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Retired and investing with friends or family? Think hard, and then think again

Erin Arvedlund, The Philadelphia Inquirer on

Published in Home and Consumer News

Smith alleges that Miller was effectively out of business "when she took the money from us. It was a Ponzi scheme. She didn't tell us she'd let all the sales force go three months before."

The importance of doing due diligence on a startup venture can't be overstated -- except the due diligence has to be done ahead of time on the main players.

Miller said she'd founded companies before that were successful. Smith alleged Miller used his money to pay off old creditors and to gamble. She tried to file for bankruptcy in 2014 but was denied.

Smith is pursuing resolution like a dog with a bone -- but is getting nowhere.

"I went to the police department in Doylestown, then the Bucks County District Attorney's Office, who told me they didn't have money to investigate. The DA sent me to the state Banking and Securities office. Five different people there gave me the runaround. So I went to the Montgomery County district attorney to file a complaint, who in turn sent me to the attorney general in Norristown."

Don't expect any help from state regulators if you invest in a startup, Smith said. He's filed complaints with the Pennsylvania Department of Banking and Securities and Attorney General Josh Shapiro. He got back two form letters.

"I don't want anyone else to lose money to Miller," Smith said.

Banking and Securities spokesman Ed Novak in Harrisburg said the department "cannot confirm or deny anything about complaints. Those are completely confidential."

 

Miller said with hindsight that she wouldn't have taken money from Smith and his daughter.

"It was unfortunate. It was high risk. It looked great. I cashed out my entire pension. My frustration is that Ron is really the one who has continued to say that something was shady and illegal. And I'm embarrassed because I still get a processor serving me papers. We're all disappointed. We all took hits. We've all tried to move on. If you ask them, it was an unfortunate thing that had great potential. It didn't happen."

Another investor, Anthony Visco, a retired attorney, confirmed that Miller's business "went belly up. Miller wasn't a good business person. I didn't blame her, however. I put in $100,000 and it was a stupid investment. She wasn't a thief, but she was a bad businesswoman. She made bad decisions and business deals. She sunk everything she had into this."

What would he advise about investing with friends and relatives? "Even if you know and love them, do your due diligence and ask a lot of questions."

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