Summary

In this conversation, Chris Bentley shares his journey from being a successful CEO of Bellatorium to facing the consequences of his actions that led to a $40 million fraud. He discusses the importance of deal flow in business, the impact of timing on success, and the motivations behind fraudulent behavior, including ego and responsibility. Bentley emphasizes the lessons learned from his experiences and the need for transparency and ethical practices in business. In this candid conversation, Jon Stoddard shares his tumultuous journey through the world of capital raising, the weight of deception, and the consequences of his actions. He reflects on the challenges faced during the pandemic, the lies he told to maintain appearances, and the impact on his family and employees. As he navigates the legal uncertainties ahead, Jon emphasizes the importance of accountability, the lessons learned from his experiences, and his commitment to restitution for his investors. This discussion serves as a cautionary tale about the complexities of entrepreneurship and the human element in financial decisions.

Takeaways

Deal flow is crucial for business success.
Neglecting deal flow can lead to poor investment decisions.
Flat rules in business can prevent major mistakes.
Timing is essential in generating deal flow.
Personalized communication is key in marketing strategies.
Transparency with investors builds trust.
Understanding the motivations behind fraud is important.
Ego can lead to poor decision-making in business.
The consequences of unethical behavior can be severe.
Learning from failures is essential for future success. Raising capital during a crisis is incredibly challenging.
The pressure to maintain a facade can lead to deception.
Financial struggles can have devastating impacts on families.
Transparency is crucial in maintaining trust with employees.
The consequences of fraud can be life-altering.
Legal uncertainties can create a heavy burden of anxiety.
Lessons learned from mistakes can help prevent future issues.
Good people can make poor decisions under pressure.
Establishing boundaries can help mitigate risks in business.
Redemption and restitution are essential for moving forward.

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Transcript

Jon Stoddard (00:00.556)
Welcome to the top &A entrepreneurs. Today I have guest, Chris Bentley. He's a Marine and he's also the author of this book called Burning Bellatorium. It is the story of a $40 million fraud and its prices lessons for investors. welcome for, thanks for joining me, Chris. How are you doing today? I'm doing well. Thanks for having me on your show, John. I really appreciate it.

Yeah, so you and I connected on LinkedIn. saw that I put out a message looking for Deal Flow, talking about Deal Flow and you pinged me and we had a couple of conversations and now we're talking here. So you were the CEO of a company called Bellatorium, which sold oil and gas leases. And what happened there? Can you kind of summarize what? Yeah, so

You know, in a nutshell, started a mineral rights and royalties acquisitions firm and our first few years were very successful. And in 2019, we hit some operational internal challenges that affected our deal flow. And that's why I think relevant topic for your podcast. And as things

you know, to try to keep the lights on and buy some time, I started telling lies. And then eventually that, you know, got into more than just ethical violations and then more into legal, you know, criminal activity where I was, you know, doctoring balance sheets and financial statements and actual transactional documents to try to keep the lights on at the company.

you know, just eventually got to a point where, you know, I was like, I need to just come clean about this or, you know, or come basically relegate myself to a life of lying and unethical behavior, which, know, and I, so I think you know what I chose and I came clean, but, you know, in essence, what I thought was neat about your show and all that is, you know, being in the,

Jon Stoddard (02:19.316)
acquisitions, investment management space, know, deal flow is everything. Off-market deals, the price you pay for the deals. And that's kind of when we, when I let that, that was our bread and butter when we were wildly successful is getting those off-market deals and generating that deal flow. And I thought, wow, that's, know, John's show is like, you know, it's very relevant to our story. And I don't really talk about that, just the deal flow aspect in the book and in

great of detail, but it's very relevant, you know, because had we had our shit together on a deal flow front, you know, I probably wouldn't even be here today. So. Yeah. The part where you said you had issues with deal flow, it sounded like it just, well, I got the names wrong. I got the prices wrong. And some of the packages, the paperwork was sent to the wrong people. What happened there? Was it?

the the systems in place or you talked about General Mattis's flat ass rules. Yeah. Can you tell me about that? Well, so the first part of your question, John, was about the deal flow, right? Like the operational aspect of it. All right. And where things went wrong there was just not paying attention to that. Right.

when you run any business, you have challenges, especially when you're a new business and you're growing, right? You've got these challenges. what I think I failed to give proper attention to was just how important that deal flow was to our success. And so when you're...

or when I was allocating my time and energy and effort into where do I put the most effort into my business, I thought that because we had been so successful with sending out these mailers and generating the deal flow, getting the referral system in place that, hey, I've got that, right? Let me focus on these other areas. And so I neglected that. neglected the making sure that there was a just a codified solid.

Jon Stoddard (04:38.146)
data management system, the data that fed the letters and the outbound marketing, right? And so by virtue of neglecting that, I thought it was, know, hey, it's being done properly, whatever, we'll come to find out, you know, whatever new data set we had fed and whatever it was improper, right? So when I, to fast forward to your question about the flat ass rules, I feel like, you know,

hindsight's always 20-20, look, but if I can tell any new entrepreneur or fund manager or mergers and acquisitions guy, like, deal flow is everything, right? You've got to, and generating deal flow. Look, I had a lot of deal flow by people sending me deals, brokers and people, hey, I got this deal, right? Those aren't good deals because they've already been marked up. People have gotten their fingers on them and everything.

Deal flow is generating the off market deal flow out there shaking the trees, finding stuff that nobody else has access to. That's what we were really good at in 2017, 2018 and where we built our track record. Well, because I neglected that part of the business, then come in 2019, now I've got $22.7 million and no quality deal flow. So what do I start doing? Start buying bad deals.

that I can't flip for a margin or that I can't monetize in the way that I had planned to execute the strategy. And so, when you talk about flat ass rules with General Mattis, mean, to take it back to the military thing, what his flat ass rules were, were like certain things like you always have a guardian angel on any patrol you're on. That means that Overwatch, right? Like you don't just go walking down the streets of Fallujah without

you know, a guardian angel, as we called it up on the rooftops watching, you know, moving with you in a place where they have a better field of vision than you. Well, that's one flat ass rule, right? So take that and equate it to business. You in my situation with Bellatorium, I could have said, Hey, if there's no deal flow, the flat ass rule is, is to stop. matter what the situation is. If you didn't generate the deal yourself, no go, right? That's saying hindsight. I, right.

Jon Stoddard (07:00.366)
hindsight, yeah. But look, I already screwed up, but I hope that if there's an entrepreneur or a fund manager or an investor listening to your show that they can say, look, I hope my fund manager or my investment strategy has some flat rules because those are, I think a lot of times as capitalists and entrepreneurs, we may think like, rigidity or rigid rules, those are bad, they're bureaucratic, they're...

we're anti-rigidity and flat ass rules, right? But sometimes, especially when you're managing other people's money and your success depends on arbitrage and finding the good deal, you need to have those flat rules. like avoiding loss and making money are two very highly consequential things that you need to...

Let me ask you about that deal flow. What changed about the deal flow? Why did it go down and you felt like you had to go to these on market deals? Was it a change in economics, like the industry up and down or what was it? So it was a little bit of both. I had operated, Bellatorum was not a business in 2014 and 2015, but

I was in the industry and those were bad years for oil and gas, Like, well, 2015 was, 2014 prices were high, you know, but we were still able, I was still able to make a really good living playing in the mineral space in 2014 when prices were high. And then even in 2018 when prices began to like fall really low in 2016 even, right? So the economy

a bad industry, so to speak, is not an excuse because as long as you're finding deals out there, it's all about the price you pay at the right time. And our marketing machine of getting these letters out, these very personalized letters with the correct salutation, the correct property that we're trying to buy. So for example, John, you owned, let's say you own Mineral Rights of Midland, Texas.

Jon Stoddard (09:20.461)
but I sent you a letter that said, dear Mrs. Stoddard, I would like to buy your mineral rights in Glasgow County, Texas. You'd be like, who are these clowns? Right? They're carried up and thrown in the trash, right? Right. It's just a form. Those are those are little crucial details that were getting messed up because I didn't make sure the data was proper. And then the amount of letters that go out and the time they go out is also important. So,

If you're sending bad letters out, it's a total wash anyway, right? Like that's deal breaker one. But let's say you're sending good letters out, but you only send 500 of them out. That's still a problem. So let me ask you about that. I don't know anything about the oil, the gas and the mineral. Why is it a bad timing? no, it was great timing to send, but not if you didn't send them out. Like January, that was kind of one of my points that I think I talk about in the book is.

You know, if you send letters out, at least in my experience in the industry, if you send your letters out, right, like literally right before Christmas, snail mail, they'll get there right after Christmas and people will start like, okay, I could get some money to kind of just, I could sell these assets that I own.

and get some money to pay, you know, cause I've got buyer's remorse on my expensive ski vacation and all the money I spend on these Christmas gifts, like let me monetize one of my assets and sell it to Bellatorium. So it had been my experience always that January was a crucial month to generate the deal flows that we could buy assets off market assets for very cheap in January. So.

That's unique to my story, right? To my industry and asset class that I was in. But the same concept could have applied to anything. Like if you're in housing, know, real estate, then maybe it's march rate. Right before interest rates go up, right? Yeah. It's gonna be hard to borrow money, right? So you have to have your deal flow and marketing machine, you know, whipped. I'll give you an example. One of my friends, another veteran, he...

Jon Stoddard (11:36.477)
is in the private equity space wanting to buy small businesses, right? And so his marketing strategy to generate deal flow is much different, but it's still extremely important. You don't wanna go to a business broker that has already taken his cut marketing this thing out to everybody. If you wanna buy an off-market business, go out and look for small mom and pop businesses where the owner operator

there's things you need to find. The owner operator is ready to retire, monetize, they're in the business. So there's room for you, there's scalability. You gotta say, all right, hey, there's this 70 year old guy selling widgets in Main Street USA, but what he doesn't have is a social media presence. He doesn't have a search engine optimized website, blah, blah, blah, right? So if you're a private equity guy looking to buy small businesses,

your deal flow generation is gonna be different, but still it's extremely important because it's all about the price you pay at what time, right? Yeah, and I love the way you say that asymmetric information, know, you're knowing that he doesn't have this, that this, which could lead to another million dollars, the top line or bottom line, whatever it is, just doing what you're good at. Interesting. I do have to ask this. I know this is just fresh. I'm talking 2021.

Are we asking, are you talking about anything that the attorneys, your attorneys are saying, you know, don't talk about, don't say or. No. So look, this is a unique situation. I don't know if anybody's ever done what I've done, but I wasn't being investigated. I wasn't, there was no case that, know, nobody was knocking at my door. I went and turned myself in and in doing so, and in writing the book, you know, I,

I'm an open book. know that's a cliche, but you can ask anything you want. have nothing to hide. you know, I'm just waiting. You know, my attorney cringes when he hears me talk. He just, he says, look, this is just, I'm not wired to have my client out saying anything and everything they want. But the one thing I think to answer your question is my attorney is not a defense attorney. I literally hired him to just help me kind of understand the process. There's no.

Jon Stoddard (13:59.597)
there's no 1-800-Crimestoppers or call 911 for my situation, right? Like I didn't even know who to turn myself into. So the reason I hired the attorney was just to help me, hey, who do I call? So this white-collar attorney that I hired here in Houston, he knew exactly who to call, set up the meeting, and then he's basically there to help me like, hey, all right, here's what you can expect when you go to sentencing, here's how you talk to the judge or the, you know, cause you need that.

I think, but I'm not paying for a defense. Like he's not out there doing legal research to see how he can get me less of a sentence. I'm willing to accept whatever, you know, you know, God has in store for me. And you're just waiting for them to come back with, hey, this is what you've done. These are the charges and this is the min and the max sentence, whatever it is.

Yeah, I mean, it's totally out of my hands out of his hands. It's all in the hands of the feds and the the soil. Let me. We all we all have dogs. My dog happens to be at the park. So just one second. Is this live or are we? This is not live. No, it's recorded. So do you edit it at all? Not much, but we'll do that with this. mean, I I like that.

put these out there and it's a, you know, it's a, it's just a live, it's not a live conversation, but it's real. It's genuine, authentic. And people get interrupted by, you know, their wife comes in or the dog or baby comes in. That's cool. I mean, it gets more views. Yeah. All right. Well, so I have a, I have curtains sound, supposedly soundproof curtains up over my office door. It's one of those glass French doors. your money back on that. Yeah. Seriously.

I got it. Let me go back to the, the, the instance. So you, you obviously done a lot of research on how people, psychologies are when they do commit fraud. Cause you talked about this fraud triangle mice, which is stands for money, ideology, coercion, and ego. And the last one, which is ABC, Apple bushel, that crop where the fraud triangle is.

Jon Stoddard (16:22.593)
there's three parts, there's pressure, the kind of individual feels compelled to private, opportunity and justification. So when those letters went out in January, did you feel the pressure that you didn't make the time cycle to do that and you may have lost the year or what? No, no, not at all. So I thought it was, I thought we could recover. I thought it was a, you know, I think I talk about this in the book, the first,

the first thing that happened was like, okay, hey, I realized the letters didn't go out and they needed, so I got, you know, rally the troops, everybody, hey, we're not going home today until we get this many letters out and this and this and this, right? So kind of got the team on board and we sent letters out. Meanwhile, keep in mind, I've got people sending me millions of dollars daily, you know, like they had signed the documents and everything. And so, you know, I didn't,

I didn't- These are your investors, right? Yeah, right. You continually raise money throughout it. I had raised money in the last quarter of 2018, right? So all the agreements are signed and in place. And meanwhile, I've got my team, know, hey, getting ready, we've got this money, they're selling the assets that we owned in 2018. So everything was a fresh start in 2019. So we did that, sold the assets, accomplished all that, the 2018 assets.

Onboarded, so in January of 2019, I'm onboarding new investors, receiving wires in the bank every day for their subscript, you know, their investments. And then realize, you know, I get my, one of my guys come up to me and like, Hey, you know, we didn't get, we only got whatever, thousand letters out. And I don't remember what the number was, but I was like, really? Why? Like we need to get these letters out, right?

And then I also realized that in those thousand letters, there was mistakes. then we opened, we were like peeling back the onion and I was like, whoa, this data is wrong. Like I can just tell by, you know, spot checking line items that, know, there's these, you know, whatever, there's mistakes on this data set. So it was like, hey, you guys fix the data, you guys prep the letters, let's get them out. you know, I thought, okay, crisis subverted, we get

Jon Stoddard (18:45.205)
you know, I think like 5,000 letters out in a week and thought it was good. Well, something had happened during the merge of the the going from Excel, the word and something. So then those 5,000 letters out that we sent out were also incorrect. Was it you tried to do that internally and didn't outsource it to somebody? Yeah, correct. We did it internally. And that was also kind of one of our

secret sauce previously was that our letters were, I mean, we hand wrote notes on all the letters and I signed them all personally, like these, you know, so I ended up eventually getting myself a stamp. So I didn't, you know, my arthritis was kicking in, but I would, looked like a real signature on all the letters. We tri-folded them and put them in normal envelopes or, you know, so it looked, it didn't look like junk mail. So that was a tedious time consuming process. Well,

So then again, you know, this goes, if you're asking about the details of going down this thing, right? Like where it starts to get murky. Going off rails a little bit. there. Outside the guard rails big time, you know? So no deal flow, my investors, the way I was set up, I had some bit of transparency with the bank account.

Some investors are like, hey, Chris, this isn't like last year. Some of the investors that had been with me in the previous, they're like, why is the money still sitting in the account? We see there's no transactions happening. We just see all this money, this $22 million just sitting there. Why aren't you putting it to work? your investors had transparency on your bank accounts? On the fund bank account, not all of it.

Not all my, not my operating account where I pay payroll and stuff, but the, where the money went for the fund, they could see it right at first. anyway, so what I started, you know, I, at that moment, I should have probably said, Hey, look, we, I'm just making sure that we put the money to work properly. And we've had a few deals that were

Jon Stoddard (21:01.409)
You know, I could have probably without lying still held off for a little bit, right? But instead what I did was, shit, man, like I'm, you know, what do I do? So first thing I do is buy some deals, call, you know, that I had, and I paid probably market value, which is not our business model, right? So that was kind of the first baby step one is to pay market value. I'll give you an example like,

you know, a net royalty acre, you talk about buying land or whatever, I probably paid $10,000 a net royalty acre for these deals that were, and I still had margin in them, but it wasn't the margin we were used to, but it was still only a small, so that was my first step. So I think I bought like maybe a million dollars worth of deals out of the 22 by paying that fee. And that was starting in February. And then it was like,

still getting these dude, you've only put a million bucks to work. Like last year, you deployed all our capital within like 45 days, what's going on here, you know. So then I start buying deals, I bought a deal less than arm's length, because I knew I could control it, right? Like I moved those. So anyway, I just start still nothing criminal yet. I think the first criminal thing I did was in May of 2019.

And that's because I had run out of operating capital. Normally we had flipped stuff by then and I was able to take a profit and fund my payroll. So in May of 2019, I told the investors there was a $6 million deal when really it was a 5.6. I think I don't hold me to these numbers, but basically I made it look like the transaction was more and I took that

that amount and moved it into my operating account via like a series of transactions. So it wouldn't be obvious, you know, using broker fees and all these other, you know, and I was doctoring up the documents to make everything kosher. So that because we did have oversight with a third party administrator stuff. I lied to them. I lied to the escrow agent, all this to get that money back to Bellatorium so I could pay the payroll with it. So that was the first criminal thing I did. And I thought, look, I could,

Jon Stoddard (23:21.293)
It's no big deal. Like I can flip all these assets and I'll pay it back and nobody will ever know. Right? Yeah. So, let me kind of bring up something. You know that study where you place a kid in an isolated room, five-year-old, and you put a cupcake in and you tell them, hey, don't eat the cupcake. And the majority of them do. They can't help themselves. I mean, what was the

you just said, you know, I'm just gonna eat the cupcake. I think, why do you think you did that? Well, I mean- Was it the pressure, the, you know? Yeah, but it was, was, it's, I think it's more than the cupcake analogy, John. I mean, you think the, I wasn't going and taking a cupcake for myself, right? Like I, I,

had employees to get, there was a lot that went into my mind. And so I think as humans, sometimes we try to oversimplify reason and logic, right? But there was a lot of things. I had wildly successful business that was on an upward successful trajectory. I had a long-term vision for like our software development and everything. And it was like, what the fuck? All this is, excuse my language, is falling apart because of a

like I can't go out this way, right? So there's that's ego, right? That's ego or hubris, whatever, there's that. But I cared for my employees. had these veterans, had guys, I had a guy that moved from Virginia, guy that, two guys that moved from Louisiana, a guy that moved from Arkansas. I had these team members that had moved to work for me from around the country and they literally sold their houses and moved their families and wife and kids. And I'm like, wow, now I'm

I mean, really- You're beholden to them somehow. Yeah, I I felt like I was, right? I think a lot of people might've said, well, screw it. Like, I mean, I even had one of my friends like, why'd you do that? Like, who cares about them? You got to, like, why'd you do all this? You put yourself at risk and you did all this. you know, and then the industry started going down in mid 2019 and then COVID came and it was like, and I kept digging a deeper and deeper hole. And all the while I thought,

Jon Stoddard (25:43.819)
I always had a plan of how I could make everybody whole and still not do wrong by anybody. Like even the final investors, right? That would have kind of, I would have brought in a large capital commitment, but even then I had a plan for how to make them profitable as well. But then it was just like, and I think I told you this on the phone when we were talking about this, is like this whole thing, all my success would have been built on lies.

or some part of it at the end. I couldn't have lived with that. That last one you tried to raise like hundred million dollars and you only brought in a couple of million. What happened there? Why did it, was it the economic? Yeah, so that one was definitely about timing and targets, Like meaning trying to raise money during an election year with the.

negative oil and gas. mean, oil and gas. You can't mail stuff out during election year. I've done that before and it just well, it lost. And yeah, I mean, my cap raising, my capital raising efforts were not mail. For the most part, it was out. But people weren't having in-person conferences as much. And, you know, in meetings like getting my meetings were very difficult towards the end. Once once people were starting to go back to their offices and talk about investing.

I mean, you remember 2020 was a dumpster fire. Like it was, mean, like nobody's gonna pay taxes. You gotta figure out how to do this. Yeah. Yeah. So trying to raise capital in 2020 was just a nightmare, but I started towards the end of the year. Some people were starting to be like, Hey, you know what? I can't sit on the sidelines anymore. And this is what I was alluding to is like, I could have kept going for a few more months and probably got a hundred million dollars in that.

The lies I was having to tell, the pressures to keep the thing going, the, I mean, the lies were just, you gotta think once I got to that point, everything was a lie. Literally telling my kids, they're like, hey dad, how was your day? I'm like, it was fantastic. Trying to be positive and upbeat for them, that's a lie.

Jon Stoddard (28:06.133)
Right? Telling my wife, you know, making small talk, everything, just every ounce of my energy to try to be positive and be the, this CEO of a business that's supposed to look like it's doing good, doing well. My whole being was a lie. The smile on my face, the, you know, just everything, right? Like, you have, I'm just curious. mean, FBI investigators are,

skeptical by nature. So do they have a reason to believe you're telling the truth now? And do you have like a champion that said, well, he's come clean. He's fighting for me. I don't know. I handed over all my computers. mean, we're supposed to be the most advanced nation in the world with the most qualified. I mean, look, I was in the Marines for 14 and a half years and I've seen what our capabilities are.

and the Marines are like usually the least equipped branch of the military. And I know that we have some pretty sophisticated technology. I got out in December of 2013. So one has to assume it's even better nowadays. I mean, if I'm not holding anything back, I literally handed over my cell phone, my computers, you know, all the bank accounts, you know, all the statements and told them exactly what I did.

And so if they're skeptical, I mean, it's not, I don't know what you can. You've bared face to everyone. Yeah. What about the employees? I mean, there's some people that you've formed relationships with. mean, are they accepting of it? Are they understanding and they're moving on? You know, I think a few are accepting of it and they,

a couple actually like appreciate have, you know, just to have told me, hey, I know, thank you for not throwing me to the wolves in the middle of 2020. Like how could I go from making $120,000 a year in 2020 to the federal, you know, that COVID relief of, you you can't go from being an oil and gas professional

Jon Stoddard (30:33.055)
and then to make him four grand a month on unemployment. Like everybody was like, why did they had all this unemployment and what you like, okay, that works. If you work at Starbucks or Chick-fil-A or something, maybe, but to go from making six figures to four grand a month with a wife and kids to support, that doesn't work for people. mean, that's life-changing, Like in a negative way, life-changing.

That was what I was thinking. so to answer your question more directly, yes, I've had a couple be like, hey, you put the company on your back. I mean, by the way, I lost my house. I sold my, I made my wife sell her vehicle too. Like she had a nice Toyota SUV, told her to sell that. I sold my truck. I put that money in the company to pay payroll. then, it was like, I think one thing a lot of readers and

people don't understand from the outside looking in and maybe even employees is like, yes, I committed fraud and it doesn't make it okay. I lost, you know, I lied to make a lot of this happen, but I wasn't just putting other people's money at risk. put my entire life and livelihood at risk to keep this thing going. And, you know, my wife didn't know what I was doing, but she also made sacrifices. Like I said, hey, I need to sell your car. I'll get you a,

I'll get you a little cheaper car. can share a car for a while. Like that's, we actually shared a car, you know, and just, but we bought a little cheap truck and got her a used vehicle and we sold those vehicles and I was able to, mean, it was literally just a band-aid, but I thought it could buy it. you tell your wife? When? Yeah. she got the email with everybody else. She was sitting at a soccer game.

sitting next to one of our largest investors who I, know, their grandson is best friends with my son and she got the email like everybody else. So I didn't know how else to tell, like I didn't want her to be, you know, at all at fault for what I did. So she never could know anything, right? And so that was

Jon Stoddard (32:55.987)
know, people are like, surely your wife knew or your best friend there, somebody had to know. how could I tell anybody this? Like, how could I, you know, anyway, I mean, people who say that must, I, you know, I can't empathize with them because I don't have those types of relationships where I would feel okay going, hey, man, you know, let me tell you, I'm committing fraud right now. What do you think I should do?

Who do you tell that to besides maybe a pastor or a lawyer or psychologist? I don't know, but you know, yeah. So she found out via email. Yeah. And she was, I hate to say this, but close to divorce for not revealing that or yeah. Yeah. I mean, the first few months I was couch surfing.

You know, like I went and stayed with some relatives in East Texas, then I went to Florida to stay with some relatives and, you know, just not knowing what was gonna happen. I was letting the FBI know this obviously like, hey, I need to go here, here, here. And, you know, we're together now. We are renting the upstairs of her parents' home and, you know, she's working and.

our life is definitely much, much different now. And there's a lot of uncertainty, but to her credit, she's still with me. I don't know, it's not like that's a guarantee, right? She says, you can say one thing, but if I get sentenced to 25 years in prison, that might change. So. Yeah. Well, what is the, I'm sure you've looked into that for fraud and white collar crime. What is the sentence for?

So, I mean, the range is extremely ridiculous. Like it could be probation at the best case scenario or 25 years at the worst case because of the dollar amount, the number of investors affected, you know. So, and my lawyer says it's unlikely they would do this, but technically they could stack it. So if they charge me with multiple crimes,

Jon Stoddard (35:16.717)
And let's say each of them has a max sentence of 25, are my- On top of each other. Yeah. So, you know, that, guess that could be my worst case scenario is, you know, the rest of my life in prison. And I know there's a few investors that have said they think I deserve that. I mean, the investors that I still talk to, there's a WhatsApp group that they all have to communicate like who's suing me or who and whatever. And they've said, hey man, look, this guy,

thinks you should spend the rest of your life in prison or this person thinks that, you know. So they're trying to sue you, but you can't get water from a rock or blood from a turnip. mean, what? Well, that's the thing. Nobody's, only a couple of people have sued me and maybe it's just so that they were first to the punch in any sort of possible restitution.

But yeah, I'm surprised that I haven't been sued by every investor or some sort of class action lawsuit against me. mean, the investors that did sue me, didn't fight it. I signed it. said, not, you you got a default judgment against me and I'm not gonna lie. Like, yeah, I committed fraud and you can sue me for that. You can sue me for the damages or losses you incurred and I won't fight it. Like, so.

Is that a is this a federal case or a local state district attorney case? As of right now, it's federal, but they haven't done anything, so I don't know. So there's no federal agent calling you asking you questions. Well, yeah, so I have the last time I had a meeting was with the SEC and the Department of Justice in March. And you know, I still don't know what's going to happen like I.

You know, I don't know what the charges are gonna be. I don't know anything. Like they, I sent them an email the other day that said, hey, you know, I'm willing to face anything. I'm not asking you for a plea bargain. Like all I'm asking you for is some idea of the path forward and like, can we get the show on the road basically? And no response. I mean, I never get a response. I've sent them several emails over the last year.

Jon Stoddard (37:38.943)
and some change, hey, I mean, I don't know what to do, you know, as far as that's concerned. Like I said, it's mainly for my wife and kids to give them some closure is like the selfish part of that. And then for the investors too, I mean, they deserve some sort of justice, you know, like to know that the legal system is working on their behalf and to, in a lot of their eyes from what the comments I've seen on that WhatsApp group is they feel like, wow, you know, you can just get away with fraud and you're out.

still enjoying freedom, you know? Yeah. Now this book that you wrote, it's published like one at a time through Amazon. I mean, did you have a fund set up for the investors to recoup or? Well, yeah. So all the proceeds will go to the investors. I just set up a separate bank account that I'm not accessing. know, I mean, technically if I wanted to, I guess I could access it. But I've actually given one of the investors view access

to the account so that they can see I'm not touching it. And so all the proceeds from the book will get, you the Amazon will direct deposit to that account and I'm just gonna leave the money in that account and the investors or the feds or whoever, you know, can manage it how they see appropriate, but you know, I'm not gonna touch it. Curious says, you know, the last half of your book is,

is kind of checks and balances in place for something to be like a cautionary tale for the next person to happen. And as many checks and balances you put into place, it still seems to happen. You know, people do that because we're imperfect human beings. What was the intention of doing this? Is this a kind of like that guy that used to write bad checks? Catch me if you can to say,

I mean, that guy ended up making millions of dollars per year teaching corporations how to look for bad checks. Yeah, I guess. mean, the main reason for this book was to try to help a way to make the investors whole, right? Well, you can't just write a book and assume that it'll sell. There has to be actually valuable information in there for people to buy it, right? So I feel personally,

Jon Stoddard (40:03.073)
that the lessons in here are valuable and actionable for investors and entrepreneurs. If you know the second half of the book or maybe the two thirds, if you will, there's a part for investors and then there's a part for managers or entrepreneurs, right? And those rules, I think, you're never gonna create a perfect scenario in any situation ever.

Right? If you're playing sports, if you're doing whatever, there's always, but the more boundaries, the more difficult you can make it for yourself or others to get, you know, the color outside the line, so to speak, then the better, you know, like for me, every case is different, but in mine, like a way that would have kept me from being able to do this or at least made it extremely difficult would have been.

timings after wires went out, right? Like if wire went out, I better have had paperwork to show the validity of that wire transfer within an hour, right? Like even within an hour would have, you know, and to know if I'm the one that's doing orchestrating this whole thing and I'm keeping it in silos. I mean, the way I did that is sometimes, you know, I'm out.

busy, busy, busy, right? So I can send a wire from my phone, but I can't doctor a PDF document from my phone. So like if I'm flying to New York, sitting at the airport and I send a wire out, I just tell my third party administrator, hey, I'm out of the office. I'll fax you or I'll scan and email you that paperwork on Saturday, right? Then I go into the office Saturday morning and do my dirty work when nobody's in the office and

email all the people, hey, sorry, I was traveling this week, blah, blah, blah, right? Well, if I would have not had that liberty to do that, and that's on me, I want to make it clear. It's not the third party administrator's fault. It's not the escrow agent's fault. It's nobody. Yeah, that's that opportunity in that triangle. So but if I would have put the boundaries on myself, then and once it's in an operating document, that's what you have to follow.

Jon Stoddard (42:24.205)
and you can do that to yourself, right? It may be uncomfortable at first, like, man, am I handcuffing my ability to operate? you can know now readers can read this story and say, hey, if I'm messing, if there's any potential for nefarious means, then let me put some boundaries on that. You don't need to put boundaries on something as like, hey,

you know, do I buy in Glasgow County or Midland County? mean, like, you don't want to, you know, you don't want to put too much red tape on your operating on the way you operate your business. But when it comes to financial and other people's money and investment reporting, mean, absolutely. Or, or if it's filing your taxes or your payroll stuff, like anything that, you know, if you're operating a business, you need to put some boundaries on anything that could go awry and potentially put you in.

a precarious position, you Yeah, what does that say about the individual to say that we need to put in? is it, you you know how to cheat or steal because you've been cheated or stolen on? Well, you know, you brought up the point earlier, right, about the fraud triangle. And, you know, look, good people make bad decisions all the time.

So it's not as simple as, you're a thief and you're not. you can leave, you know, get a good person that you, your whole life, like you never would have thought this person would even consider picking up a hundred dollar bill off the ground and not running after the person in front of them and saying, hey, you dropped this, right? But there's people you never know if the stars align and they've.

You know, they're late on their rent and things are bad. They just got laid off. They may put that hundred dollar bill in their pocket and go buy groceries for their family. Right. And kind of same thing. Like you don't you never know what your circumstances are going to be in the future. Right. You just you have no idea. I didn't know that the industry was going to go. I didn't know when I came back that I was going to have a deal flow problem. I didn't know the industry was going to go down in 2019. I didn't know that covid was going to come.

Jon Stoddard (44:41.449)
If I would have had a, case of emergency, break glass kind of boundaries in place. And that's what I was forced to do. We wouldn't be sitting here today, John, like it. I think those are important to, to, to govern yourself. I mean, the Stoics all talked about it. The Bible talks about it. mean, no matter what your religious or, you know, moral philosophy is in history, there's so many examples of human beings putting boundaries on themselves because they didn't.

you know, they didn't know how they do things. It's just like, you know, if you're a married man, you know, maybe you don't want to go hanging out with single women, right? You like, you just don't even put yourself in that position. Like in a, a, an intimate setting, right? Like we, talked about that in, in, in my Bible study recently. And it was like, you know, you just don't put yourself in positions where you can make bad decisions.

Maybe if you want to test yourself, but like, why, why even go through that? Right. Well, I also think there's a part, know, Seneca talks about stoicism, premeditation of evils. Like we suffer more often imagination and the reality, something that was going through your head, like, my God, shit is going to be worse if I don't fix this. Yeah, absolutely. I mean that. And you fixed it how you thought. Right. Well,

ended up failing at fixing it, but I absolutely thought that the outcome I was shooting for was going to be much better than if I had said, hey guys, I've already spent some of your money, but here's the rest of it back. And I shut down my business and lay off the employees and all those things, right, that I should have done in

let's call it February of 2019 or January of 2019, we could argue about exactly which step would have been the right time to break the glass and say, guys, sorry, we're done here. But it was, I thought that the better solution was to try to figure out a way to make it work, to make it successful.

Jon Stoddard (47:06.475)
What's obviously you're an entrepreneur and now you have a strong duty to make it right. I'm curious what's next. Is it a movie? Netflix movie or what? I don't know. Would this be a movie that you'd watch on Netflix? I think they can do it. They're so hungry for content that one of those channels, HBO or whatever could do it. Yeah. mean,

You know, it would be, if that would be a way, mean, look, 40 million, I just learned last week that like the SEC is separate from the FBI and the investors, right? So I know I owe the investors, let's call it $40 million, right? That number could actually be different because there were actually real assets in some of the entities and there's royalty income being produced from the oil and gas that was being produced.

So, you but let's just call it $40 million. Well, then the SEC, from what I learned last week is they have a number that they're saying, hey, those losses, those are just losses. don't, you know, we're gonna say you owe 9 million because that was the fraudulent or the, you know, wrong activity was $9 million. So you owe $9 million to the investors, but hey, we're also gonna fine you $9 million.

And so that's on top of it. So then now I'm going to owe the SEC $9 million and the investors $9 million from the SEC, but then there's going to be the judgments and the lien. So, you know, from what my lawyers told me is like, Hey, it could be 50 or $60 million that you owe every, you know, total. And so to answer your question, I fully intend to at least making an effort to try to pay that back. And so.

that's gonna take something like a movie or an invention or something that can be sold widely. And I have some ideas, but I gotta know what the path forward is because if they're gonna put me in prison for 25 years, then I won't be able to execute that plan. So what do you do? This is my last question. What are you doing to...

Jon Stoddard (49:30.689)
you know, lighten the burden of your guilt. How do you stay? so your family and child. Well, I mean, I'm I'm you know, in a way this has been. From a spending time with my kids standpoint. This last year has been better than any previous year. I drive him to school every morning. I get to go to more of their soccer games. I mean, I just.

recently quit the job I was working and not quit, like just quit for no reason, like, cause I thought that I was gonna be moving forward with the case. I had gotten a phone call, I was the general manager of a thrift store. So I didn't wanna leave them, you know, hey, I'm gone all of a sudden. So I trained my replacement and then thinking that I'm gonna have official charges coming any day now.

and start to move this process forward well, and then now it's been crickets and that was like about a month ago. So I already trained my replacement, he's there, he took over. So now I'm gonna be looking for work again, I guess, but it's hard to find employment when this is hanging over your head. Cause a lot of the people they're like, hey, we're not judging you, we're willing to hire you, but not in anything meaningful if we don't know what, you you're gonna go to jail. I'm referring to spiritually actually.

I mean, you know, to lighten the guilt, I mean, I think coming clean was a big, you know, I feel guilty. I still feel guilty. Don't get me wrong, but it's not a debilitating feeling of guilt anymore. I've come clean. I've done everything I can now. It's in the hands of the feds. And so, you know, and it's...

not having to tell a lie is a huge weight lifted off, you know, my shoulder. I joke with my wife and say, hey, I'm never telling a lie again. So do not ask me if those, you know, those green colored jeans you like to wear look good on you. Cause I don't think they do. And I'm not going to tell you they do, you know, so. Well, there's white lies, right? Does that make me look bad? But,

Jon Stoddard (51:54.389)
Chris, I want to thank you for spending time with me, top &A entrepreneurs. mean, this is a cautionary tale of building a business, acquiring leases, $40 million fraud. And this is open. mean, you're at any moment, somebody calls you up and you're going to hear some kind of information that could say, is, I could do it or, my God, it's, yeah.

Yeah. I want to thank you, man. want to thank you. for having me on, John. I appreciate it. I hope your listeners will buy the book and help towards the restitution efforts and leave some reviews, honest reviews. know, if you some, I'd like to hear some feedback. I've, we just launched less, you know, I think about a month ago. So exactly a month ago. So, you know, getting some more reviews and feedback would be great. Yeah. So thank you very much, Chris. I appreciate it.

Thanks, John. All right. Cheers.