I am sure they did not make much money.

I have used other labor that I wrote checks out to the guy doing the work, and his wife, both for less than $600, as requested. No 1099s.

The construction business is so busy, that anyone who can pound a nail, or push a lawn mower, can make quite a bit of money on the side. It is FAR cheaper to pay $20 an hour cash, than $12 an hour on a W2. Craig's list of full of cash workers.

When I pay for a worker, it is not unusual to get a call from the bank verifying that I wrote the check. That means, the check is being presented for cash, not deposited in their own account. I do not pay for much labor, but it is almost a guarantee if I write the check to a person, it gets cashed, not deposited.

When you get cash, you spend cash. It's the basis of money laundering.

[MooreBonds]

As a part-owner in a multi generational construction company, I also echo Senator's suspicions - but for different reasons.

If you are truly running a crew of 100+ people, assuming $20/hr (with all costs, overhead, insurance, taxes, etc.), you are running a payroll of well over $3MM/year. And if you are running that much business, from large home builders, you are getting paid in checks. Mostly likely to a business name. But at any rate, I don't see how this buyer doesn't have a bank account, what with all of the various rules and gov't regulations (and you aren't cashing $5,000 or $15,000 checks at WalMart for cash). He's getting paid monthly draws from home builders, and each check would be for a (relatively) sizeable sum. Which means he is getting 1099s from builders each year. Which means he has to be declaring the income. Which means he is paying quarterly estimated taxes, along with various other state/local taxes. If he's not using a bank, he's going to check cashing places with wads of cash to buy money orders and checks every month/quarter/year to pay taxes.

Is it possible? Sure, it's physically possible. Is it likely that someone with several million a year in revenue in construction is "all cash", with that many people, working for larger builders? Highly unlikely, IMO.

And these days, many forms are required to be filed electronically (not necessarily tax forms, but various other forms of employee data and other information about your business). Not to mention the new Obamacare-related forms, since he has over 50 employees. So there is some electronic form-filing for his employees. And if he is doing that, I highly doubt his esposa and his hermano and hermana are also doing the books all manually with pen and paper with an old solar powered TI calculator, and piles of papers each week for paychecks and recordkeeping, and paying in cash. And if he does have a computerized system tracking employees and processing payroll, you are going to print paychecks each week.

If you are going to the trouble to pay in cash, despite having all of that computerized recordkeeping - you are using cash for a reason, and I doubt that reason is for convenience or some other honest purpose.


And for the person who suggested this person is still doing painting and drywall work, as "evidenced by his attire"? LOL...if you are running a company with 100+ construction workers at various locations, the last thing you are doing is actual installation work. It would be no different than seeing a district manager of McDonald's for Los Angeles standing behind the counter taking your order one day, or a regional Ford manager standing on the assembly line tightening the nut on a tire.

I simply doubt this person is the head of a 100+ person firm. The disguise of paint on your jeans is not what someone would be doing if they had 100 people working for them. He's busy enough trying to touch base with the various clients he has, bidding work, addressing the inevitable schedule changes, shuffling employees around when (every day!) you have the inevitable 1-5 employees who call in sick/don't show up/were hungover/are late...fielding complaints, issues, and doing all of the office stuff, among all of the other things he has going on. Hell, my brother is running the show at the family construction company, and we have about 50-60 construction field workers at just about 8 commercial jobsites. It would be far more insane if he were in residential, with maybe 1-3 workers at each house, spread out among 30-50 homes. There's no way he would have time to do half of the stuff suggested by the buyer's attire - and no way in hell he would be doing actual trade work.

Could this buyer be an honest, hard-working person? Sure. But I'm willing to bet he's not what he claims he is. An easy way (presuming that his ID was shown to the notary and his real name is on the bill of sale) is to simply look it up in the state database for business registry, or see where his office is (no way in hell he is running a company with that much business out of his garage - so he must have an office somewhere).

As senator suggested, make sure he actually transfers the title.

[CaliKid]

Can we start a poll here who agrees with Senator and who agrees with MichaelB? I vote for MichaelB.

People pay me in cash sometimes for my work. I actually report it to the IRS but I don't deposit it in the bank. Keep it in the safe and break it out for purchases like this. My plunking down a grand or two cash doesn't mean I operate as you describe. Last I checked cash is legal tender in the USA!? I agree many businesses do run on cash and don't pay taxes but I think you are really jumping to conclusions here in this fact pattern described. Obviously we will never know.

[marko]

The "...flicker of lightning..." at the time of deposit was God hitting you upside the head to run.

[Dog]

Good post and interesting comments. We can all guess at what the "real story" is. My "guess"would be a small business and he may be adding a van to replace existing or add family or friend.
In the neighborhood where we just sold our house, we see the small trucks loaded with lawn equipment or vehicle pulling a small trailer with lawn equipment to do lawn maintenance for the neighbors in the area. DH and I are one of two homeowners doing our own yard maintenance (we enjoy it). Kids/teens don't want to do that work any longer (that's how DH made his money during his youth). Anyway, these guys are hard workers and spend maybe 30 minutes at each place (weedwhacker, lawn mower, blower) and move on to the next hime. It's a huge residential area with smaller yards and dual-income families, so a target-rich environment for lawn maintenance outfits. Interestingly, they are typically Hispanic males, so it seems they have found a niche.




Sent from my iPhone using Early Retirement Forum

[Senator]

Quote:

Originally Posted by MichaelB No, you may, but I don't. Just to be clear, based on my experience, the situation as described by Fuego in the OP is possible, Fuego has established credibility so it is highly likely. There is no reason to assume that there is tax evasion or any unlawful activity. That is a presumption and entirely external to the thread.

I 100% agree. Even if there is money issues, it is not on Fuego's side. And more power to the individual if they can figure out how to make a cash business work in their best interests. Most large American companies do it too.

The part that makes it unrealistic for me is someone running a 129 employee company, with excess of $10M+ in revenue, is paying cash for an over-priced vehicle when they are at the bank themselves. If a company is supplying a work vehicle, they are not subs, they are employees.

My other point is that Fuego should make sure he gets the proper transfer done at the DMV, from his end.

I did miss the part where it was a different party that needed to borrow the $500, not this party.

Quote:

Originally Posted by CaliKid People pay me in cash sometimes for my work. I actually report it to the IRS but I don't deposit it in the bank. Keep it in the safe and break it out for purchases like this. My plunking down a grand or two cash doesn't mean I operate as you describe. Last I checked cash is legal tender in the USA!? I agree many businesses do run on cash and don't pay taxes but I think you are really jumping to conclusions here in this fact pattern described. Obviously we will never know.

I agree. I had almost $100K in my safe at one time from cash rent payments...

[ESRwannabe]

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Originally Posted by CaliKid Can we start a poll here who agrees with Senator and who agrees with MichaelB? I vote for MichaelB.

Put me in the Senator and MooreBonds camp... This scenario doesn't pass the logic test.

[ExFlyBoy5]

My head hurts.

Sent via mobile device. Please excuse any grammatical errors.

[rodi]

Folks - the point of this post was that a guy who was buying the truck was more successful than he first appeared. Stealth wealth.

How this morphed to somehow this guy is sketchy shows how quick we are to judge when someone's image doesn't fit our preconceived stereotype.