• A GPS or ABS representative cold calls or stops by a small- or mid-sized private business.
• The GPS/ABS rep convinces the business owner to accept a brief meeting.
• The GPS/ABS rep gets the business owner to agree to let an expert “analyze the business” for just a few hundred dollars. Invariably, the “business analysis” concludes that the business is faltering.
• The GPS/ABS rep tells the business owner that the business is in deep trouble. In fact, it will fail soon. However, they claim that–with the help of the GPS/ABS representative–it can soon be making big profits.
• The GPS/ABS rep gets the desperate business owner to agree to let GPS/ABS “get to work,” in part by promising that the enhanced profits will easily pay for the cost of the consulting.
• The “consultant” racks up as many hours and as big a bill as quickly as possible before being thrown out of the business without having produced any positive results.
• IPA/GPS/ITA/ABS (or whomever it may be at the time) uses hardball tactics to collect on amounts “owed.” The amount is typically tens of thousands dollars and can run up to hundreds of thousands of dollars.

Unfortunately, it historically has been the already desperate business owner who falls for the scam, like the woman who I talked to nearly one year ago. The business that she and her husband owned was having serious financial difficulty. The IRS had placed liens on the business.

The Burgess representative assured her that one of their experts could get the liens removed in short order and “solve the problem.” The business did not have the funds to compensate the “experts” for the good and valuable work they promised but, with Burgess’ team’s help, they’d have the funds in the near future.

So, the experts talked the owners into post-dating checks under the agreement they would not attempt to cash them unless and until the owners approved of doing so and there were sufficient funds in their account. A few weeks later, Burgess’ crew deposited all the checks, payroll checks bounced, the IRS liens were not removed, and the consulting firm was threatening to sue the business and owners for fraud (writing bad checks) unless payment was immediately made in full (about $39,000).

Tyler Burgess is son of the John Burgess, the disbarred lawyer who is the subject of an Inc. Magazine exposé. He founded International Profit Associates (IPA) in 1991 and, later, International Tax Advisors (ITA), and Integrated Business Analysis (IBA). Each carries an “F” rating from the Better Business Bureau and has been the subject of many lawsuits, such as one brought in 2008 by the Illinois Attorney General. It cites:

Until recently, Tyler Burgess was an owner and top executive at IPA. GPS and ABS are staffed with many former IPA/ITA employees. Burgess also operates consulting businesses under the name Global Resources, LLC and, incidentally, has begun publishing a publication under the name The Business Owner Magazine. DL Perkins, LLC , which produces how-to information under the The Business Owner and The Business Owner Journal labels, owns the federal trademark to “The Business Owner” name for purposes of consulting and business advice. As such, Burgess and his companies are infringing upon DL Perkins, LLC’s exclusive right to use the name. They, as well as their legal counsel, have not responded to repeated requests that they cease their infringement.

Reviewed by David L. Perkins, Jr.

Life is a struggle. Why so much violence? Hurt? Poverty? Deception? Greed? Delusion?

What is it, you say? Why focus on the negative when there’s so much good all around?

True, our world is also filled with love, health, hope, care, generosity, sanity. All of these rest — at least in part — on our ability to hold tight to the “good” that is and is possible. But is there also value in acknowledging the “bad?” Is there value in, at least on occasion, viewing the underbelly and pondering why it exists in such abundance?

Ignoring it does not make it go away. If we all just “focus on the positive,” would we have social workers? Homeless shelters? Psychologists? Doctors? District attorneys? Prisons?

My most recent gaze into the abyss was compliments of an employee who swindled me. Six figures’ worth. This guy was G.O.O.D. good. He worked me over like I was a mental midget.

Nothing saps your energy like getting scammed, you know? Like getting taken advantage of? It makes you question everything — your instincts, intellect, friends, work, maybe even your creator. Why is evil allowed to exist, seemingly flourish and often win over the diligent, caring and just?

A compassionate friend gave me a copy of a book titled The Sociopath Next Door. “One in twenty-five ordinary Americans secretly has no conscience,” the cover reads. These people “can do anything at all without feeling guilty.”

I read it. It helped.

The Sociopath Next Door was written by a clinical psychologist who served for 25 years on the faculty of the Department of Psychology at Harvard Medical School. She apparently has spent her life studying and working with sociopaths, psychopaths and their victims.

What You Need to Know

There are people in our world, lots of them, who are very different from you and me. They look normal and even act normally in most ways, but most definitely are not. They have absolutely no conscience. They are incapable of basic feelings of care, love and compassion. They are not this way by choice, rather they are born this way, wired this way. They are not bound by the same rules that govern our lives: rules of fairness, respect, honor and commitment. Much to the contrary, they want only for themselves.

Sociopaths can and do lie artfully and consistently to get what they want, which is basically wealth, ease and/or simply the pleasure of removing from you those things they wish they had and envy in you (such as true friends, self-respect, trust and faith).

Fail to recognize that these people are around you — at work, at school, in your neighborhoods and your homes — and you will fall victim. They will take hold of you and rob you of things you hold dear. They will use your sense of moral obligation, commitment and compassion against you to get what they want from you.

How to Spot the Sociopath

Apart from knowing someone well for many years, there’s no foolproof decision rule or litmus test for trustworthiness. You must

acknowledge this fact.

Also, spotting the sociopath is very difficult. Even experts have a hard time. Sociopaths do not look like criminals or crazy people. More typically, they’re charming, well-dressed and well-mannered. They cloak themselves in respectability, tend to seek positions of authority and are deft at appearing kind and interested in you.

According to Dr. Stout, the most reliable way to spot the sociopath is the pity play. That is their appeal for sympathy, typically using tears.

Another good clue is righteous indignation. When these people sense you may be onto them, they scold you for questioning. Accuse you of being uncaring, uncompassionate and unaccommodating.

How to Avoid the Sociopath

Sociopaths have no guilt or shame, and so easily dupe us because of our faulty belief that all people have a conscience. That is, we naturally assume that people are all like us. And so, we are unable or unwilling to believe that a person near us could act without conscience. We repeatedly endure illogical, insensitive, cruel and selfish behavior by telling ourselves that the perpetrator is sick or having difficulty and in need of help. Or better yet, we allow them to convince us that we are the reason that things are this way. Either way, we end up helping them and/or tolerating them.

But sociopaths DO know they are different. They know they have no regard for the social contract, but they keenly know how to use it to their advantage.

What You Can Do About It

The best thing you can do is refuse to tolerate repeated instances of insensitive, selfish and/or cruel behavior. Once, okay. Twice, maybe. Three times, see ya later. Detach and get them out of your life.

Dr. Stout says: “Pity and sympathy are forces for good when they are reactions to deserving people who have fallen on misfortune. But when these sentiments are wrested out of us by the undeserving, by people whose behavior is consistently antisocial, this is a sure sign that something is wrong.”

Keep in mind, sociopaths are not curable and there is no end — and will be no end — to their neediness and usury. So don’t waste your time. Don’t waste your life.

Moreover, when you observe a sociopath influencing many for ill, stand up. Studies show that, especially when the maniac is in a position of authority, most people will remain quiet. Think Hitler. Remember, Albert Einstein once said:

“The world is a dangerous place to live, and not because of the evil ones, but because of the people that don’t do anything about it.”

I first alerted you to IPA in our September/October 2003 issue. At a business presentation, I had heard a businessman named Elvis Davis tell how IPA convinced him that it could improve his business’ profitability and lower his tax bill. Davis hired IPA on an hourly basis but with a total cost estimate of $11,000. But the bill grew to $35,000 and the results were far worse than useless. Damage to his company’s morale, productivity and bank account took years to correct. In hindsight, he thinks it was a scam.

Inc. magazine featured IPA in its January 2000 issue. The writer, Joe Rosenbloom, said he wrote the article after receiving complaints from Inc. readers about IPA and its tactics. The article reported that a disbarred lawyer named John Burgess, a former George S. May employee with a conviction for attempted grand larceny, owns IPA. His two founding partners also had criminal records.

According to the article, IPA was founded in 1991 and posted 2001 revenue of $105 million. With an average client fee of $18,000, it served approximately 6,000 small-business clients that year. Although IPA purports to be a consulting company, only 20% of its employees are consultants. The majority of its employees are telemarketers and sales people. In researching the story, Rosenbloom had no trouble finding disgruntled clients through Better Business Bureau complaint filings.

According to the article, IPA relies heavily on:

• Massive telemarketing force and very aggressive sales tactics

• Use of credibility-garnering “signals” such as paying for high-profile spokespersons and IPA’s inclusion in Inc.’s list of fast-growing companies

• Avoiding the need to provide referrals by explaining that its clients want their names kept confidential

Inc. readers wrote to the magazine’s website about IPA:

Having worked there (IPA) for 60 days and participating in the unethical hard core sales pitch, my only remorse is for the two clients whom I convinced to part with a lot of money for no value.”

Walt Marino

Orlando, Florida

“I signed their pressured deal. At the time it all made sense. Now I realize the huge mistake I made.”

Tim Shea,

Escondido, California

I recently spent one week in Chicago training to be an IPA senior advisor. After seeing firsthand their sales tactics (very heavy handed, strong arm, aggressive techniques), coupled with the old bait & switch approach, I have decided to pass on this opportunity.”

Bob Thompson,

Detroit, Michigan

Once the sale was made, a very unqualified person came in to do the work. Nothing went well.”

Elvis Davis,

Memphis, Tennessee

From what I’ve heard of International Tax Associates (ITA), its business model is basically the same as International Profit Associates (IPA). It has terrific salespeople who are highly skilled at dealing with your concerns about their credibility, including helping you get past negative postings that you may find on the Internet. They’ll argue things like:

Any large company will, over time, have some bad customer experiences. Toyota at times will have unhappy customers, but you wouldn’t say that they’re a scam, would you?”

Granted, you would not. But that does not address whether IPA or ITA is a scam or not.

If you have any experience at all with IPA or ITA, we’d greatly appreciate it if you’d share your experience with us. Ditto if you have paid a “business brokerage” firm or “investment bank” a large, non-refundable up-front fee but received very little of what you really wanted – buyers that were willing and able to buy your business for the prices or “multiples” that the firm led you to believe were possible. Unfortunately, people who fall victim to scams, or think they may have been scammed, rarely tell anyone about it. But this only benefits the scammers. Please resist the urge to protect yourself and help us protect other business owners like you. Call me on my cell (918-760-2715) or send me an email (editor@TheBusinessOwner).

You, the seller, receive a response on a “business for sale” ad you placed, typically on the Internet. The caller says he’s with a private equity group (PEG) or small investment firm. You give him your data and receive a full-price offer. If you have representation, the buyer demands to work directly with you and not your representative. If you resist, the buyer says your rep is in the way, unprofessional, incompetent or unresponsive.

The terms call for purchase of stock rather than assets (very nice for you!) and payment in full within the first year, wherein more than half of sellers have to wait five to seven years. But there’s very little cash at closing, maybe 10%. Not to fear; the buyer allows you to hold all the stock (i.e., equity shares) as collateral until you’re paid in full. The terms call for the buyer to gain control of all the business assets at closing, including cash and accounts receivable.

The deal closes, you get the down payment and the buyer takes control of the company. The buyer then factors the receivables (i.e., sells them for cash), sells off the inventory, cleans out all the cash, maxes out the credit cards and pays no bills. Within a month or two, the buyer disappears. You’re left with your collateral – the company – robbed of most of its assets and with huge liabilities.

One victim “sold” his company for $1.8 million and the buyer skipped town after pulling out $1 million. Also, the buyer persuaded the seller to let him (the buyer) take over the business with nothing down because “the funding was just a day or two late, but on the way.”

According to various sources, if you get cold feet before closing and try to back out, these cons will try to extort money from you for not completing the transaction.

Think no one falls for this scam? Think again. Unfortunately, many have. At least two teams have been working this con in the United States for years. One team is a mother and two sons from the Midwest. Another is three men working together. The FBI arrested one of the ringleaders of this trio in Texas on March 3. His accomplices were arrested March 9.

If you encounter a similar situation, call the police or the FBI. Watch out for names such as Veneto Ventures, Fidelity Securities and Investments, James Robert Nance, Steven or Don Nadroski, and Jay Cohen.

Finally, stick to these recommendations when selling your business:

• Check the background of the buyer(s) extensively. Check references, pull credit reports, tax liens and litigation history, etc. Any litigation attorney will be skilled at this.
• Selling a business is tough. If the process is going spooky-smooth and/or the price and terms seem too good to be true, they probably are. Be cautious.
• If the buyer continually fails to meet deadlines and supply requested data, you have a problem. Don’t accept excuses. Find a new buyer whose word is good.
• Don’t let the buyer “work in the business” before he or she pays the cash.
• Require a substantial percentage of the purchase price up-front in cash before you turn over ownership. Seller financing is a fact of life in selling a private business, but accept no less than 50% in cash at closing.

When in doubt, hire a skilled representative.

———

This article was adapted, with permission, from Ron Johnson’s piece “Wanted-Considered Dangerous …” that appeared in the International Business Broker Association Weekly Communication for March 14, 2006. Johnson is a business broker in San Ramon, California.