A little due diligence goes a long way. An incredible story took place which could have been entirely prevented with 10 seconds of Googling. A West Coast con artist made $4.27 million by swindling Middle Eastern investors. The con artist, Craig Stevens, sold In-N-Out Burger franchises to investors who had money, but lacked intelligence.
Craig was a Newport Beach California resident who took each of his victims for amounts ranging from $150,000 – $400,000. In total Craig had 10 investors who he tricked into purchasing false franchises. Craig sold franchises for over a year, and claimed the $400,000 was for fees and royalties to open and In-N-Out franchise.
In-N-Out has been privately owned since 1948. In-N-Out does not enter into franchise agreements and does not have partnerships with third parties. This is a fact any investor could have verified via Googling In-N-Out or looking them up on Wikipedia. This makes it pretty incredible that the scam lasted for over a year. It is very surprising that no one decided to do even the most basic research into their investment. Had they simply taken a small amount of effort to research their investment, they would have quickly determined that what they were being offered was 100% fraudulent.
The con was so successful that it would have likely continued on for a long time had Craig not emailed the fraudulent agreements. Emailing the documents meant that Craig was guilty of wire fraud, which he was ultimately arrested for. Craig ultimately received a sentence of two years in federal prison. In addition to the time in prison, Craig received an additional three years of supervised release.
Next time you’re presented with an investment opportunity it is worth taking a little bit of time to familiarize yourself with what you are thinking about investing in. Besides simply searching the web for information, you can often reach out to the company directly. In this case In-N-Out has no plans of going public or franchising in the future, which is information a representative from In-N-Out would not have hesitated to share, let alone put an end to the con.
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