Money Lost On A Deal That Never Was...

[Jim's_a_Thai_Fox]

Hi there,

Let me give you the situation:

Me and my business partner own 49% of a company (with 5 other Thais owning the remaining 51%) that owns a small piece of land (chanote deed) worth about 900k Bhat.

About 2 months ago, my business partner pawned this land (without my consent - very annoying, but beside the point at this time), and he got 270k Bhat for it. Naturally, that amount (+ interest) must be paid back in 1 year or we lose the land completely.

He gave this money to a Thai guy who runs a farming co-op. My partner knows this guy pretty well - knows where he lives, visited his place, met the family etc.

The Thai guy told my partner that the money would be used in a government backed scheme (each province would be allocated a small budget to get these schemes going) involving the importing and selling of livestock in Thailand. The money fronted by my partner would be repaid to him in full once the govt grant came through, allowing my partner to buy back our land form the pawn broker. Also, my partner and this Thai guy would benefit from a modest monthly income arrived from the buying/selling of these animals. The Thai guy had the contacts and would be doing the buying/selling whilst my partner would simply 'front the initial cash' to buy the first cattle.

My partner asked a lot of other farmers in this co-op about this grant / cattle business deal. All of them told him it was legitimate and that the govt money would be coming. He felt that he had done enough background checking to ensure this was not some BS scam he was falling into - after all, he considered himself friends with the Thai. Given that he felt he could trust this Thai guy and the scheme seemed legitimate, he gave him the money from the pawning of the land. This was about 2 months back.

Since that time, my partner has been in regular phone communication with the guy who has been informing him that things were going well, the money is coming etc.

However, in the last few weeks, my partner had the feeling that the Thai guy was starting to tell lies and stringing the story out a bit ("the check is coming Monday" / "The check has been delayed" / "I am cashing the check, it will take a few days" etc.). The thai guy began answering his phone less and less and not returning calls etc.

Believe it or not, my partner knows Thailand well (14 years here) and naturally had a bad feeling something was seriously wrong.

Now, in the last week, via an independent source, my partner has discovered that the govt grant is not coming (he was informed that this was due to the recent change of govt). To compund matters further, the Thai guy had not been buying any cattle with my partner's money either. As of yesterday, still no word from this Thai guy (5 days now).

The way I see it, there are two reasons for this:

i) The grant really did fall through. The Thai has been lying just recently in order to save face... (however, if that were true, he should give back the money my partner gave him but nothing as yet.)

ii) It was a scam from the start and the Thai guy was always going to take the money and run.

I have no evidence, at the time of writing this, to prove or disprove either of the above statements.

I am very tempted to drive the 600kms over there and find out what is going on and what does this Thai guy intend to do about repaying the money. I have asked my partner what the <deleted> he is going to do, given that it was his poor judgement in the first place. He seems almost resigned to getting ripped off and berates himself for being such a sucker. He has been very apologetic and genuinely feels guilty for the whole thing. That is all well and good, but that does not remedy this situation.

Personally I reckon my partner has been ripped off. Assuming that this Thai guy is not going to simply come over to my partner's place with the 270,000 Bhat, what recourse, if any, do I have?

Would you recommend I go and see the Poo Yai Baan of this Thai guy's village? I don't know the area (I've visited his place just the once) and know no one else from that village. I am unsure as to what effect a farang would have on such a scenario.

Is there any legal recourse? (there was no written agreement between my partner and this Thai guy)

Go see him directly and ask him what he has done with the money? (we all know how the Thai dislike confrontation...probably just more BS would spout to cover himself?) Maybe the situation escalates... I don't really want to get into a physical confrontation.

Try and engage the help of a respected (retired) teacher who lives in the main town (about 25kms from the Thai guy's village) I used to know him and his family pretty well... I know that getting respected/elderly Thais involved can be a non confrontational way about resolving matters here.

I am semi-tempted to visit this guy's farm at midnight and exact revenge myself (I am not prone to violence, but this situation really pisses me off!). But seriously, this is way down on the bottom of my options.

Another option is simply for me to buy my partner out of his half of the land, about 450,000 Bhat. With that cash, he pays off the pawn broker, keeps the rest of the dosh and I put the land up for sale, keeping all proceeds - I wash my hands of him and chalk it up as experience. I am reluctant to do this without covering all other options before - I know what the market is like and doubt I could sell the land at this time,

Any advice is appreciated,

Cheers

James

[slapout]

Well James after reading your sad tale, I would encourge you to do one of two things. Walk away from your friend/partner and kiss the business good bye or hire a mediator to take care of the monies owed, precieved untruths, etc. The latter should not cost 450,000 and you would get your value back. I have heard of a fellow who may take care of part of the problem for 150,000 up front.

[Pierrot]

In this kind of case, would it be possible to hire some kind of private investigator to assess the situation, who are the people involved, what are the chance to recover any money ... and how much would it cost to hire such a person? Everything legally done of course.

Regarding your idea of "visiting this guy's farm at midnight and exacting revenge myself", I think you should first ask yourself the following question : Do I have any experience in racket, extorsion, debt collection ? Am I ready to spend the next five to ten years in jail? If you answer no to these question, better hire a lawyer.

[GuestHouse]

I agree with Siapout.

The issue here is not the Thai farmer, the issue is your partner, he has removed money from your business without your consent.

I would demand he refunds the money - the idea of setting a mediator on the case is a good one, but I would not use a local retired teacher, get a law firm to act for you.

Do not under any circumstances get directly involved yourself - Dish the dirt on the guy who has created the problem - Your partner.

[meom]

How much revenue was the 270,000 baht supposed to generate? Seems to me you guys are fighting about peanuts so maybe better forget about the money and go back to a more honest way of living such as teaching in order to generate wealth.

[astral]

It sounds to me as though your partner is guilty of embezzlement and criminal action is required.

[disgruntled]

You definitely can't trust you partner or the person he claims he was doing business with if that person actually exists.

Why not find someone else to join with you who can buy out your partner's position by paying off that pawn broker.

[bratpack]

I agree with the posters,that your partner is responsible to give you the money back.He is the one who has done the most wrong and your partner/friend deserves the full wrath of you.He should be the one who goes to the thai guy to find out whats happening about the money.

Bad luck and bad decisions too.

[MSingh]

Hi there,

My partner asked a lot of other farmers in this co-op about this grant / cattle business deal. All of them told him it was legitimate and that the govt money would be coming. He felt that he had done enough background checking to ensure this was not some BS scam he was falling into - after all, he considered himself friends with the Thai. Given that he felt he could trust this Thai guy and the scheme seemed legitimate, he gave him the money from the pawning of the land. This was about 2 months back.

I wonder what smile he gave for your Partner to assume that ???

[dotcom]

You definitely can't trust you partner or the person he claims he was doing business with if that person actually exists.

Why not find someone else to join with you who can buy out your partner's position by paying off that pawn broker.

Excellent suggestion. Then your partner gets his just desserts. There never was a dime of profit in the scheme for you. Selfish bastard. Some Nome Nah (your mate).

[roygsd]

Hi,

Jimmy the fox, it seems the chickens have out smarted the fox on this occasion.

You mention your "friend" has been in Thailand for 14 years, but you dont mention how long you have been there, how did you become involved with this guy in the first place?

As you (and he) are the minority shareholder it seems you have a legal obligation to report this matter to the the Thai majority shareholders, who if my hunch is right are likely to be friends/family/aquaintances of your pal.

How long has the company been trading? Do the Thais have any of their own capital invested in the company?

From what you have said it seems likely they have not.

You personally have no right to recover the money, the money belongs to the company, if you call a shareholders meeting

you can vote this guy out of Office, I assume he is actually the person controling the company otherwise I dont see how he could have possibly raised funds on the companies land?

I would not be suprised if this was a rip off by both your pal and his aquaintance, in oyur position I would call a shareholders meeting and during the course of the meeting I would bring the matter up and ask your pal to confirm how he proposes to return the money he has misapropriated from to the company.

I am sorry to be so negative but the money does not belong to you but to the company which has its own legal identity, if the other shareholders are as I suspect his associates I suspect you, not he will be voted out of any apointment you may hold in the running in the company.

You then simply become a minority shareholder in the company, who is entitled to recieve a share of any dividends the company may decide to issue, the majority hareholders could vote not to issue a dividend, indeed it is as I supect you know quite well easy for a company to continue to trade by syphoning off any profits in many ways.

I suspect ths land may be the company's lrgest asset and the company were to cease trading.

The land was not in your name, you know quite well a farang cannot own land so you cannot expect to claim any right of ownership of it, in short I think you have been had.

If I am wrong and the money is returned to the company then I suggst that you get your money out asap, if he can remove funds from the company without consulting you now you should not trust him in the future.

Best of luck to you, remember if something sounds to good to be true, it usually is.

roy gsd

[Jim's_a_Thai_Fox]

Thanks for the posts guys, some interesting points that I had not really thought about.

I am very good friends with my business partner and am calling him today to discuss how to best go about resolving this issue. I am a 20% share holder, he is 29% and 5 other Thais (trusted family and friends of his) make up the 51%. The land title is in the company's name, but in reality, both he and I put in the 450,000 bhat to purchase it. We had hoped to build some energy effecient homes on there, put that simply never happened.

If there is no way we can get the money back from the Thai guy to pay back the pawn broker, I see no other way than to dip into my remaining personal funds, buy my partner's half and transfer the land into a Thai citizen who I know and trust and then try and sell the land, distancing myself from this guy forever more after that.

I shall let you know what happens,

thanks

James

Edited June 20, 2008 by Jim's_a_Thai_Fox

[bino]

You definitely can't trust you partner or the person he claims he was doing business with if that person actually exists.

Why not find someone else to join with you who can buy out your partner's position by paying off that pawn broker.

Excellent suggestion. Then your partner gets his just desserts. There never was a dime of profit in the scheme for you. Selfish bastard. Some Nome Nah (your mate).

Or- if you have the cash, you buy him out for 270,000 (not 450,000) to the pawnbroker, and take control of his share, making you the 49% foreign owner.

Edited June 20, 2008 by bino

[Prakanong]

You definitely can't trust you partner or the person he claims he was doing business with if that person actually exists.

Why not find someone else to join with you who can buy out your partner's position by paying off that pawn broker.

Excellent suggestion. Then your partner gets his just desserts. There never was a dime of profit in the scheme for you. Selfish bastard. Some Nome Nah (your mate).

Or- if you have the cash, you buy him out for 270,000 (not 450,000) to the pawnbroker, and take control of his share, making you the 49% foreign owner.

That still leaves the trusted family and friends as 51% owners and Jim the minority owner - no homes to be built so what to do with the land?

Best to try and get the partnet to agree to the sale and divvy up the proceeeds - the partner can then pay of the pawnbroker or as others have suggested buy him out but at the same time get the 51% owners to sign away any proceeds of the sale if possible for a nominal fee?

I would just want to get my investment back and get away

[kurgen]

Buy his shares back for 270 k and once you sell the land decide whether the scum bag deserves any more cash after trying to <deleted> you over

[Maestro]

James, you make it sound like your “business partner” is Thai (my business partner and 5 other Thais) but I believe what you want to say is that your “partner” is a foreigner and the other 5 shareholders are Thai.

If the 900,000 Baht you and your “partner” put into the company are 49% of the share capital there must be at least an additional 936,735 Baht of paid-up capital representing the remaining 51%.

Whatever is the case the fact remains that you legally own only 20% of the shares, your “partner” and his – not your – trusted family and friends together own 80%

Perhaps the 900,000 Baht you and your “partner” put into the company is the only paid-up capital, ie the two of you loaned money to the 5 Thai shareholders to buy their shares; the 5 Thais are nominee shareholders. This still does not change the fact that you personally own only 20% of the company and at a shareholders meeting your vote will count only as 20% of total votes if all shares are voted, unless you hold valid proxies from other shareholders.

If you are lucky you can recover part of your investment by selling your 20% share in the company to one or more other shareholders. If, as you suggested, you buy the 29% share of your “partner” you will still be a minority shareholder holding only 49% of the total shares.

--

Maestro

Edited June 20, 2008 by Maestro

[Jim's_a_Thai_Fox]

Hi Maestro, thanks for the post.

Just to clarify:

My partner is indeed a farang. Isn't the land ownership seperate from the shares of the firm that you mention (the firm's start up capital was 3million Bhat)

In reality, my farang partner and I paid for the land 50/50, although we both appreciate that technically the company owns the land and together, we own only 49% of the company. The 51% Thai shareholders have no interest in the firm and don't even (to my knowledge) know about this asset 'their' company has.

I would hope that if I were to pay my partner for his part of the land, i would take the land title out of the company altogether, write up and get signed some ficticious company meeting minutes stating that the shareholders agree to this, then pay the necessary taxes and put the land under a Thai's name who I know and trust.

You think that would be feasible?

[Maestro]

I don’t know how these shenanigans work and therefore cannot advise you on your planned strategy.

--

Maestro

[distortedlink]

To the OP:

Your partner took a loan on your plot of land, it is irrelevant what he wants to use the money for or what separate deals he's into.

In a normal circumstance, you could take the matter to civil court to impose your partner to pay back the loan on your land, therefore releasing your property rights back to you, being able to sell etc.

51% of the company directors are Thai people as required by Thai law, but illegally only there on paper as a front for the purpose that 2 farangs may solely have control on a plot of land, run a company and do business in Thailand.

If this matter is taken to court, the judge will issue an order that the sleeping Thai partners will have to show statements that prove they financially contributed their equal shares for the land purchase and any projects connected with that land.

The fact is that this whole venture was illegal in the first place and you quote your illegal activities with total indifference. To be quite honest, you and your partner deserve each other. You make a mockery of the system and create difficulties for the legitimate Western residents and business people living here.

As they say about people like you: give them enough rope and they will hang themselves. Hope that sooner or later someone will report you to Immigration.

Edited June 20, 2008 by distortedlink

[rick75]

Distorted, can't you see that if the system was set up differently this type of thing would not happen, it is the Thai system that forces people to take measures like this and then allows the majority share holders to do as they please. I am not condoning his behavior or his proposed exit strategy but I think your post is a little harsh.

As for getting out of this problem I would be trying to call a general meeting and try to dissolve the company and get what funds you can out of the business legitimately, your proposal of falsifying documents is just plain stupid unless you like the idea of an overcrowded Jail cell.

[Prakanong]

Distorted, can't you see that if the system was set up differently this type of thing would not happen, it is the Thai system that forces people to take measures like this and then allows the majority share holders to do as they please. I am not condoning his behavior or his proposed exit strategy but I think your post is a little harsh.

As for getting out of this problem I would be trying to call a general meeting and try to dissolve the company and get what funds you can out of the business legitimately, your proposal of falsifying documents is just plain stupid unless you like the idea of an overcrowded Jail cell.

Ageneral meeting with a % of 49% and the 51% in the hands of the others trusted friends and relatives?

Get real

And if anyone gets involved in this kind of shit in Thailand knowing the rules and trying to get round them well accept the consequences - you own fuc_k all and you got nothing

[rick75]

Thats assuming that they are all in on this and it is a scam, he is the only one who deep down knows if this is the case. If they are all in on it, he has lost it all no matter what he does. I hope for his sake that this is not the case.

[Priceless]

Distorted, can't you see that if the system was set up differently this type of thing would not happen, it is the Thai system that forces people to take measures like this and then allows the majority share holders to do as they please. I am not condoning his behavior or his proposed exit strategy but I think your post is a little harsh.

As for getting out of this problem I would be trying to call a general meeting and try to dissolve the company and get what funds you can out of the business legitimately, your proposal of falsifying documents is just plain stupid unless you like the idea of an overcrowded Jail cell.

rick75, can't you see that if people followed the laws of the land, including the ones that they don't like, this sort of thing would not happen

/ Priceless

[rick75]

What would not happen?

A farang invests with Thai business partners, Thai business partners have control of company, Thai business partners do as they please with your capital and it is completly legal because they have 51% control.

What i fail to understand is that foreigners can bring a huge chunk of cash to Thailand invest in business that pay taxes, provide jobs and boost the economy yet they can not maitain control of the company.

If I am not mistaken only US citizens have an exemption where by they can maintain control of the company.

My point is that under this system they force people who see business oportunities into situations they would never agree to in another country.

[Bluelotus]

Attn. Farangs YOU WILL NEVER OWN LAND IN THAILAND AND YOU WILL NEVER BE A CITIZEN OF THAILAND.

This should be on the top of every arrival card.

[Pepe']

Hi there,

Let me give you the situation:

Me and my business partner own 49% of a company (with 5 other Thais owning the remaining 51%) that owns a small piece of land (chanote deed) worth about 900k Bhat.

About 2 months ago, my business partner pawned this land (without my consent - very annoying, but beside the point at this time), and he got 270k Bhat for it. Naturally, that amount (+ interest) must be paid back in 1 year or we lose the land completely.

He gave this money to a Thai guy who runs a farming co-op. My partner knows this guy pretty well - knows where he lives, visited his place, met the family etc.

The Thai guy told my partner that the money would be used in a government backed scheme (each province would be allocated a small budget to get these schemes going) involving the importing and selling of livestock in Thailand. The money fronted by my partner would be repaid to him in full once the govt grant came through, allowing my partner to buy back our land form the pawn broker. Also, my partner and this Thai guy would benefit from a modest monthly income arrived from the buying/selling of these animals. The Thai guy had the contacts and would be doing the buying/selling whilst my partner would simply 'front the initial cash' to buy the first cattle.

My partner asked a lot of other farmers in this co-op about this grant / cattle business deal. All of them told him it was legitimate and that the govt money would be coming. He felt that he had done enough background checking to ensure this was not some BS scam he was falling into - after all, he considered himself friends with the Thai. Given that he felt he could trust this Thai guy and the scheme seemed legitimate, he gave him the money from the pawning of the land. This was about 2 months back.

Since that time, my partner has been in regular phone communication with the guy who has been informing him that things were going well, the money is coming etc.

However, in the last few weeks, my partner had the feeling that the Thai guy was starting to tell lies and stringing the story out a bit ("the check is coming Monday" / "The check has been delayed" / "I am cashing the check, it will take a few days" etc.). The thai guy began answering his phone less and less and not returning calls etc.

Believe it or not, my partner knows Thailand well (14 years here) and naturally had a bad feeling something was seriously wrong.

Now, in the last week, via an independent source, my partner has discovered that the govt grant is not coming (he was informed that this was due to the recent change of govt). To compund matters further, the Thai guy had not been buying any cattle with my partner's money either. As of yesterday, still no word from this Thai guy (5 days now).

The way I see it, there are two reasons for this:

i) The grant really did fall through. The Thai has been lying just recently in order to save face... (however, if that were true, he should give back the money my partner gave him but nothing as yet.)

ii) It was a scam from the start and the Thai guy was always going to take the money and run.

I have no evidence, at the time of writing this, to prove or disprove either of the above statements.

I am very tempted to drive the 600kms over there and find out what is going on and what does this Thai guy intend to do about repaying the money. I have asked my partner what the <deleted> he is going to do, given that it was his poor judgement in the first place. He seems almost resigned to getting ripped off and berates himself for being such a sucker. He has been very apologetic and genuinely feels guilty for the whole thing. That is all well and good, but that does not remedy this situation.

Personally I reckon my partner has been ripped off. Assuming that this Thai guy is not going to simply come over to my partner's place with the 270,000 Bhat, what recourse, if any, do I have?

Would you recommend I go and see the Poo Yai Baan of this Thai guy's village? I don't know the area (I've visited his place just the once) and know no one else from that village. I am unsure as to what effect a farang would have on such a scenario.

Is there any legal recourse? (there was no written agreement between my partner and this Thai guy)

Go see him directly and ask him what he has done with the money? (we all know how the Thai dislike confrontation...probably just more BS would spout to cover himself?) Maybe the situation escalates... I don't really want to get into a physical confrontation.

Try and engage the help of a respected (retired) teacher who lives in the main town (about 25kms from the Thai guy's village) I used to know him and his family pretty well... I know that getting respected/elderly Thais involved can be a non confrontational way about resolving matters here.

I am semi-tempted to visit this guy's farm at midnight and exact revenge myself (I am not prone to violence, but this situation really pisses me off!). But seriously, this is way down on the bottom of my options.

Another option is simply for me to buy my partner out of his half of the land, about 450,000 Bhat. With that cash, he pays off the pawn broker, keeps the rest of the dosh and I put the land up for sale, keeping all proceeds - I wash my hands of him and chalk it up as experience. I am reluctant to do this without covering all other options before - I know what the market is like and doubt I could sell the land at this time,

Any advice is appreciated,

Cheers

James

$$$$$$$$$$$$

You're screwed, period. Haven't even botheredto read any of the other replies yet.

My little 100 pound Thai honey screwd me for much more all by her little self.

What you lost, kids stuff.

NEXXXTTT!!!

[catwho]

In the case of lone sharking or prawn brokers they hold the chanote till payment,they sometimes even rego it with the land titles dept,to cover legals [not sure on companys tough]if this is the case you or someone[partner] have to pay back money before u do anything.

[Pepe']

In this kind of case, would it be possible to hire some kind of private investigator to assess the situation, who are the people involved, what are the chance to recover any money ... and how much would it cost to hire such a person? Everything legally done of course.

Regarding your idea of "visiting this guy's farm at midnight and exacting revenge myself", I think you should first ask yourself the following question : Do I have any experience in racket, extorsion, debt collection ? Am I ready to spend the next five to ten years in jail? If you answer no to these question, better hire a lawyer.

$$$$$$$$$$$$$$

No you should be asking,

"Hey punk do ya feel lucky?" " Make my day" - Dirty Harry...

[Jim's_a_Thai_Fox]

The fact is that this whole venture was illegal in the first place and you quote your illegal activities with total indifference. To be quite honest, you and your partner deserve each other. You make a mockery of the system and create difficulties for the legitimate Western residents and business people living here.

As they say about people like you: give them enough rope and they will hang themselves. Hope that sooner or later someone will report you to Immigration.

Thanks for your opinion, although I do think that your comments about what you hope occurs in my future are slightly over the top. We bought the land together a few years with the hope to build some good quality, energy effecient housing on it...that is all.

The company already existed before (set up over 6 years ago by my partner and his Thai friends/relatives) the government turned their attention to ensuring that firms run by farang with 'ficticious/sleeper' Thai partners weren't grabbing loads of land at the expense of the Thais. In retrospect, my comments about writing up false company minutes was a little stupid. However, I thought about this only because the firm's accountant, a registered Thai financial accountant in Bangkok, has asked me to do very similar things in past for a host of reasons... so I assumed that it would be no big deal. It is clear that some of you think otherwise...

As Pepe has said, its all just small fry in the grand scheme of things. However, I was interested in knowing if there was anyway that we could put pressure on the fraudulent Thai guy in order to get the money back. After having lived here for 4 years now and having read countless posts on TV during that period, I perhaps should have realised that there was no way that was going to happen.

"Never invest more than you can afford to lose" is very apt. If this loss is permanent, i.e. the land and my 450k Bhat goes up in smoke, I shan't be ruined and shall simply let the emotional baggage go and hence not become a bitter a twisted anti-Thai TV ranter that currently seem to overpopulate this forum.

Thanks once more for your postings, please feel free to add anything else to this section.

James

[nick2k]

whenever you buy property of any sort in another country, you are always taking the risk of your property being confiscated by the local government whomever they might be.