Ep407: Tom Dutta – Avoid Fraud by Digging Deeper Than the Traditional Due Diligence Process

Andrew Stotz 00:01
Hello fellow risk takers and welcome to my worst investment ever stories of laws to keep you winning. In our community we know that the when investing you must take risk, but to win big, you've got to reduce it. To join our community go to my worst investment ever.com and receive the following five free benefits. First, you get the risk reduction checklists I created from the lessons I've learned from all my guests. Second, you get my weekly email to help you increase your investment return third, you get a 25% discount on all a Stotz Academy courses. Fourth, you get access to our Facebook community to get to know guests and fellow listeners. And finally you get my curated list of the Top 10 podcast episodes fellow risk takers, this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guests, Tom, Tom, are you ready to rock? I am ready to rock. Let's do it. Now for the listeners out there who aren't seeing the video. The nice neat thing about Tom and myself is we have the same hairstyle. Yeah, I call this my COVID-19 haircuts, I'll just have to deal with it. Yeah, I call my haircut, the last of what I can possibly produce on my head. Luckily, I can still produce it on my chin, but not on the top of my head. Let me introduce you to the audience. Tom, Donna is an award winning CEO, number one international best selling author, a TEDx speaker, radio and film producer. In fact, his book is called the way of the quiet warrior. You can get it on Amazon. And you'll notice that he's got a rating of 4.9 out of five, which is just amazing. Transforming leaders and companies worldwide. Tom believes real change starts at the top. He is dedicated to changing our view of mental health in the workplace, by breaking the silence, telling his story of struggle. And being a leader by example, Tom, take a minute in filling for the tidbits about your life.

Tom Dutta 02:10
Well, first of all, thanks, Andrew, for having me on the show. And it your listeners? Well, you know, I used to introduce myself and say, you know, I've been for 30 years, as senior executive. I've done everything right up to CEO and through 11, different transactions, mergers, acquisitions, some failed, some didn't chairman of the board for a decade. But I want to let you know, in secret when I did my TED talk in February 2020, I failed the first time. And they said, I have got a coach and I said, coach, give me some coaching. He said, I gotta tell you when they first met you, they didn't really like you. And I always like a punch in the gut man. So I said, What are you talking about? They said, well, it's really not about your book or your business, or it's about your idea. So now I introduced myself This way, you know, I stumbled into business, I did very well, because of some great people around me. And I decided 10 years ago, to instead of coaching and building others dreams is to to create my own company and become a teacher, Android teach the wisdom, what I learned to other people, then I'm on a mission. And so that's why I said, Hey, I'd love to be on your show.

Andrew Stotz 03:17
Well, it's great to have you here. And I'm really excited. I know you and I talked for a little bit before the show. I'm excited to hear your story, and learn from it. So now it's time to share your worst investment ever. And since no one ever, ever, ever goes into their worst investment thinking it will be. Tell us a bit about the circumstances leading up to it and then tell us your story.

Tom Dutta 03:40
Well, I don't know how much time I have here. Something tells me this could be a two three parts series. You know, I've had enough time to think about it. I'll take you back to 2006 actually. So getting into story one, I want to paint a picture to the audience. Okay, I want to get this in your mind that it aged. In 1996 I was married to my amazing wife Today we celebrate over 25 years being together. And she was a career banker. And at the time when I met her we met in one of Canada's largest banks. And my career grew fast. I became a CEO at the age of 31. And at about that time, I was traveling a lot Andrew and I wasn't home. I had orphaned my daughter for many many years. But man I had this incredible job and I was traveling and I was well paid and all of a sudden came with that the life stuff we without getting into all the details personal we did have a beautiful home. You know we have the house at the lake up in the Okanagan here, which is a part of British Columbia they the Sonoran Desert comes up from the United States. It's the warmest climate in Canada. And we used to go there every year I saw my daughter take your first steps in the hotel room was beautiful. And so this was the lifestyle. My wife's 10 years older than I so we had this timeline is bankers that we were going to retire at some point but probably 10 years apart. Well, at that time, three kids, two step sons, which I was raising, and my daughter came along. Today, she's 23 into the university. And so life couldn't be better. But here's the thing. Andrew is a financial guy. That's why I started in banking. I think I told you offline I, I was licensed to sell mutual funds. This was before advisory came out. So I got my life's license to sell insurance. And I started talking to people and what was funny, I was a young guy. And coming into my office as a branch manager, there were doctors, pilots, accountants, and like, here's a little Tommy, it's these people are in their 50s and 60s, I had no life experience, and here I am counseling them. And man, I'll tell you that every financial statement I looked at when we did their lending was a train wreck. These were people who were advisors to others, and they were highly leveraged in debt. And they were spending more than they were bringing in. So I remember looking at that back then rather arrogantly because I had a bit of an ego saying, that's crazy, I will never put myself in that position. Well, I guess like they say, Andrew, a quality of life and a quantity of stuff don't necessarily line up. And so a 2006, three significant events in my life happened. At the peak of my career with all this amazing place that we were blessed with my wife, one of my wife's parents had a major medical setback. And my wife is part of a traditional Italian family. And she was very close to her mom. On the strength of my employment as a C level executive. I said, Honey, because the bank was giving her a lot of work to do. And then she had to balance is caring for mom. I said, Well, why don't you consider taking an early retirement. And so she did. At that time, the bank had merged with one of their trust companies. And they were looking for ways to shed some pause. So I gave my wife control of it. I said, whatever you want, I will lead the way. And she retired. right about that time, we had moved into a home a nicer home, and our neighbors who were behind the fence who was a seniors, 65 year old plus. And there was this guy, and he was gray haired, and you know, it's kind of thin, and he was always in his garden gardening, if you can picture here's my porch of my house, in a corner lot. And I'm overlooking this house, Kitty corner, and there's this big backyard with a double decker house. And there's this guy in there every day. And he's got two Corvettes parked in the parking lot. These are like $80,000 Corvettes. And he's gardening all day. And I'm like, dude, I love to cook. I should just be in the kitchen cooking here yet. I'm slaving as an executive on an airplane, like, What's your secret? And they didn't really connect to us. But one day I walked over I was a pressure washing my driveway. And I said, What do you do? He says, Oh, well, we help people structure their finances. And I said, Well, that's interesting. But he didn't say anything else. And of course, back then I'm gonna go like, Well, you know, I'm a banker. And I got to know a lot of that. Well, we got invited over and one thing led to another and we started learning more that they became part of an investment house is a structure of an investment. And they asked us come to the presentation. And so my wife and I very innocently went sat in the room. And there was a presentation. And they presented everything. And it was an investment where we could earn higher rate of return. And you know, right about that time, there was a perfect storm because my wife had retired, we had received fairly large retirement pension for her. As well, as we had a lot going on financial, we had saved up a lot for a cell, so is everything we'd worked for. And well, we took a year to check this out. And it looked pretty legit. And it was actually what it was, a series of investments. Now, like, I don't mind sharing with you the name of the investment, because if somebody Google's that they'll find it. And it's been on the news. But this is a long time ago, it was called the ifl, the Institute for financial learning. Now if you it's basically they set up as an institutional arm. So it would be something like your investment advisory group, if it was you. And they basically showed us structures structures are now you can take investments and restructure them and earn a higher rate of return. And on the surface, it looked fairly decent, because one of the things that was disguised, some of the investments were disguise through some of our banks, self directed RSP programs. And of course, as bankers were looking at and going like, okay, it's through a Chartered Bank investment program. Looks pretty interesting. To all three that year we did our due diligence, we actually were flown over to one of the other provinces in Canada, to meet the president, CEO of this group I felt and this guy was like he was a salesman, but he seemed like he was he was insurance base. We went through all of this. They even had a gathering of 1000 people in one one part where they invited us and they had The companies that were part of the structure that the investors were investing through their savings, retirement savings plans, the companies were brought in to talk to the investors or potential investors. So there was one follow at of steps and cap on he was, he was running a mining company. There's another fellow who was running this company, they even brought in people connected to their leadership teams. And here's the thing, I was a financial guy myself. And having been through a lot of mergers, including leading one myself in the last few years, we would set up a data room, and we would exchange information and do due diligence. So my wife had just said, You know what, before we take her pension, and we do some things, let's just look at this. So man, we took a year, at the same time, there was this health issue and stuff going on with my wife's mom. So we really weren't doing anything. But after about a year, we came to a point where they said, Okay, it's time to make a decision, do you want to get involved in this, they actually even wanted me as a banker to go and be structures, they call it or do presentations to show people this program. And you know, what, we smelled some funny, we had a gut feel. But at the time, it was emotions. And my wife had just retired and I was now solo guy and running a company as an executive, the guy at the top a lot of time raising kids. And we made the decision to, to invest. And so we did. And man, the first year was amazing, the returns were great. And we receiving the cash was started coming in, the whole plan was to give us a runway, while my wife was off work when she was eventually going to go back to work. At some point, this was not a retirement, she was still pretty young. And to, to use that just to basically maintain our lifestyle to take some pressure off me. And the return seemed better. After in 2007, another big event happened. And I was like to say to your audience that have a backup plan of income, no matter what your career now I was a hired gun, they call it so my job manager was to go in and turn companies around rightsize downsize. And it's so happened that my company, which is a global, I think is a multi billion dollar group of financial companies I was a Canadian had. They went through a merger and acquisition and they handed me my future. So my job was eliminated, I knew it was might have been at risk. Hard guns are usually three to five years horizon, because we do a lot of heavy lifting. And we move on, I was given my future and a couple months severance, and my income went away. And right about one I remember sitting in my car, seeing my wife, look, honey, I can go back and get back into a six figure income. One month later, I went to the bank to withdraw some of the investment return we were getting. And if the client and it was at that point where we literally woke up, my wife not having a job looking after mom, me just being laid off or downsized, which was the second time in my career. And we had nothing, no income. So we had all the debt to pay the houses and the lifestyle. Nothing. So imagine waking up to your audience, having three children, having a mortgage pay on your home and other debts and having a combined income of almost mid six figures. And you're done. I I you know, maybe I'll stop there, if you want to ask me any specific questions, but I'll tell you this, just to wind the clock forward. The next year. I bounced back, I went back and get some work as an executive got my six figure income going. We had no idea this was the world's largest Ponzi scheme. The total take in globally, we were told was a billion dollars. Now I'm saying the world's largest I'm not sure but somebody said that. The total take in North America was 400,002,000 investors. And to give you an idea of how hard this was my wife and I were blessed because we were young enough. And I had enough career experience to get back and work. And she could we had resources. We just tend fortunately lost all of our liquid resources. But the thing about it is stories I want to I'll just tell you a couple. There was a couple we met who were 65 in their 60s 65 to 70. They had built five businesses over lifetime. They liquidated all of them and put them into this. And we learned just as we got out of this that the wife was working at McDonald's. There is like six or $7 million. I think they put in their NFL athletes. There are police officers there were financial people there were lawyers involved in this that made us feel that you know what, you know, join the team because you know, everybody's legit here. The last thing is, is that the there was sadly I think one suicide and I never really went down that. But I'll stop there. This was 2000 And then and seven. And here we are literally, with a wake up call saying, Okay, this was our Sucker Punch. But I'm a fighter. And we built we built back. We don't talk about it because it's 16 years ago, but so yeah,

Andrew Stotz 15:16
so maybe we can review the lessons that you learn?

Tom Dutta 15:20
Well, I was thinking about that. Many. Number one is when I based on being an employed employee, I did a lot of research after and I said to myself, I only have 10 years where I want to rebuild my life. But I never want to travel like I did. And I only have this many years. So what should I do and in a paying job was in it with percent tax. So I started looking into how to create wealth. And so my first lesson was, whatever I do to rebuild, create a platform where it would pay me as I sleep, and it would be a saleable asset. So I actually built my own business, I created a platform, my people development company, touch to that Now's my author work, my book, my TEDx talk of, we're having a movie made and multiple revenue streams got into public speaking. So I actually reached the peak of that business. Just you know, few years ago at the peak where I last look, we're almost back to replacing my income. And it was fantastic. So that's the first thing is don't get back into the same playing field. Number two, is due diligence. Due Diligence isn't enough. So quite frankly, go outside the bubble, of whatever the program is, and talk to other people who are experts. And so I learned this in corporate I don't know why I didn't do it, but go to I had friends who were lawyers, accountants who are external and go to them with the influence. Okay. No emotion, take a look and give me your thoughts. And follow your gut. I think everybody listening to this with a story would say they had a gut feel. And you know, the old cliche, it's too good to be true, Andrew? Yeah, well, I sniff that. That is weird. When you're in emotion, the emotional side of the brain, which is the joy side, it's like buying a timeshare. When you're in the joy of the dream side of the brain, you literally vision and connect to the future. So it's like, wow, this is going to be great for a future you get out of the analytical side. So get back into that analytical side, follow your gut. And can I just give you one more? Yeah. Which I really thought about a study was done in Canada actually on, when you get to 90, the top three regrets only this is a gift for you. In the data that came in the top three regrets of 90 year olds were number one, I didn't risk enough. Number two, I didn't reflect enough. And number three, I didn't leave a big enough contribution or legacy. So we took a big risk. We didn't reflect enough on it. But now after the biggest lesson is I've created a legacy. I have now a business we've recovered and we are better than we ever were, with heart with almost no debt. So now we have a better lifestyle today than we would have when we're even before this snowed under

Andrew Stotz 18:05
exciting. Well, let me share some of the things that I took away. I mean, the first thing, you know, you started off the story, talking about the guy with the Corvette to Corvette. And it made me think about the idea that manipulators and all that are masters at these types of magnets, these types of magnets attract people, and they know exactly what they're doing. They don't keep it, you know, in a garage, or something like that, you know, they display it. And I would also say the second thing I take away, you know, you talked about, you know, having a meeting with 1000 people in an event and, you know, you saw all these people, they're also masters at building credibility. And, and so, you know, my, my big lesson from this is just the idea that, you know, there are people out there that really, really will come across as very credible, and very successful. And they're experts at that. Otherwise, they would never be successful at this type of thing. And so I think what the lesson I take from what you've taught, is that we all need to be aware of that. And that also takes me back to your due diligence isn't enough, you know, you really, really have to explore something from every angle. Anything you'd add to that.

Tom Dutta 19:30
Just one through my, through the last few years, I think I told you offline, I had a bit of an accident, I fell and got a serious concussion and my lifestyle for about a year. I know this is not a faith based faith based show, but I was never really one into my faith. But I started, you know, reading the Bible and I'm praying a lot to get my health back. And because I'm self employed, and here's the thing I learned to everybody building your life, for the material things The real world is not what it's about. A lot of times the people whose change self worth bigger, bigger, bigger, you know millions of dollars net worth, a lot of times they're missing something else in their life. So today our target isn't to be multimillionaires, our target is to live within our means have what we need and live by our faith. And that's what's pushed us through this. And I think it's really what got us through the times, though, we didn't end up one of those on the, on the list of the, you know, the suicidal list for sure.

Andrew Stotz 20:29
Well, it's a great reminder, because during these very difficult times, you know, a lot of us just don't have, you know, we're not sure what to do and how to handle it. I know, from my perspective, I've had my days of just falling to my knees and you know, surrendering and just saying, you know, let go, it's going to be okay, do the next right thing. And don't that, you know, sometimes you just can't control everything. And so sometimes the The irony is that us surrender to when, you know, so absolutely. So based upon what you learn from this story, and what you continue to learn, what one action would you recommend our listeners take to avoid suffering the same fate? I'm picturing you. Looking over your fence in seeing two, four vets, and a guy just raking a lawn? Okay, so if I'm in that situation, or whatever, you know, what, what event? What advice would you give?

Tom Dutta 21:30
You know, having looked back all this, I guess my advice would be really simple, it seems kind of maybe basic, but to go back and create a vision of what the future of your life should look like. And really take a look at the whole life and what's more, most important to you. And, and then build your dreams and investments around that. And a lot of times it will solve itself, you'll find that the dream you need for the future. It's not all money.

Andrew Stotz 21:58
Beautiful. So last question, what's your number one goal for the next 12 months,

Tom Dutta 22:03
over the next 12 months? Well, I'll tell you the, the company is doing well. And we've got many projects on the go. So my number one goal is to double the income stream from the company and execute on a few projects that I have. So that's number one. Number two, my wife and I tied to that a personal goal is we're going to Bali, when the COVID opens up to celebrate our 25th anniversary. Beautiful, we're planning to write another book. And I'll write the last chapter there. So two goals, don't read about personal.

Andrew Stotz 22:37
So maybe just tell the audience about create a new website and so that they can understand more and what's there, check it out?

Tom Dutta 22:47
Well, thanks for the opportunity, Andrew. The website is www dot create, play on words kr e a t.ca. Particularly you can visit my book page to see my author work and media pages, a lot of things there. But we basically have a company that teaches entrepreneurs, business owners, corporate leaders, we train them. And so I take the years I've had an experience, we do communications workshops, we help teams be more effective. Get called into coach one to one executives, and particularly built cultures sometimes that aren't working very well. From that I'm an author. So I have book work I do public speaking. And then we're working on a movie project. Now the book is made into a feature film, which by the way, are all threads of revenue lines from the business platform. This didn't happen by accident. So

Andrew Stotz 23:41
great. Well, listeners, there you have it another story of loss to keep you winning. My number one goal for the next 12 months is to help you my listener reduce risk and increase return in your life to achieve this. I've created our community and my worst investment ever.com. And I look forward to seeing you there. As we conclude, Tom, I want to thank you again for coming on the show. And on behalf of East Arts Academy. I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience? For the crowd?

Tom Dutta 24:20
Oh, you know what, just follow this guy. And I'd be happy to look further into that with that is an honor and I don't have any parting words other than tell your story. Everybody keeps telling it if you've lost it all, or lost something, because then that is really the answer to the future. And by the way, I learned through my loss that sometimes we have to look in the mirror was someone else's fault.

Andrew Stotz 24:46
Yep. Great. Well, that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. This is your worst podcast hose Andrew Stotz saying. I'll see you on the upside.