The Burton family purchased a business, known as Kebko from a conman named Kevin Erdmann from Gilbert, Arizona in June of 2010, paying him $55,000 cash down, and with a $55,000 note for 4 years at 6% ($110,000 purchase price).
Within the first few weeks of owning Kebko, the Burtons realized there was something very wrong with the Business they purchased from Erdmann, and that they had been cheated and defrauded.
The Burtons soon realized that Erdmann had intentionally, flagrantly lied and misrepresented several key facts regarding the business, including:
1. The dollar volume of the contracts the Burtons were buying from Erdmann (Erdmann represented $269,000 vs. the reality of $172,000);
2. The quality and margin of those contracts (33% gross margin represented vs. 8.5% factual);
3. The timeframe for when those contracts were due (Erdmann represented these contracts were due in “the next few months of 2010” but only $105,875 in contracts were due to be completed in 2010;
The number of days Kebko was accustomed to carrying accounts receivables (Erdmann’s represented “average days outstanding on accounts receivable is 45 days” vs. actual documented receivables being well over 100 days);
5. The fact that Erdmann regularly factored his invoices for cash, a fact that was not disclosed to Burton prior to the sale. This is an important fact because factoring companies require a first position lien on the company’s assets, and the only way to get Erdmann’s cooperation to subordinate the Kebko note was to comply with Erdmann’s demands that Burton pay 70%+ APR terms;
6. Erdmann did not disclose to Burton that the Accounts Receivables - which were not included in the sale - represented the "most important" asset of the company;
7. Erdmann had omitted from the P&L statements factoring fees that would have led the Burtons to realize that factoring and high interest fees were a cost Erdmann had realized while owning Kebko;
8. Erdmann enjoyed 30-day terms from suppliers, and alleged that such terms would carry over to the new Buyers (such terms did not carry over to the Burtons as promised).
As a result, the Burton's anticipated positive cashflow of $70,000 from Kebko for 2010, turned out to be closer to a $60,000 loss. A $130,000 swing loss as a direct result of Erdmann's fraud.
Kevin Erdmann Reviews
The Burton family purchased a business, known as Kebko from a conman named Kevin Erdmann from Gilbert, Arizona in June of 2010, paying him $55,000 cash down, and with a $55,000 note for 4 years at 6% ($110,000 purchase price).
Within the first few weeks of owning Kebko, the Burtons realized there was something very wrong with the Business they purchased from Erdmann, and that they had been cheated and defrauded.
The Burtons soon realized that Erdmann had intentionally, flagrantly lied and misrepresented several key facts regarding the business, including:
1. The dollar volume of the contracts the Burtons were buying from Erdmann (Erdmann represented $269,000 vs. the reality of $172,000);
2. The quality and margin of those contracts (33% gross margin represented vs. 8.5% factual);
3. The timeframe for when those contracts were due (Erdmann represented these contracts were due in “the next few months of 2010” but only $105,875 in contracts were due to be completed in 2010;
The number of days Kebko was accustomed to carrying accounts receivables (Erdmann’s represented “average days outstanding on accounts receivable is 45 days” vs. actual documented receivables being well over 100 days);
5. The fact that Erdmann regularly factored his invoices for cash, a fact that was not disclosed to Burton prior to the sale. This is an important fact because factoring companies require a first position lien on the company’s assets, and the only way to get Erdmann’s cooperation to subordinate the Kebko note was to comply with Erdmann’s demands that Burton pay 70%+ APR terms;
6. Erdmann did not disclose to Burton that the Accounts Receivables - which were not included in the sale - represented the "most important" asset of the company;
7. Erdmann had omitted from the P&L statements factoring fees that would have led the Burtons to realize that factoring and high interest fees were a cost Erdmann had realized while owning Kebko;
8. Erdmann enjoyed 30-day terms from suppliers, and alleged that such terms would carry over to the new Buyers (such terms did not carry over to the Burtons as promised).
As a result, the Burton's anticipated positive cashflow of $70,000 from Kebko for 2010, turned out to be closer to a $60,000 loss. A $130,000 swing loss as a direct result of Erdmann's fraud.