A first person Ponzi scheme experience

I recently had the opportunity to learn more about Ponzi scheme out of Florida.  One of the employees victimized by this scheme and company shares her experience with Identity Theft Secrets.

K. Balbi, in 1992, worked for a food wholesaler that is now out of business called Sweet Life Foods. Back then they were prominent in New England and supported many of the mom and pop grocery stores and local family chains. Her job was to buy and sell groceries that were diverted. Unhappy with her position and pay, she decided to find a job where she could use her experience and earn a salary that would allow her to save for the future.  Learn about her experience.

She shares:

I was paid a salary to make buy and sell all day long, similar to the stock market except my commodities were baby food, truckloads of laundry detergent, coffee, juices and various paper products. Watching the stock market helped me to be successful.

In the grocery world, as in most industries, you can obtain a better price if you do a quantity buy from the manufacturer.  You can also speculate based upon world markets. Sometimes manufacturers offered regional sales discounts.

For example, I could buy a truck of tomato sauce out of Texas, truck it up to the Northeast, stop in one other location and sell part of the truck off, and then take the rest for my warehouse and still make a profit. It was a legal but somewhat unwelcome activity.

Commission sales vs. salary

The buyer and sellers that I worked with worth were largely based in Florida. I asked several of them and learned that many of them were making a six-figure income.  Unsatisfied with my current salary I combined business with pleasure, scheduling an interview one of my suppliers, during our family vacation to Florida. I was offered a position, if I would move to Florida at my own expense.

Uprooting the family and taking a chance

After giving notice, my family was on its way to hopefully a better life and a more secure future.  Of course there were all the standing moving problems like my significant other finding a job and my daughter a school.  I was a little worried about my salary becoming straight commission sales based.

I was expected to buy and sell trucks of groceries as well as sell product out of purchases we had made for inventory.  The sales pit was intimidating; I had never done straight commission sales before but I knew the business, knew the “right” prices, had a few contacts and I dived in because I was desperate for a better life for my family.

Payment and work arrangement

At first, I earned a five hundred dollar a week draw in exchange for a six month “trial” period. I was expected to repay the draw in less than six months and be in a position to be earning significant commissions.  I took to the phone, cold called the hell out of my list, and eventually I started earning.

Making It!

Within a year I was making six figures. I understood that funding came from private investments. Occasionally we would have investors walk through our offices and management asked us to look “sharp”. That wasn’t abnormal. I had worked for other companies that had investors and that were standard practice.

Hindsight is 20/20

  • What was abnormal was that my management team carried personal weapons on them.
  • They often too expensive trips out of the country, sometimes just for the weekend.
  • One of them had a pet tiger that he brought into the office one day.
  • The interview I had initially would have shocked many HR managers. (More in my memoir, Bad Girl Gone Mom)
  • We were treated to an extravagant Christmas Party with Dom Perignon, Caviar and Quail. Again, not being from the area, I took this all as the way people did business in Florida.
  • Many of the women dressed in a manner that in my experience “sold” a whole lot more than groceries.
  • On request by a member of the sales team was met with not only an abrupt no, but the entire sales staff was informed if they didn’t like the way their taxes were paid and checks processed they could leave the company and lose all their commissions to future sales.
  • There was a distinct division between the accounting group and the sales staff. In fact, they spoke another language and rarely came out of the finance office.


What we didn’t realize was happening was that the investors were being shown a completely fake set of books. When I sold a truck of laundry detergent, it was between 46 -52 thousand dollars. The paperwork that the investors saw looked more like a sale of 460K.  Our business was yielding a 2-3% profit but they were promised profit margins of 10 percent or more. The owners were pocketing the money and providing returns to future investors coming in rather than using the revenue to operate and grow the business.  This situation was very similar to Bernie Madoff’s Ponzi scheme, except people were asked to invest in the company rather than mutual funds.

The pen is mightier than the money

Ken Thenen, an owner of the company was interviewed by a money magazine.  Suspicious after receiving some answers to his interview questions he followed up with questions to the company investors. As a result, just days later investors quickly started pulling out and demanding their money.

The corporate office turned into a flurry of activity with shredding and destroying documents. Just days after the interview the S.E.C. (Securities Exchange Commission) was at the office door greeting all the employees and telling us that they thought we had been hired as actors. We were asked to sit in our chairs and wait until each one of us was interviewed so that the receiver and his team could learn our part of the story.

The bottom line

As a result of this scheme Karen was investigated and questioned about the actions of the company she worked for.  She lost $12,000 in commissions, and $4,000 from here 401K plan, because the money wasn’t deposited.  Suddenly she was out of a job, had no insurance and tainted by the fact that she worked for a company that was being investigated.  Her husband worried about her judgment, after convincing the family to make this move and eventually her credit was ruined, as she was unable to find other employment and the bills stacked up.  As a last result they moved back home and had to depend on help from family to get them back on their feet.

Her advice, check out the business you are considering working for thoroughly.  Find out what others in the industry think of it and find any information for official sources you can.  This time she found out that “if it looks too good to be true, it probably is.”

Official reports/sources