Say It Isn't So Joe!

Most people in the Chattanooga area have never heard of Joe Prebul. But most people have probably seen his dealerships located in the Tennessee Valley area. Some have probably purchased a car or two from one of the Prebul Auto Group dealerships.

Today, we learned that the man behind the name is in big trouble. He's being charged by the Federal Government in an eleven count indictment for wire fraud. The details behind the charges are a little unsettling. This man didn't just rip off strangers. His victim list includes an unidentified relative from New York City. How much did he take? At least $14,517,925. He took this cash in eleven separate wire transfers from January 11, 2006 to May 2, 2008. About half of the money came from his relative.

The unnamed relative is purported to be involved in the music industry.  Although not specifically mentioned in the indictment, it may well be that some well known individuals will come to light as victims of this latest investment scam. And what a scam it was.

Apparently, Prebul was a victim of the economy, much like other auto dealers around the nation. When the economy took a dive, the flow of people seeking to purchase a new car took a plunge as well. So his rouse was simple. He convinced his relative that investing in the Prebul Auto Group would pay him well above going investment rates. And like Bernard Madoff, Prebul made impossible claims to convice investors that investing in his business was a sure thing.

The relative was told by Prebul that investing his money, by allowing Prebul to place the cash into accounts that are used to provide operating capital to run his dealerships, it would result in a 6% interest accrual without fail, by simply leaving it the operating accounts untouched. The only problem was, that the accounts he was referring to were not interest bearing accounts. The accounts merely offset interest rates on cash he had previously borrowed from the car manufacturers. In essence, what Prebul was doing was arranging unsecured loans of capital that he indeed did use to operate his enterprises with the expectation that he would eventually pay 6% per month (unverified) on what he received. And of course, the relative convinced his associates to invest, because after all Prebul was a relative. What could be safer than that?

The red flags were flying all over the place, and yet people handed over the cash. Prebul insisted that he was the only person who could place the money into the "investment accounts." Prebul gave assurances that the money was always accessable to the "client" and could be withdrawn at any time along with all accrued "interest" and with no penalty. The relative had been "investing " for a period of 14 years. And like Madoff did with his investors, statements were issued, along with claims of interest having been "paid" to the phony investment accounts.

Several times over the years, Prebul "cashed in" a few accounts and handed over the money to "clients" who requested liquidation of their investments. He always paid up, so the merry-go-round kept on turning, that is until this year. Not only were his dealerships losing money, his personal lifestlye, and that of his wife, dictated a little dipping their toes in the pool, so to speak.

He used the investment funds to pay himself a salary of one million dollars per year, to purchase and operate his personal airplane, to pay his mortgage(s), and to keep payments made on both of their personal credit cards. He additionally took lavish vacations. Private golf lessons were paid for. $1.2 million was spent over two years to pay off private credit card balances for both Prebul and his wife. All of this came from investment funds.

Apparently, his own accountant was not filled in on all the details, but then given the way the money flowed in and out, the accountant would have to be a complete imbecile to not have seen that something was amiss. Prebul told the accountant that the funds were loans and were allowed to be used to cover personal expenses. I don't have an accounting degree, but even I know that the practice of dipping into business accounts for personal expenses is patently illegal. All of this was ongoing while the Prebul Auto Group lost $1.6 million over a three year period from 2005 to 2008.

Keep in mind that the amount of cash that he had borrowed under false pretenses represented an eventual payout of more than $10.5 million a year in interest, if indeed the interest rate was 6% per month. Even if the indictment was incorrect and this was supposed to be a yearly payout (which makes a little more sense to me), the amount per year would still represent a payout of nearly $900,000 a year in interest alone. Over three years, he would have been in hock for almost $2.7 million for interest that he was to have on hand to keep the scam afloat. He didn't have it.

So, when his relative began to suspect that something was wrong this past July and demanded total liquidation of his "account" that was to have $7.6 million in it, Prebul couldn't cough it up. The account where all of the investment money had been dumped into only had $700,000 left in it. Prebul notified his relative at that time that the money had been used to operate the Prebul Auto Group.

Two of Prebul's dealerships have closed since December, and I expect that the rest will close in the very near future, throwing many more people out of a job. That might just push the Tennessee Valley's unemployment rate over the 8% mark.

It's clear that Prebul's finances are in turmoil, and he's going down hard. The worst thing he has had to suffer was to stand in front of a Federal Judge in shackles and leg irons to enter a plea. He was released on a $2 million appearance bond, meaning that he didn't have to part with a thin dime, and is basically restricted to remaining in the local area until his appearance in court that has yet to be scheduled.

The man deserves to be in lockup. He is a definite flight risk, despite his local ties to the community. A petty thief would have been detained without bail for stealing pennies on the dollar compared to what this man has stolen.

Our justice system absolutely needs an overhaul. I'm sick of reading stories like this. People who have millions to invest are absolutely victims and their losses are real enough, but the ones hurt the most are rarely considered. The punishments definitely do not fit the crimes committed. That has to change, and soon.

How many people living from paycheck to paycheck who worked for this man and who cannot spare a dime at the moment, are now facing their own financial difficulties due to the actions of this man? Okay...maybe their fate was delayed for upwards of three years, depending on how long they have worked for one of Prebul's dealers, but yesterday they thought that life was good. Very soon, their entire lives will be upended.

Greed and dishonesty have no place in our society. We all want to be successful in life, and there is no shame in having to retreat every now and then to recover from setbacks. There is shame however in refusing to do what is right when the time comes to do it. I'm tired of reading of people who have no concept of shame.

 

 

Let Them Grieve In Peace...

There's no questioning that when a family tragedy strikes one of our celebrities, it is news. There's no doubt that because we as a nation tend to worship celebrities, and quite often idolize them, that we find ourselves grieving for our idols when tragedy happens to them. And of course, many of us, having faced similar circumstances in life, know to some degree what those suddenly facing crisis are going through.

The passing of John Travolta and Kelly Preston's 16 year old son, Jett, has saddened most of us who are aware of it. I know one of the first thoughts I had when I heard it on the radio, was that this horrible event has fallen upon one of the nicest celebrity families in America. This should not be.

John Travolta and Kelly Preston have been married many years, have lived a very quiet and private life together, and as such, and lacking a better way to describe them, are none other than American royalty. I have always liked John Tavolta on the screen, and probably have never missed one of his movies. He simply does not make a bad movie. He obviously loves his job.

I've been more than a little incensed over the efforts by some in the press to take this tragedy, in an effort to keep the momentum moving and to keep it in the headlines. Some are treating the story as if there were twists and turns to it. Had this happened to a lesser known family, it would not have breached beyond the local papers in the Bahamas, where the death occurred.

Of course, celebrities know that they give up a certain amount of privacy when they achieve fame, but that doesn't always make it right. If anything, this tragedy illustrates that even those among us that we at times worship and admire, are just as human as the rest of us, and they too suffer the negative aspects of life that we all have to face as humans.

I can't imagine how hard it is to have to endure the indignity of having one's life dissected on television when something like this happens. I've witnessed attacks on everything from the Travolta's religion, to the questioning how long it was from the time he may have had his siezure until he was found. These are baseless, unfounded, unfair, and totally cruel issues to be examined by anyone, much less those who are sensationalizing the tragedy of a family losing a child, in some pathetic attempt to garner an audience.

The story here is simple. A family has lost a dear loved one. Nothing more need be related to the public. The family deserves their privacy. They deserve respect. And what they don't need or deserve, is to be analyzed by anyone.

My heart absolutely goes out to the Travolta's for their loss, which will be deep and a lasting loss that they will have to try and cope with for the rest of their lives. At the same time, I also pray that they will never read or hear about the more invasive reports out there that we have seen.

Most have been respectful and sympathetic. Others have crossed a line that should never be crossed, and shame on them for doing it. I'm just a little bit, more than sick of these Geraldo Rivera wannabe's...

Leave the Travolta's alone.