Sometimes Clients Say Shady Things

“We don’t pay taxes. Only the little people pay taxes.” Leona Helmsley had a way of endearing herself to the general public. Regardless of income, many people think rules don’t apply to them and aren’t shy about it.

Hiding money

If you’ve worked with people in retail you’ve heard the expression “Cash is king.” Sure, it can be an innocent comment, the all cash buyer isn’t costing the merchant credit card transaction fees. Nothing wrong with that. Local banks accept large cash deposits.  Car washes and convenience stores are often large cash businesses. When I was a financial advisor in the 1980’s, interest rates were high, clients with shopping bags of cash were common. One day I asked a client if he had ever been robbed. He casually answered: “Just once. But the guy dropped the bag when I shot him.” 

Other problems develop when they say, “I don’t trust banks,” or “I keep cash in a safety deposit box.” More red flags appear when next they ask for good hotel recommendations for a short trip to Antigua. Obviously they wouldn’t ask: “How do I setup an offshore account?” but his is a good time to remind them that Stanford International Bank was a Ponzi scheme.

Assuming They Won’t Be Caught

Television does a bad job depicting how a government authority with unlimited resources can hunt down a person they are convinced is in the wrong.  Well, except maybe Person of Interest. Some clients say, “They will never find out.” or “They don’t know what they are looking for.”  Then there was my a client who could never say “IRS” without adding “Those bastards!”

Then there’s the clients who say, “Tell them anything,” or even worse, “Just make something up,” or, “Use creative accounting.” They don’t seem to understand that they are inviting you to be their co-conspirator when something goes wrong. Then when everything goes bad they will feign righteous indignation, explaining they never gave you that information.

Keeping Someone in the Dark

Did Eve hide money from Adam? Were there two apples on that tree in the Garden of Eden? The concept of keeping something on the side has been around forever. Spouses in deteriorating marital relationships are prime culprits. Everything has a tax ID number attached, but they try anyway, often using cash. The clues are obvious: “Send all correspondence to this post office box.” And “Don’t ever speak to my wife.”

Sometimes older clients who “don’t trust banks” decide to turn cash assets into something more portable, like gold coins or diamonds. Realizing their safety deposit box will be part of their estate they decide to outsmart those greedy relatives and bury their treasure or hide it somewhere in the house. The plan is the favored heirs are let in on the secret. You are told to keep your mouth shut in the meantime.  Unfortunately they die or suffer dementia before revealing the cache, leaving the next generation to wonder “Where did all the money go?”

Shady Business

You might encounter a situation where you discover your client is involved on the periphery of organized crime. I recall stories of an investment going badly and a fellow financial advisor being asked to, “Meet with the family,” to explain what happened. (He was fine afterwards.) Then there’s the story of a client who wanted to compare the merits of a traditional investment with “Lending money on the street.” This is when you decide if you keep this person as a client. Or not.

Point of No Return

You don’t always get the early warning above, although it might start with: “Hypothetically, let’s just say I did something illegal.” It’s also rare they would ask: “How many clients of your have ever gone to prison?” I’ve heard a similar line used when a local luminary in our community introduced his accountant and referred him with the attribute “He’s out of prison now.” 

Sometimes it’s easy to know when someone shouldn’t be a client.  What red flag expressions have you heard that let you know you should part company with someone? 

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