Don’t Make Me an Offer

… I usually know the end long before the person on the other end of the line runs out of steam. It’s a case of seeing money go out the door to make the buy, and then a little more to get things rolling, and eventually everyone involved ends up short on money and long on embarrassment.

These stories are part of everyday business life, but you’re likely to hear more of them when the economy hits the skids. When that bottom line fades from a strong black to a distinct red hue, the chance of turning a nice, quick profit seems irresistible. It just can’t miss.

As you can guess, it usually does. For one of my recent callers, the lesson cost upwards of 20 large, as they used to say on The Sopranos. And he’d have a better chance getting a refund from Paulie Walnuts than recovering any of that money through the legal system.

To protect all involved (for reasons we’ll get to later), a recent version of the deal involved a fabricator in a U.S. coastal city. Someone he’s done business with in the trade comes in the door with the inside skinny that a shipment of stone – at least one container – is sitting unclaimed in the nearest port. Since there’s no return-to-sender policy, it’s not going anywhere.

Here’s the pitch: For a sum that’s far less than the wholesale value of the shipment, the stone can be moved out of the port. It can be sold to other local fabricators at prices far less than the going price, and everyone involved ends up with a fat cash profit.

A check that can easily be converted to cash changes hands. Then there are the calls detailing unforeseen circumstances, and another check – and another – goes to the dealmaker. After that, there are calls explaining delays. Another check goes out the door.

Then the calls stop. The alarm bell that probably went off in the fabricator’s head at the start – the one muffled by the idea of easy money – suddenly gets very loud. The embarrassed fabricator starts wondering how this will play with the company accountant and the spouse at home.

One fellow I talked to didn’t like this end of the story, and proceeded to try and get some justice and, hopefully, his money. Of course, there were no written contracts. The dealmaker claims that there’s still a chance for delivery, so it’s still just a purchase in progress. And the local news media – the people who spread out en masse with Eisenhower-era Geiger counters for killer kitchen countertops – blow this off as just another business deal gone bad.

Law-enforcement sees it in the same light and points to civil action. After the fabricator spends more money seeking financial judgments, he finds the dealmaker holds no personal assets, giving new meaning to getting blood from stone.

The fabricator turned to other shops in his area about his problem. And many of them ask the same first question when he calls: “How much did _________ get you for?”

Sure, we can pull out the old advice from your mother in that, “if it’s sounds too good to be true, it probably is.” And a check with ports-of-entry will show that it’s usually standard procedure to impound unclaimed goods and sell them at public auction, usually within 30 days. And, to be harsh, people shouldn’t be so stupid.

The fabricator freely admits he was foolish. His worry came more with the same thing happening again and again, with the dealmaker moving farther inland where people are desperate for money and even less-savvy about shipping and importing.

Since nobody’s been charged, let alone convicted, of any crime here, naming names puts people like me in a precarious position; the people with nothing but cancelled checks have suffered enough and don’t need a public outing. The circumstances, though, offer a fair warning to be careful.

It’s not just that lonely container of granite that causes grief. It can be tooling or anything else of value to a fabricator, all pitched by someone they believe, if not trust.

The pitch doesn’t need to be abandoned goods, either. The downturn in the economy also fueled a reverse boom in the fabrication-machinery trade, with hundreds of automatic edgers, bridge saws and CNC machines flooding the market as shops sold off excess equipment or – in most cases – went out of business.

Some of the machines went through bank/lender auctions. A vast majority ended up on a variety of second-hand equipment Websites, going for far less than the price tags sported by factory-new units.

The problem with some machine sales. though, wasn’t the lack of all parts needed for operation, or the some-assembly-required without even the benefit of a IKEA pictogram instruction sheet. It came after the sale … or what looked at first to be a sale.

Several tales went through the industry in the past year of equipment sold directly by shops going out of business, occasionally by fabricators well-known and –liked in their area. After the sales, financing companies appeared at the doors of the purchasers to claim property, as the “sellers” only had the machinery on a lease. The buyers, in these cases, ended up with a worthless bill-of-sale, and small luck trying to convince anyone to investigate the bogus transactions as frauds.

The cruel paradox is that it’s easier to pull a fast one on people during tough times, when they have less to spend and more to lose. It’s tough to catch anyone in the act and get a conviction or judgment. Getting your money back is close to impossible.

There’s one sure way to stop the fleecing: Don’t start. Resist the temptation. It may seem like simple and trite advice, but stopping yourself if the deal doesn’t feel right always beats getting nothing for something.

Emerson Schwartzkopf can be reached at emerson@stonebusiness.net.

This article first appeared in the October 2009 print edition of Stone Business. ©2009 Western Business Media Inc.