Why I’m Famous At Wells Fargo

I am convinced that we all will be humbled at some point. The fortunate part is it is probably one of the largest stepping stones to the success there is. I can’t believe the shaky foundations I have tried to build on in the past, viewing from where I stand now. I have gone through so many times in my life where I felt like I couldn’t lose. Like I had the world by the balls. Sometimes you need the world to kick your a$$ to realize something better might be out there.

The following story I’m going to share shows how being diligent in hard times is so important.

Ok. I have been attempting to source raw materials for very large companies. Companies you would know. This had initially been a project I took on for fun because I saw some opportunity. I eventually found demand for something huge and went after it. It took over a year to find this particular product. I worked and worked. Through supplier after supplier. Country after country. I must have had the same discussion with 1000 different potential suppliers. I have spent thousands of dollars on samples that didn’t pan out. Plane tickets to meetings that didn’t pan out. Shit wasn’t going right. I wanted to quit because this sourcing crap didn’t even matter, I was making money elsewhere, but I decided a long time ago that if “its too hard” is my reason, I will not quit. I refuse to be a pussy.

I decided a long time ago that if “its too hard” is my reason, I will not quit.

—Kyle Keegan

Finally, after all of that blood, sweat and tears, I found the material in China, at a price where I could make an ongoing mid six figures per month. I thought the blood sweat and tears were over. This was by far the biggest kind of deal I had ever done. It was amazing and exciting. I sailed through the process of sending samples and supporting documents to potential customers. Doing my best to look like a way bigger company than I am. Finally, One bit. Hard. Within about a month I had money being put into a letter of credit for the first of what would be 6-10 similar transactions per month. It was there. Way more income than I have ever had in my life was sitting in limbo. It was a side project about to blow past my other businesses. It was sitting there ready for me to transfer just a fraction out to my supplier. That fraction happened to be about 100k by the way. The remaining chunk would be mine when the LOC cleared.

Wells Fargo made the transfer a pain, every step of the way they would need some other bs for me to create. I ended up on my honeymoon during this deal because it took a few weeks to get this done. My wife, being the awesome girl she is, was supportive and found it hilarious when I needed to get a document notarized in Cabo. We went to like 7 places before one just took 20 bucks to stamp my document. Finally I was in compliance with all of the regulatory crap. Honestly, it probably wasn’t, because the Mexican notary may have just been some guy with a stamp.

Whatever, now I can relax and look at million-dollar vacation homes and have fun on my honeymoon because big money is on the way.

Back at home I got confirmation from Wells that the transfer was a success and the credit was now offered to my supplier. I was excited to tell them that evening, but evidently they already knew. The supplier we had been in discussions with for months, who supplied a rock solid sample was completely unreachable.

Their website gone.

Phones disconnected.

Email bouncing.

Son of a bitch…

Yeah that is what I thought.

They had a very professional website. They had a number of different salespeople. I ran their business license with the Chinese government and they were new, but clean. The sample was good. They accepted a secure form of payment. They looked like the real deal and I was fooled. I didn’t think I needed to look harder at them. Although I have a different way of doing things now.

Within 10 minutes I contacted my customer with the bad news. I always do business above board with the most honesty I can possibly share in order to build the most solid foundations I can. As you would expect this looked bad. I looked like shit. I basically sent 100 grand of his money to a scam.

I was livid. On that day, given the opportunity I would have been willing to murder those pieces of shit. I called Wells Fargo about the protections offered by a letter of credit. They said they MUST transfer the actual funds against a bill of lading… More bad news. They have “no say” in whether the transfer is facilitated. So adding this up in my head… These scammers had a plan to be able to transfer the money even though it was supposedly a secure LOC. I called around to people I know who work out of China and they said it was becoming a common thing to fraudulently accept letters of credit because they have paid off ship captains that will create fraudulent bills of lading for them and allowing them to transfer.

For all intents and purposes I was screwed. Not only did my deal fall through, but I was going to lose my customer 100 grand, probably get sued, and proceed to lose 150k of my own money in the lawsuit. I thought the blood, sweat and tears were bad until then and I would have given anything to go back there and take a different turn that would have led me to a different supplier.

I almost took Wells Fargo at their word. The money was basically sitting in escrow just waiting to be dispatched to the scammers whenever they submitted the proper documents. I almost decided to hope and pray that the bill of lading would get flagged, and then that my customer wouldn’t sue me if it did. I was in for a rough month of a waiting game. Then I had a discussion with a mentor. He said something along the lines of “the hell they have to transfer the money,” and “make it known that you aren’t going to go away.”

I took his advice… for 2 weeks I beat them up. Calling them and sending them email after email. I got to the board of directors. I was the most annoying to any one organization I have ever been in my life. The total tally was over 500 emails. Probably 100 that said I was going to sue them and that they are complicit in the fraud if they transfer the money. That they knew in advance of a fraudulent transaction and did nothing. Their internal communications system sucks by the way, you can never get the same person on the phone twice. They told me time after time that there was not a thing they could do.

Then a lady called me. She said “I think I can help you”, for the first time a bit of hope. She said “we can’t cancel the LOC but we can make it expire sooner” I asked how much sooner because we definitely had already given them plenty of time with our money exposed. She said 2 days to process an amendment. I said lets do it.

Meanwhile I wasn’t giving up beating on the board at WF over and over I asked for a cancellation. 2 days was all it really took for them to run off with the money anyway. Over and over they said they cant. I sent emails to the CEO, CFO, internal counsel, COO. Every single officer. Each of them probably got 60 emails. Finally it was confirmed that the LOC had expired. I had dodged a bullet, but I still had the Chinese police looking for them and assisted in an investigation with a Russian guy that was actually defrauded. I should follow up with the police to see if anything came of it. Hopefully they are all behind bars or dealt with.

I told my customer he could call and get the money out of the LOC. When he called and said which transaction they kissed his a$$ up and down the place. “Oh you were the applicant on KAKs LOC? We know exactly who that is, let’s get you your money.”

He later called me and asked me what the hell happened and I told him this story. He said he has never worked with a supplier that has gone so above and beyond to protect his interests in his life and has since given me the opportunity to not only sell this same product to him again, but has asked me to source most of his raw materials. Yeah a big 180. Thanks to that mentor kicking my a$$ a bit.

Me and my team talk about two things in this business “irons in fire” and “balls in courts.” A good iron in the fire turns into a ball in court. When it’s no longer up to you and you are waiting on a yes or no that is a ball in court… I have 2 currently, with the same customer I worked with in this story.

One is a synthetic lab-made version of that initial Chinese good. It solves ALL of the problems I had with the natural product. Like supply ability, quality, consistency, and outrageous price. It is also made by a company I visited in person, in Texas. It will probably take over an entire market with a private label brand of the good that I own. Finally some light at the end of the tunnel for that product.

The other product I am sourcing for him is made by a friend’s company in Shanghai. The factory is the size of the town I live in. They are legit. My customer has considered 2000 tons (which is like 90 containers full) per month of this material and I’m waiting to hear back on that as well. If one of these balls in courts turns into a deal, and I have no indication why it wouldn’t, it will be a 2-year “overnight success story.”

Lessons Learned

The point I’m trying to make here is that if I had given the finger to this project at ANY point along this journey I wouldn’t be here looking at a far more lucrative deal than I ever thought possible. Hard times can be a blessing in disguise. Clearly a much closer relationship with my customer than I would have had. I have earned respect.

Also, don’t let anyone tell you they can’t do something. They may be right, but someone can. Remember no one gives a shit about you.

In any large scale international trade where you can’t use a credit card or paypal the best bet is net 30. Second best is using straight escrow service. I suggest an LOC as a last option, its only marginally safer than a full blown wire transfer.

No matter what, get references. Do a ton of research and don’t trust anyone.

The bottom line: Don’t leave yourself exposed if you don’t want to get screwed. I’m not above flying somewhere with a laptop and transferring in person as I take delivery on the spot and bring in my own transportation on the first few deals. When you are dealing with 7 figures in a total order, which is where this will end up, you are dealing with enough money where even a once legitimate businessman could be tempted to cut and run. When you are dealing with figures like this you have to be willing to accept a truth that something could always go wrong and you could be the one left with the bill. I always do what I can to make sure that isn’t the case. I also learned to be even more vigilant.

You also need money and the willingness to wrap it up temporarily and the balls not to kill yourself if things go haywire.

My knowledge… I believe being smart is the willingness not the capacity to learn and so I wring every bit of knowledge that I possibly can out of every situation.

My drive… I am a lifelong entrepreneur and I simply understand that the difference between a big business and a small business is the size of your strategy.

Kyle Keegan

Kyle Keegan is a 30-year-old serial entrepreneur from Houston, TX. He has been self-employed since age 19 and has made every sacrifice and hustle necessary to make it work. Currently the CEO of three companies. Kill Bigger Media, providing high quality and educational business resources to entrepreneurs. A VC funded government technology startup and finally an industrial supply company serving some of the world’s largest companies. He is passionate about philanthropy, freedom, capitalism, economics, personal finance, investing and real estate. He has a BA in Business from Baylor University.

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