The Tax Guy Who Embezzled From Us, Red Flags We Ignored & What We Did to Fix It

Most entrepreneurs worry about getting more clients, not getting burned by the people who are supposed to be "on their side." In this episode, we share the full story of how our longtime tax preparer secretly stopped paying our payroll taxes, how it spiraled into years of penalties, fear, and cleanup, and what we did to finally get out of it. We walk through the red flags we missed, why "no news" from your tax person is not good news, and the exact steps we took to switch firms, negotiate repayment, and get our business and personal finances back on solid ground. If you've ever felt clueless about taxes, afraid you'll look stupid for asking questions, or tempted to ignore uncomfortable money stuff, this conversation will help you protect your business, choose better advisors, and start cleaning up any mess one smart move at a time.   

Highlights

00:00 Halloween candy, Snickers, and the "lies" we tell ourselves.

05:30 What it took for us to set hard boundaries, raise prices, and order minimums.

11:45 Meeting "Jerry," and why he seemed like the perfect tax guy.

19:00 Small penalties, extensions, and the slow creep of red flags we ignored.

27:30 Realizing we were two years behind on taxes.

35:00 The quarter-million dollar gut punch.

43:15 The letter that exposed years of unpaid payroll taxes.

52:00 Why we didn't sue, what we'd do differently, and how to vet your tax pros now.

59:30 Practical encouragement if you feel stupid, behind, or scared of what you'll find.

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Transcript

SPEAKER_01 0:00

Today I think the theme is lies. And you know what I believe is a lie? What? Snickers satisfies. Snickers doesn't satisfy. Doesn't satisfy me. Want more? Oh yeah. Uh-huh. The worst thing you could possibly do is buy Halloween candy that you want to eat. Yeah. Because you end up keeping it. Or, you know, if you you had like hundreds of kids, I think I had 30, but I bought candy for a thousand. And I was giving, I would I buy the full size because I'm I'm not a regular neighbor. I'm a cool neighbor. I'm a cool guy. And I was telling the kids, I'm like, take take three, take a few. Wow. And they were excited. I was pretty strict on the one. Well, you know, kids out there, if you're listening to appointment only, you know whose house you want to go to. That's right. But what happened was I had all these leftover Snickers, and I finally polished them off the other night and wasn't satisfied. You just wanted more. Candy definitely doesn't fill you up. There's no doubt about it. I don't know who came up with that idea that Snickers satisfies though. Like, I don't know what you were thinking because it's it's not true. No, it's absolutely so good though, and they taste different if they're full size versus the small size. That is 100% true. I feel like the the fun size candy is not the same. It's like not made at the same place as the full-size candy. Yeah. I don't know what's going on. It's different. It's different if it's larger. And you know what's so good is Snickers ice cream. Oh well, duh. Don't even get me started on that. Yeah. Today's theme is lies, you say? Lies. Lies and cheats. Lying and cheating is today's uh theme. But before we get into what we're really talking about, I do want to just preface by making a couple acknowledgments. The first one is that you hear us talk, you hear us talk about business. We are very unapologetic in the things that we say, in the boundaries that we have, in the things that we enforce. It has not always been that way for us. It has been an intentional effort to get to the point where we can be straightforward about the order minimums and these things that we that we are very serious about. But it's been an evolution. And I just want to make sure that a creation, depending on what you yeah, there we go. It's been a creation. It's been a big bang. Nice. Good, good cover there. Thank you. Um, that'll be a good witness. If you're listening to these episodes and and you're hearing us uh say things, and your tendency is to tell yourself, well, easy for you to say because you're you've been in business for X number of years, or you have clients that uh spend X amount, or easy for you to say, we had somebody tell us once we were talking about something business related, and he looked at us straight face and said, Well, that's easy for you because all you have to do is raise your prices. And I we stopped him and we said, Do you know how much work we had to do to get to the point where we can just raise our prices and people will pay the price? So much work. It's not as easy as it sounds, my friend. It's not as easy as just raising your prices, but this is supposed to be an encouragement ultimately. That I know when you hear people talk about business, if they're in a different stage or have a different sensibility, it can be easy to just write it off, be like, but they don't understand my business. They don't understand, they don't understand my clients. And we do. Today, what we're going to be talking about is a perfect example that we have been there. We have gone through the ringer and we have come out on the other side, and it has been tough. And there was some business advice that I heard before we ever started the process of getting run through the ringer and all of that. And the business advice was I think we've maybe mentioned it before, but if you're ever in a situation that you know you're gonna have to pay somebody to get out of, instead of trying to focus on fixing that situation in the moment, focus on making as much money as you can so you can pay the right person to help you dig out. And that was advice that it would have been easy for me to hear and say, yeah, but he doesn't understand my situation. Yeah, but you don't understand what we're going through. But instead, it was one of those pieces of advice where we chose to apply it to what we were going through or what we knew we were gonna have to dig out of, and it ended up working. Today we're gonna talk about the tax preparer who embezzled money from us, the long-awaited tale. And it is not a tall tale, I will say. You'd think it was just a story. It unfortunately is not even just based on a true story, it is very much a true story. This is Appointment Only, the podcast for entrepreneurs building profitable high-end businesses. If you want control, profit, and freedom from the endless hustle, this is for you. We're Kenny and Dami, twin brothers from day one and business partners for 15 years. We're sharing insights from our own experiences running a high-end small business, the highs, the lows, and what we've learned along the way that will help you build businesses you enjoy running that aren't running you. We're here to help you continue creating businesses that support the life you actually want to live. Your appointment starts now. So without further ado, a couple of things. The first, for the purpose of keeping us out of jail, we are going to change our tax preparer's name. From now on, we will call him Jerry. And it's not Jerry. And his real name is not Jerry. For those of you trying to deduce who it who it is, you know that you there's a starting point for you. You know that his name is not Jerry. So start there. It is not Jerry. But seriously, if we're telling the story, and I mean, I don't know, it's a small world. Maybe you think this might be who you're using. You can reach out to us privately and we'll tell you everything you need to know about him. We will give you his name, we will give you his info. We'll tell you the other thing is he doesn't live here anymore. He has moved to Florida, which I'm sure we will get to in the story. So that's where you can start. Start looking in Florida for people not named Jerry. It's a great place to find him. Really good place to start. Before we dive into the specifics of what happened, I think a little bit of background on us and where we have come from and what we've identified as something that is important to us might be helpful. For starters, you need to know we've never done our own taxes. That is just something that we've never wanted to mess with. We grew up and uh my my grandpa had someone that he had allowed our everyone in our family to use. So we used to use him. And we growing up had one of our very best friends whose grandparents ended up in legal trouble because of some tax stuff. Now, I will say there is a little bit of murkiness surrounding the specifics of what happened. There were a lot of, you know, loopholes, there were a lot of gray areas, a lot of technicalities, things that didn't seem to be cut and dry as legal or illegal, but the buck stopped with him ultimately. And it was kind of that time was sort of riding the Martha Stewart coattails of this like white-collar crime crackdown. There were a statewide, there were a few really big dogs that got pinged for white-collar crimes. Uh, one of whom was Tom Petters, one of whom was Denny Hecker. If you live around us, those names may sound familiar. But what happened was we were, we were living in a smaller community about two hours uh west of the Twin Cities at the time. And the state was targeting big dogs in smaller communities as well. And so our friend's grandpa was a big dog in our community. He was well regarded at church. He was a uh a really great guy, really kind, generous man. And they honed in on him and they figured out a way to nail him for some tax issues. And he ended up going to prison. And it served as a very cautionary tale to all of us who lived in the, you know, obviously that was what they were mission accomplished. Mission accomplished, but we it served as a cautionary tale to all of us who grew up in the community. Like, I don't want to be in a position where that could ever happen to me. And clearly, if he was unaware of things and didn't know how to maneuver the tax code, and if he was able to be taken advantage of from a tax preparer, then we better be careful and we better hire somebody who's legit to take care of this and get it done the right way. So we had all of the best intentions. There was no part of us that were trying to be sneaky or we're trying to get away with things. There are a lot of business owners out there that are trying to be sneaky and that are trying to pay no taxes. That's never been us. I'm always like, I'll pay the taxes. I don't want to go to jail. Just tell me what I owe and I'll pay. If only it were that simple, right? So let's dive in, let's start talking about this. So we we we knew that we were not tax experts. We never tried to do it. Our first year full-time in business, we ended up going to an HR block because that was the option at the time. We didn't have a bookkeeper or an accountant, and that was what ended up working. We literally brought a shoebox full of receipts. We tracked our it was an organized shoebox, but it was it's that classic scenario where a business owner shows up with a box full of the lady, it was absolutely she wanted to quit her job that day. She said, Are you kidding me? She thought we were joking. She was pleasantly surprised, though, at how organized the receipts were inside. So we had done some of the heavy lifting, but we did show up to HR block with a shoebox full of receipts. We paid whatever they charged. It was low, but they we paid it. And we knew from that point we need to find somebody who we can actually have a relationship with. We met Jerry in a networking group that we were a part of. Scary Jerry. Scary Jerry, Harry Jerry. We met Jerry in a networking group that we were a part of, and most people in the group were using him. We joined the group and it was, it was, it seemed legit. The group itself was fine. It was one of those networking groups where it was only for small business owners or people in the business community. So there were a lot of other small business owners. There were also just a lot of other people just in the business world. But everyone, I think almost every single person in the group was using this guy. He had his own tax firm. He was knowledgeable, he was approachable. He had a business partner as well at the time who was involved as well. And he seemed great. We never felt dumb for asking him questions. That was another thing because at that stage of our lives and at that stage, early stage of our business, we felt a little bit weird that we didn't have a better understanding of like what taxes we would owe. And he was just very, he was really great to work with right away. And we, it's not like we hired him day one of the networking group. We knew that we had this need and we'd been looking for someone low-key for a little bit. And we did meet with him and his business partner. We walked him through our situation. Cause at the time as well, it wasn't so straightforward with our business. We were 50-50 business partners technically, but at the time, just based on revenues and profits and all of that, we were actually on paper. Danny was taking more money than I was because Danny was married with family. I was single at the time, didn't have any dependents or anything like that. So I just needed less to live. And at the time, that seemed reasonable. It was sort of a gentleman's agreement between the two of us and obviously worked out fine because here we are still. We're 50-50 now. But at the time, it wasn't, it wasn't so simple. So we thought we were in need of a tax accountant who we were able to have a little bit more of a rapport with where we could just be really transparent about what was going on. We needed, we felt like we needed to have a relationship with the person, is what I should say. And as a small business owner, I think that that is an important relationship to have is somebody who you can have strategic conversations with who can help you accomplish the goals. And Jerry was that for us. And in fact, there's there's some advice that he gave us years and years ago that we still give other people today. The advice was if you're running your business and you can connect 10 or more percent of your revenue to one individual client, that's a dangerous place to be operating in business because it's not so simple as if they stop buying from you, you're gonna just be okay. And that's really great advice. Is he told us you're you're gonna want to have a much more diverse clientele where they're all making up smaller percentages. So you're not so reliant on one individual client. And that's really great advice. It's really great feedback. And we still, you know, we still tell that to other people who are in situations where, you know, they have one client who's responsible for 25% of their revenue. That's not a super healthy place to be. But all that to say, Jerry was a knowledgeable guy. Yeah, and he wasn't sketchy. There were, there were a lot of things that we were running past him, and he was saying, nope, that's you can't do that, or yes, you can do that, or you you're gonna want to be really careful if you do this. He was, he's, he was very knowledgeable. He wasn't sketchy at all. And we had no reason to believe anything other than that he was gonna be a great addition to our to our uh team, that he was gonna really help us grow, that he was gonna be above board in every way because we were very clear with him that we want to be above board. Of course, I don't want to overpay taxes, but we also don't want to, you know, underpay him trying to get away with something. I'm not interested in playing that game. It's just, it's too risky, and I know what can happen. So we're not interested in that. It all went fine for a while, partly because it was going fine, I think, and then also partly because we didn't know anything. And we've always operated from the place as as it relates to taxes, especially, where no news has got to be good news, right? And where ignorance is bliss. We have a little bit of a different sensibility around that now. But that was our mentality then, right? Was ignorance is bliss, no news is good news. And as long as he doesn't need anything from us, then we must be good, right? And he needed very little from us. It wasn't, it wasn't as though we were, because he he was kind of tracking everything. He had access, we had given him access to uh our credit card statements and all of that. He he did not have access to our well, actually, I think he did have access to our bank account, didn't he? He did, yeah. Yeah, okay. Oops. We'll get there. We'll we will get there. But he had access to everything. So he wasn't, we weren't sending him anything. He was very much taking care of it. And then every once in a while, he would need like a signature. There were a couple of times I remember where he signed or he filed some extensions for our taxes, but that's no big deal. That's very normal. And we knew about it ahead of time. He was very straightforward about it, and no reason to think anything weird or unsavory was going on. It was during that time when things were going well, where we he opened a payroll branch within his tax firm. And it made sense that we would payroll ourselves through him. And everybody at home is clenched now. Everyone at home is like clenching, everyone's clenching their butt cheeks. Their butts are tight. Uh, but I wish we would have clenched our butt cheeks a little bit at some of this instead of just letting her rip. But uh, we he opened a payroll uh branch and it made sense at the time because of there was and there was also some some federal changes with small business taxes, where if you're filing as an S-corp where you're getting payroll, there's some sort of a state deduction you can take. I believe that's what it was. That was the other genius thing. Thank you so much, Jerry, for your thank you so much, Jerry. We really owe you Jerry. You know what? Just thank you for everything. That was the first thing he had us do was switch out from LLC to S-corp, which made a lot of sense. Good advice. Again, you know, things, it's not like things were always crazy and bad, but we ended up payrolling ourselves through Jerry's company. We also payrolled our employee through Jerry Jerry's company. So the dollar amounts were small. Yeah, and you know how it works. You you it's a monthly thing, X number is withheld for taxes. So it was paid to the state. Every month it was payrolled, it would land in our bank accounts, and then there was automatically stuff that was withheld and paid to the state. And the dollar amounts were small, but they were thousands a month. It wasn't like it was, you know, peanuts, but it was all things considered pretty small. But this was something that was going on then for a few years. At some point, and we do know we were sitting down, we were coming up with a timeline, and we just decided for those of you regulars listening to this, we're not gonna bog you down with the dates and the days and the seasons and all of this because that's unimportant. So some of this cool fall morning. Some of this we're kind of breezing past, and we're not getting into a lot of the specifics because we this is this is a complicated story enough. But there was one point one year where we were told, and I believe this is true, that his wife had a brain aneurysm. Yeah, some sort of a severe health problem. And it was during tax season, and he was very apologetic, but he was not able to uh file our taxes on time. So there were some interest in penalties that accrued. And he said, please let me know when you get the letters from the IRS and I will pay them. And we got the letters from the IRS and he paid them. Okay. Things happen. Of course, it was a little weird. It felt, you know, I had never been penalized from the IRS before. And here's the thing once you're on their radar, you're never off their radar. Yeah, you're on the radar. We had up until that point felt pretty good. And I was I was feeling a little uncomfortable with that because I was thinking, oh man, yeah, you know, now we're on their radar, but at least he's taking care of it. And that wasn't the only penalty or you know, interest penalty letter that we got. We got a few more in the in the following year or two, and we would send a photo of the letter, and Jerry would say, I'll take care of it. And Jerry would take care of it. And again, this was our first, our first actual tax person we'd ever worked with, in you know, a personal sense. I didn't know what to expect. Some of you listening are you're you your tax people probably do this too. I don't know. I don't know how common is maybe not, hopefully not, but I didn't know. And as we've been telling the story over the years, people will say, Well, didn't you know? Weren't you signing these forms? And didn't you didn't you have this? And why weren't you doing this? We didn't know. We can't know what we don't know. Don't talk to me about a letter and a number form. K1, W2. I remember that. I don't want to hear it. I don't know what forms that I signed and didn't, and did, and didn't, and should have and shouldn't have. I don't want to hear it. Right. You know, of course, we understand how we understand now. My tax guy could could call me right now and say, hey, I thought you guys were gonna sign your pen 15 form. You guys, you're late on your pen 15. Honestly, he's uh he's gonna our tax guy, you need to write pen 15 on your forehead in order for the form to count. Okay, sounds great. All right, yeah. I could sign a pen 15 form right now, and I would I would think that it's going to taxes. You're welcome, Uncle Sam. So we'd gotten some letters. It wasn't all sunshine and rainbows, but it was there were no there was no reason to ring any alarm bells or to freak out or to you know to get get upset. It was just as far as we were concerned, things happen, you know, it was a little clunky, but it wasn't it wasn't horrifying. And it wasn't, it wasn't like we were feeling unsettled by any of this. Yeah. And there was, there was a a time right around this period of time, we were we were trying to buy a a cabin up north. And that required Jerry be in touch with the lender. We realized at that point in time, Jerry actually hadn't filed, not only did he file an extension, but he actually hadn't filed the taxes. So then we were hit with another pretty substantial tax bill uh because I was a majority owner of the company. Still at the time, mine was a lot higher than Kenny's. But we were, we were in the point where we're like, okay, we're starting to see this like actual tax debt now start to pile up. And shortly after that, all that to say, nothing ended up happening with the cabin. Maybe that's a story for a different episode. We'll see. Shortly after that, we were trying to figure out what would it look like to maybe move. Like personally, me and my family, we were wanting to move and we were starting to look at houses. So I was trying to get in touch with Jerry about hey, I I know we historically file extensions. I'm not interested in doing that this year. I want it to just kind of go normally so that I have some current paperwork that I can provide for pre-approval stuff and what have you. And I didn't hear anything from Jerry. So then I was in touch again, didn't hear anything. And at some point in time, I got in touch with an employee that worked in his office. She was super responsive and super great, but she had no awareness of anything that was going on. She wasn't helpful, but it was she would always be like, Oh, yeah, next time I see Jerry, I'll let him know. And all that to say, I never heard. Heard anything from him. And we were, Kenny and I were having conversations about this now is not normal. Right. And it was around the same time as well that we were we were at a holiday and we were I were I was overhearing my brother-in-law and my brother have a conversation about owner distributions. And I'm like, excuse me, what what what are you talking about? What district, what does that mean? And uh so I went ahead and I shot Jerry an email and I was like, you know, tell me more about this distribution. Yeah, I'd love to get one of those. Kind of sounds like something we probably should have been doing for a while. Uh, what do you think? Crickets. And between Danny's issue, our issue, the extensions thing, the at this point now it's now a pattern of this. We're now aware of the tax debt. We're starting to get the sense something's really wrong here. Yeah. And it was, it was just one of those things where we were so helpless in this situation because the guy who we had been working with for years just was straight up not responding to anything. I remember a conversation I had with this employee of his. And I remember telling her, like, I the only thing I can think of in this moment is that you are employed by a Ponzi scheme where he's taking people's money, he's not doing what he says he's gonna do with it. And then he's he's paying off people's debts and, you know, people's scary tax letters. And she's like, oh, haha, I don't think that's what's going on. But shortly after this, we are now in the middle of the first year in business where we are actually making real money. The saving grace of all the tax debt and all of the weirdness and the penalties and all of the things that were feeling that were feeling odd but not scary. The best thing that could have happened was that these were happening during years where it was pretty lean times for our business. It was the early days. We were not all that profitable. We were making very little personally. So looking back, that was a real benefit to us. I'm really thankful that we were not in the process of making, you know, a million plus every year when we were working with. I'm sure he wished we were making a lot more. Oh, yeah. He would have loved that. But uh, we that that's kind of the saving grace is we it was in the the early days, and we were just were not that profitable. So the tax numbers at the time were big for us, but all things considered, you know, pretty small as far as business and personal taxes. Yeah, I I had five figures on a payment plan. You had a, you know, middle. I had like an eight, yeah, I was like eight or six or eight thousand that I was had on a payment plan. So we were on these like low payment plans for dollar amounts that looking back feel like not that big of a deal, but in in the at the time felt pretty large. And we were just realizing like this is not normal for for business owners to be to owe back taxes on things that we were unaware of. So we have in we've mentioned 2021 before. That was the at that point, that was the biggest year that we'd had in business up until that point. And it was a great year. That was the year that we uh tripled our revenue and quadrupled our profits. And we were about halfway through the year, and we looked at each other and we said, it's gonna be pretty important that we have our taxes done right from this point forward. Yeah. And I'm not into the idea that we're rolling the dice. I'm not into the idea that we are on the IRS's radar, but there's stuff going on that we're not aware of and we're also not in control of. But I know the buck actually does stop with me. And we decided to take the steps to hire a different firm. And this is very common where when you hire a new firm, same, same with insurance, you know, you hire the new person, and then the new person, this is, you know, you change therapists or doctors, they get your records. They get your records from the old company. It's supposed to be a seamless transition. We thought it was going to be straightforward. Uh, we had gotten the recommendation from uh my wife had started to use this new firm. A friend of ours had started using this firm, and uh we liked them and we thought, oh, this is great. So we hired the new firm. We said, here's a deal. Uh it might be a little tricky to get in touch with Jerry. Uh, so do your thing. And it was through the process of them trying to get in touch with Jerry to get our records that we really started to identify just how wide the spider web had been spun. So we were actively almost daily at this point trying to get into contact with Jerry, trying, trying, trying, trying. Because at this point, we were just trying to get our files. Yeah, our returns. Just our previous returns. And he was just not responding at all. After months of this, because our our new people were like, hey, we can't do anything unless we see what's been going on. Yeah, it was the very end of 2021 that we started making this transition, which was for the tax year 2021. But, you know, we'd been trying to get in touch with Jerry now for months. So it's kind of coming up on the time where we really need to file those returns. He had given them my 2019. You didn't have a 2019. Somewhere in my 2019, it had showed that I had taken some $127,000 distribution, which I hadn't done. And so I'm I'm looking at that. It's like, of course, I've been grossly overpaying on my personal taxes, but now is not the time to try to figure that out. Now is only the time to try to move forward. So we're in this, in this process. Jerry ends up sending us a letter, a physical hard copy letter that is essentially him owning up to the fact that we don't have 2020 done. They were never filed. He said that they were filed and the dog ate his homework, essentially. Uh, I filed them, but they disappeared and whatever. So we had to pay the new firm to dig out of 2020 and to move forward with 2021. So just to recap here, the information the new firm got from Jerry's firm was partial. It was not complete of as Danny sort of breezed past this, but the information that they did receive, we were actually, it turns out, we had grossly been overpaying our taxes on the years that Jerry was filing our taxes, which is, you know, ultimately really annoying, but it's not the worst thing. I would much rather have done it that way than the way that, you know, underpaying and then have to pay it all back. But the things weren't done correctly. And then he didn't file any 2020s. So by the time we hired the new firm, we were actually now two years behind where we should have been, because the new firm we hired for 2021. So they needed to do that. They also needed to go back in time and figure out the 2020s. And I don't even remember what happened with my 2019s. It was a mess. It was a mess. Jerry did end up our new firm build him for the cost of cleaning up 2020 and the associated penalties and fees. Jerry made it right. Awesome. So now it's business as usual. Now we're able to move forward. Well, you no, no, no. Not yet. As the new firm is doing our taxes and they're estimating what we're gonna owe this year, what we were gonna owe from 2020, and the penalties and fees associated. We were spitballed a number from our new firm of what we probably, and I was like, our new tax guy, his name is Chris. I was like, Chris, you need he didn't want to, he didn't want to take a guess on what we were gonna owe. He I he wasn't gonna spitball. And I and I know why now. I said, you need to spitball. We need to know. We need to know what we're looking at. The number that got spitballed to us was $250,000 that we were gonna have to owe all in to clean up the taxes, penalties, fees, taxes owed. A quarter of a million dollars. And boy, did that ruin my winter. It was like right before Christmas. It was, it was right before Christmas. It was uh very, very scary. Now, after all was said and done, it did not end up being quite that high, but it wasn't, you know, it wasn't that far off, but it was not quite that much. So that was kind of nice. But that was the big scary number we were given. And boy, was it big! And boy, was it scary. It sure was. All right, you may continue. So we think we're in the clear. Yeah, we we finally got all paid up. We wrote all these huge checks, and we're like, finally, thank goodness we're all caught up in our taxes for the first, we didn't realize it at the time, but we thought we were all caught up for the first time ever in our careers. Yeah, so now we can start to move forward, we can stop looking in the rearview mirror, we can focus on being strategic and being smart as opposed to being reactionary and wishing we could go back in time and change the way we were doing things. And a couple years after we thought that we were set. So now we're getting sort of recent. We get a letter from Minnesota Revenue on our birthday of all days. Happy birthday. It said here's a big fat check. Thank you so much, Kenny and Danny, for your your faithfulness and your diligence. It was not a check. In fact, it was a demand letter for previous taxes owed that we had thought we had already paid for $64,000 that we owed the state of Minnesota for the last five years of taxes. Payroll taxes. Payroll taxes. Remember when I said we started using Jerry's company for payroll? Oh boy. So we were not about to try to get in touch with Jerry to try to figure this out. So at this point, we hired an attorney. We figured anything we have to say to Jerry from this point on can be said through an attorney. And I think we might get a quicker response. So sure enough, Jerry is responsive. Jerry is uh admitting, I guess, that perhaps he was not paying the state of Minnesota with the money that he was withdrawing from our account. So basically, what was happening uh is in our bank statement for years, you can see the payroll amounts that come out. You then also see the taxes, and it's it's indicated on the bank statements as taxes paid to the state of Minnesota. Now, I don't know how he was able to doctor that, but he obviously was because it was being withdrawn out of the account and it was designated as a tax payment, and also records provided from Jerry's firm showed tax payments. So as far as we were concerned, taxes were being paid, but it turns out Jerry wasn't paying the taxes. I think Jerry bought a new camper. I think Jerry, I think, I think we did a very extensive landscaping project for Jerry's new residence. Exactly. But we hired an attorney to go after Jerry. The attorney was great. Jerry was Jerry. He was willing to do some things. He wasn't willing to sign a promissory note. That was very made very clear. Basically, for you regulars listening, my understanding of a promissory note was basically it's like a paper trail where your signature is on it, where you're saying, I am committed to it's basically like I'm I'm open to you putting a lien on everything I have. Like I, I you have permission to sell off my belongings to recover your money. And Jerry wasn't interested in signing that. He was not interested in uh putting his camper up for sale, but he was willing to at least take some of the responsibility. And he was admitting fault, admitting that he would get it figured out, but then we wouldn't, we would go periods of time without hearing from him again. So the demand letter we got from the state of Minnesota was on our birthday, which is in April, and the payment date was I don't know if it was a month later. It might have been June, maybe two months later. Regardless, it was uh a couple months later. And the reason why we had our attorney going after Jerry was it is taking all of my mental power to not actually say it's real. Yeah. So our attorney was like after Jerry, like a dog with a bone, every single day. Where's the money? Where's the money? Where's the money? Because we were obviously hoping that Jerry, since he admitted that he, you know, took the money but didn't pay it to the state, he didn't say what he did with the money, but he did say, yes, you your records are correct. I did take the money, and I you are correct. I did not pass that money on to the state. So we were really hoping that Jerry would write us a check so that we could pay it to the state. You know, no reason we need to be Jerry's lender again. But Jerry uh ghosted again. We should have maybe called him Casper. Casper the ghost. Jerry disappears. So what ended up happening was we ended up needing to write the state a check. We got we were we'd been in touch with the state and we'd said, here's what's going on, here's the deal, this is the guy's name, here's his info. He embezzled from us and he admitted it, and here's the paperwork to prove it. Now we're trying to go after him for the money, and the state was like, Yeah, that doesn't matter. We can't adjust the payment. Yeah, we're still gonna need it. By the way, the state of Minnesota uh was trash throughout this process, and we'll tell you a little bit more about that in in a minute. But uh, we did contact the state and they were not interested in hearing the story. We had our attorney contact the state on our behalf. They don't care. They just wanted their money and they weren't gonna allow it to even be a day late. So because we couldn't get in touch with Jerry at the time, we ended up having to write the state a check. Now, keep in mind this was money we already paid. Over the course of however many years we had done payroll through Jerry, we had already paid that $64,000. It had already left our accounts years previous. Jerry said he was paying our taxes with it and didn't. So now we're looking at this situation where we have now double paid the taxes on this thing in order for the state to be made whole. All that to say, shortly after we wrote the check to the state, we did receive a wire transfer for the total amount from Jerry. Through this process, we were talking through litigation possibilities. We had met with his former business partner to kind of see if we were the maybe the only ones who this had been happening to. And it turns out we were far from the only ones. The dollar amount was on the higher side of what other people had dealt with, but we were not the only ones who had this done. But ultimately, because the state of Minnesota was unwilling to do anything with him, unwilling to take away his license to practice. There was nothing really that we could be that we could do. We did, you know, open a police report and try to start an investigation. That was the other thing that our attorney suggested was that we file a police report. So there's a theft police report. What the police wanted to do was they wanted us to provide them with five years of our bank records. That felt a little bit weird. And I was just thinking, you know, I'm not gonna do that. I'm not gonna just give, I mean, that's essentially like inviting the police into your home without a warrant. It doesn't matter if you think you have anything to hide, you're just not supposed to do it. So that's what it felt like. I think that kind of is what it was, it would have been. So we were just like, uh, no, never mind. But everyone is like, well, why didn't you sue him? Why didn't you sue Jerry? Well, here's why. Well, first of all, we we would have had to foot the bill on that. And I'm not interested in paying that kind of money to go after the guy secondary. To hopefully get him to cover attorney fees. Secondly, the guy's broke, obviously. He's broke, he's stealing from people like us. And it's, you know, like we said, we we know where he is and we know what he's up to. And he's not living La Vita Loca. You know, he's not, he's not like living large. He's living a he's living a fine life, but it's not like he's uh living this uh obscenely wealthy lifestyle. If that was the case, we would go after him. If I knew there were hundreds of thousands of dollars in it for us to pursue a lawsuit, I would absolutely pursue that. But I just don't think there's anything there. Not to mention the mental toll that this situation had. We breezed through this story in you know, 20 minutes or whatever it's been, but this was years. I mean, this was over the course of three and a half years that we were discovering this every single day, going to the mailbox with a pit in my stomach, because I was assuming, and oftentimes there were demand letters from the IRS, the state of Minnesota, more penalties, more and just a dark cloud over what was really our best year in business that we had had up until that point, knowing that we did not have our tax situation figured out. It just cast this dark shadow over that entire super profitable, super exciting year. And I didn't really want to relive that. No, and court cases are notoriously slow. And I just we we just didn't want to go through the the mental anguish of that sort of situation. It just wasn't feeling like there really was gonna be a positive to that, other than yes, we probably would be able to recoup some money, but ultimately you have to think about what is the what is the money actually gonna get you? And uh I just wasn't I and I'm still not willing to put myself in a situation where I'm going to go after that dollar amount, but have to live through the unknowns of however long it would take to get that money back. So that's why we didn't sue. I know we have a case. We have this paper trail of him basically acknowledging that he's, you know, stolen that he's embezzled from us. So of course I know we'd win, but I just don't want to do it. It's just out of sight, out of mind, I don't want to do it. We've moved on, and that's the end of it. I've never heard of anyone who's gone through something like this, except for recently. Recently, there's this clip going around from a podcast that the guy who is the um the son on Breaking Bad, he went through What's his name? RJ? Is that his name? That's his actual name, I think. Okay, I think his actual name is RJ. I can't remember his name from the show, but editors, can we find that clip and throw it in here? If you can find the clip editors, insert it here.

SPEAKER_00 40:42

One thing that did put a damper on me, I did have a bad business manager. I did, I got, I got royally like hammered. So what happened in my last four years of my highest earnings series? I write a check and like to go pay my taxes. And instead of her using it to pay my taxes, she would send me a fake filing of taxes and take that money. And so at the end of the day, though, it's my negligence. So, regardless with that, the IRS doesn't really care about you. They only care that you make sure that you're that you are paying it, and anyone else that handles that is your fault because you did not do your due diligence.

SPEAKER_01 41:23

So that's very similar to what we experienced. And I had never every time we've told this story the same length of time, too, five years. I know it's crazy. Every time we've told this story to somebody, it's it's met with kind of a whoa, like that's sounds horrible. But that's you know, what he experienced is kind of exactly what we did too. I would think that he was working also with Jerry, if he wouldn't have said she, which maybe is his way of covering. I mean, who knows? I don't know. Jerry and Sherry, I guess, are quite the dynamic duo. But the other thing that I think this sort of this experience kind of brought up in me, and it was something that I had to fight for a long time, was I felt really stupid. And it was something that felt really it was difficult. It was difficult to talk about, and it was it was difficult to share with people because I feel like there were so many. We mentioned the questions, well, didn't you know when you weren't signing this? And well, what about the K forms? Yeah, what about the pen 15? What about what about pen 15? And you know, it's it was one of those things where it's I don't know how you're supposed to know this. I don't know, you know, we we didn't grow up around big money where we're talking about taxes and we've never had these sorts of experiences before. I don't know what it's supposed to look like. When you when you hire someone real, you assume that they're doing a good job. We just assumed in the years that we were working with them that our business wasn't big enough to have to pay taxes. We weren't profitable enough to have to pay taxes. And listen, for those of you who uh regulars who are unfamiliar, we work in Minnesota and the state of Minnesota actually doesn't have sales tax on clothing. So there is a huge amount of tax that we actually are totally exempt from, exempt from having to pay. So the idea that maybe we're not making enough to actually owe taxes isn't that far of a stretch. But what we hadn't accounted for was the payroll taxes, which we very much thought were we're getting paid, which we're not getting paid. So, anyways, that's the story of the tax accountant. Oh, and by the way, did you know not every accountant is a CPA? We didn't know that. You can be an accountant and a tax preparer, not a CPA. So Jerry is not a CPA. Jerry is a tax preparer, and didn't know that. That's the other thing. Well, didn't you check his references? Yes, we did. Didn't you check his reviews? Even to this day, everyone, his reviews are pretty good. Yeah, they were they're pretty good. There are some reviews out there that aren't so good, but you know how the bad reviews look. It reads like this person's just a you know angry, sort of got a bone to pick. Yeah, they don't read that legitimate, and nobody uh writing these reviews has a similar story to me. So, yes, we did look at his reviews. Yes, we did see his references. Someone at one point was like, Well, didn't you see his uh credentials? No. Like if I drive to your house or your work, you're not gonna ask to see my driver's license. Like you just kind of assume that I've got one. That I've got one, that I know how to do it. Like, no, there's a certain amount of things that are just you do have to make the assumptions. And when you when you know someone and a lot of people you know are using him, of course, there's there's no shortage of things we could have done. Hindsight is 2020. And going back, would I have used Jerry? Absolutely not. But going back, would I try to do it myself? Also, absolutely not. I still am under the conviction that as business owners, we've got to offload certain things, taxes being one of them. And now we work with a great firm who, you know, is very strategic and does a really great job. I wish maybe we would have looked a little bit harder for somebody, but we thought we were doing what we were supposed to do. I don't uh, I don't. I mean, where would we have looked? Right. We met the guy in a networking group who who it was for this very thing. Right. I don't know how we would have looked any harder. I mean, we we joined this group. It was he was vetted. I don't know. I I don't I don't kick myself anymore. I was kicking myself in those years. Yeah, I was absolutely kicked. I don't kick myself. It's no wonder we used him. I'm not surprised we used him. Yeah, and and we're we're in the clear now. It's been multiple years since we've had any sort of dealings with anything negative. Okay, although you guys, we went to the mailbox today and there was a letter. I kid you not, I'm not kidding. There was a letter from the IRS today, and both of us are like, holy shit, are you kidding me? And it was actually uh, you have a hundred dollar credit in your account. So I don't know what that's about. I have no idea. Maybe Jerry's trying to repay us. But that's those are the letters we get now from the IRS. Thank God. It's fine now. It's it's it's fine now, but I do think it's easy to be in this active, like you idiot, and you you're so dumb and beat yourself up, but we didn't know any better. You learn as you go, you learn as you go. That's the whole point. Like what got you to the point that you're currently existing in now is not necessarily what's going to be the what's going to get you to that next stage. And just like I was saying at the top of this episode, sometimes you have to change things and and and tweak things for what you want long term in business. And we learned some expensive lessons, but we learned some lessons along the way too. And I do think, you know, being on the other side of it, I do think we are much better off for having gone through that. Do I wish we never went through it? Yes. Of course. Of course I do. You know, personally speaking, we weren't able to seriously look at homes that we really liked in that early stage of realizing he's not going to have anything ready for us. We're not going to be able to get pre-approved right now. He's not caught up on anything. There were also spaces that we wanted for our business that we weren't able to actually land because we didn't have the proper PLs. We didn't have up-to-date gear to information. And so there were certain things that we were missing out on for years. But listen, here we are about to move into a much better space. Things happen for a reason than the spaces we were looking at there. Here I am personally, you know, in a in a home that we were able to qualify for the right way. We were able to do the things we wanted to do. It's a much better neighborhood than what we were looking at. It all works out. Our tax people now, quite the dream team because it's our tax. Uh they're actually CPAs. Yes, of course they are. So that's important. CPAs, he also is a lender for mortgage lending. And his one of his good friends is a realtor. So we kept it all in-house and they took care of it all. When I bought my house, it was everyone's was, you know, everyone complains about how complex it is buying a home. I know you, it was no picnic for you. Quite frankly, it couldn't have been easier for me. Well, quite same thing for me when we actually were working with them and doing it the right way. It was a breeze. I never had to have any sort of conversations with the realtor. Pre-approval letters were sent for everything we looked at. Qualification, easy. The lending was a piece of cake. It was, it was honestly a dream. So, of course, it was a pain in the ass to get there, but ultimately everything happens for a reason. And I'm so glad it did. My number one fear in the time when we were working with Jerry and unknown about what was going to happen was that we were going to be audited. I honestly kind of wish we would have been. The IRS would have been like, here's what you owe. Yeah, here you go. It would, it would have saved us years of trying to untangle this thing. But ultimately, everything happens for a reason. We're in a much better place now. Thank goodness. And I'm not kidding. If you're in a situation like this, uh and you think, I mean, we're in Minnesota. Uh, Jerry lives in Florida. Okay. And his name isn't Jerry. So that's the information you have about this guy. If you think you might be working with him, let us know. We'll actually give you his real name. Or if you're in a similar type of situation where your tax preparer is flaky, you never have access to the information you need in order to grow your business in the right way. We'd love to have a conversation and kind of help talk you through what we did. But if you're in any other situation, I wonder if you can hear the the sirens in the background right now. They're going for Jerry. Jerry's here. Jerry's in town. But if you're in a situation the police finally got him. If you're in a situation that you just know isn't ideal and you know you're gonna have to dig out of it, and you know you're gonna have to hire somebody to help dig you out of it, I would focus on making as much money as you can so you can hire the right person to help you dig out of it. And if you're in a situation where you're feeling frustrated and you're feeling stupid and you're feeling like you should have done this thing, but you didn't, just know that everything is gonna be okay. The buck does stop with you, though. So it may require some hard work. We knew it was gonna be hard to change tax preparers. We knew it was gonna be a long process. We had no idea what we were actually in for because we had no idea how wide the web was. It turned out to be much more of a process than we realized. But all you can do is all you can do and start with one thing, start to try to do it differently, start to try to do it better and take it one step at a time. One step at a time. That's all you can do. But don't allow yourself to beat yourself up and feel stupid and feel embarrassed and feel ashamed. No good will come out of that. Just be proactive and try to do something different in a better way. If you'd like to get our weekly newsletter, that link is in our bio. Thanks so much for coming to your appointment. Your appointment's over. We'll see you at your next one. And that's that. Today's appointment is over. This has been appointment only. Your time is valuable, and we're very appreciative of you spending some of it with us. Thanks for showing up. Thanks for being on time. Thanks for being receptive to what we have to say. And if you have a question you'd like us to answer here on appointment only, please shoot us a DM. We would love to hear from you. 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