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

Jun 23, 2021

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BIO: Tom Dutta is an award-winning CEO, # 1 International best-selling author, TEDx speaker, and radio/film producer.

STORY: Tom was drawn to his neighbors who had a huge house and two Corvettes. Out of curiosity about their wealth, Tom indulged them, and that’s how he and his wife got lured into investing in a Ponzi scheme.

LEARNING: Due diligence is not enough; you must dig deeper. Trust your gut, and don’t fall for the shiny object syndrome.

“Get back into your analytical side and follow your gut.”

Tom Dutta

Guest profile

Tom Dutta is an award-winning CEO, #1 International best-selling author, TEDx speaker, and radio/film producer. 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.

Worst investment ever

Tom became a CEO at the age of 31 when he was newly wedded and with a baby. The responsibility came with a lot of travel, but he was well paid and could afford to give his young family a good life.

Things start to shake up

In 2006 at the peak of Tom’s career, three significant events happened. His wife’s mom had a major medical setback, and his wife was now juggling work and taking care of her mom's recovery. Given that Tom’s career was flourishing, he suggested that his wife considers taking early retirement. And so she did.

The curiously wealthy neighbors

At that time, Tom and his wife had moved into a nicer home, and their neighbors were seniors, 65 years old plus. They had this big backyard with a double-decker house and two Corvettes parked in the parking lot. One of the owners, a grey-haired man, was always gardening. Tom was very curious about what their secret to living such a good life was.

One day Tom walked over and asked the man what he did for a living. He said they help people structure their finances. They got to know each other and even invited Tom and his wife over for dinner.

Lured into an investment option

Over time, Tom and his wife started learning more about their neighbors. They got invited to an investment presentation the neighbors were making. Tom and his wife innocently went, sat in the room, and listened.

The presentation was about an investment where they could earn a high rate of return. There was a perfect storm right about that time because Tom’s wife had retired and had received a relatively large retirement pension. They had also saved up a lot. So they had the money to invest should they wish to do so.

Doing their due diligence

Tom and his wife took a year to check the investment out. They did their due diligence, and in the process, were flown over to one of the other provinces in Canada to meet the CEO of the group. They even had a gathering of 1,000 people in one session that the couple attended. Companies that were part of the structure that the investors were investing in through their retirement savings plans were brought in to talk to the potential investors. Everything checked out.

Taking the leap

After about a year, the couple reached a point where they figured it was time to decide. Tom had a gut feeling warning him against the investment, but he brushed it off as emotions because so much was happening simultaneously. They decided to invest.

The first year was amazing, the returns were great, and the cash started coming in. The plan was for the investment return to give the couple a runway while Tom’s wife was off work until she eventually returned. They’d use the money from the investment to maintain their lifestyle and take some pressure off Tom.

Losing his job

In 2007, Tom’s company went through an M&A, and his job was eliminated. Now he had no income. One month later, he went to the bank to withdraw some of the investment return they were getting and was declined. Now they had nothing.

The couple had no idea that they had invested in the world’s biggest Ponzi scheme. Now they were left with a massive amount of debt, and a lifestyle they could no longer sustain.

Lessons learned

Create a platform that allows you to make passive income

If you are trying to rebuild your life, don’t get back on the same playing field. Instead, create a platform that allows you to make passive income. When creating your platform, make sure that it is a saleable asset.

Due Diligence isn’t enough

Talk to other people who are experts. Go to your friends who are lawyers, accountants, financial advisors, etc., and let them help you dig deeper to make the right decisions.

Listen to your gut

When faced with an important decision, let go of your emotions, get back to your analytical side and listen to your gut.

Andrew’s takeaways

Don’t let manipulators fool you with their shiny objects

Manipulators are clever, and they will use all sorts of shiny magnets to attract people, and they know exactly what they’re doing. Be wary of them.

Do your due diligence and dig deeper

Not everyone who seems credible is. Do your due diligence and dig even deeper to ascertain that people are who they say they are.

Actionable advice

Go back and create a vision of what your future should look like. Then build your dreams and investments around that. Often, you’ll find that the dream about your future is not all about money.

No. 1 goal for the next 12 months

Tom’s number one goal for the next 12 months is to double the income stream from his company, execute on a few projects that he has and write another book. Tom and his wife also have a personal goal to go to Bali when the world opens up to celebrate their 25th anniversary.