Matthew Cox | Inside True Crime Podcast - How to Lie Your Way to $28 Million (The Big Short Explained)

Episode Date: June 28, 2024

How to Lie Your Way to $28 Million (The Big Short Explained)

You saw the movie The Big Short, right? First time I read the book, I was actually in federal prison. As I'm reading that book, I'm breaking out in sweats. I'm like, they're going to name me in this book. I mean, me personally. I was in a number of those meetings and at those tables that those guys were at, and at those dinners, at those conferences. I was one of the idiots at the table while they were put together, you know,

they're playing the Big Short. I went to Arizona State University. During, while attending there, I switched my degree to computer science of engineering. They just started a new computer science program. And so completed that in 1986 and went off into the business world. In engineering? No, eventually I applied that in technology and engineering. down the road. But initially, and I think it's part of the being driven by a paycheck versus being

driven by love of doing something. Right. So at the time, I had been working for a supermarket chain out here in the Phoenix metro base called Smitties. And I had worked my way up into management. I had gotten married. I married my high school sweetheart after my freshman year of high school. And two years later, we had our first child, our daughter. And then 14 months later, unplanned, we had my son. And, you know, so that required me to go back or go to work full time in this supermarket while attending Arizona State because I needed benefits, I needed to be able to provide

for a household. So I had worked my way up into management. So by the time I had completed college, the money that they were paying me, which again, this is, you know, in the mid-80s, offering me $60,000 to $80,000 a year, whereas engineering jobs were starting out about $30,000 to $35,000 at that time period. Really? You would think, you know. Oh, yeah. I remember a professor from one of my engineering classes at Arizona State, one of those classrooms with 350 students. And spoke of, hey, you live in great times. You know, if you're a guy, you're going to meet a woman engineering student. The two of you are going to marry. And between the two of you, you guys are going to make $60,000 to $70,000 a year. It just doesn't get any better than that. And really, at the time, that time that sort of sounded intriguing to me, but I always had in the back of my mind, I'm like, I'm going to retire on that. I plan on retiring by the time I'm 30. I just, it's driven by precede financial success, if you will. And so I'm working in the supermarkets

and doing well and was on the fast track of running stores, you know, because a store manager or a store director could make 100 or 120,000. I thought, hey, you know, that's top 10%. And really at that time, that was top one to two percent, anything over $100,000 a year. So, you know, I wanted to really drive towards that. The grocery chain I was working for, I actually left that grocery chain and went to work for another chain called Smith, now currently a Kroger company, but went to work for a chain called Smith that had open stores down in Tucson and was ready to open stores in the Phoenix metro area. And my best friend, he and I decided,

hey, let's go down to Tucson. Let's take a look at what these guys have got, what type of operation. And this best friend that I speak of eventually became a president of major supermarket companies was offered the presidency of Whole Foods and stuff like that. So really had it going on, if you will, in the industry, and we were both very fast movers.

So we went down there, checked them out, and it was like, hey, these guys are going to kick our ass. I mean, there's no getting over this. And unbeknownst to us at the time, Smith had actually made an offer to buy the company we were working for, Smitties. And when they refused that offer, Smith basically was owned by two brothers, made the announcement, okay, no problem, it was bury you and put you out of business. So we went to work for Smith.

He and I moved down to Tucson. I got divorced during this time. So six years into my marriage, you know, I just, my wife and I, who, who was, I'd love to this day and have a relationship to this day. We're growing apart, which led to our divorce, all in my own, my making, nothing that she ever did. And so my best friend and I, his name's Ron, I'll leave his last name out, we moved to Tucson and roomed together down there and began our management careers with Smiths.

to open stores in the Phoenix metro area six months later as in store management. We both worked, and I worked my way up through that, eventually going into the regional office, the corporate office, and just having greater and greater opportunities thrown at me, opening some other stores and such. While working in the office, I thought that was a pretty slick opportunity because I was all about the visual, the pride, not only the paycheck, but the perks of the business. I'm flying around on a Lear jet

around Utah, Arizona, and New Mexico, landing in the middle of nowhere, popping in, visiting stores, trying to surprise them, doing store checks, getting back on to the Lear, and flying somewhere else in the Western United States. And, you know, and I thought, well, hey, this is the life, right? Right. Bud Weiss was keeping the plane supplied with beer and the alcohol distributors and free to lay with chips and all that type of stuff. And I thought, hey, man, I'm on the grand stage. But I eventually did leave that industry in 1991, mutual agreement. I had gone to a little place called Globe, Arizona.

And if you've ever seen or remember the movie U-turned from way back when, it was filmed in Globe, by middle of nowhere, an old mining town about an hour, hour and 15 minutes east of Phoenix. So I went to open that store, and when I opened that location, realistically, the budgets for that size town and community and the type of store we opened, just weren't realistic. And I had built this reputation. I'm being very successful, meeting budgets, exceeding budgets,

controlling labor costs, controlling shrink, and just all the various things to address our bottom line. Matter of fact, our net profit numbers were four times higher than the industry average, because 2% versus a half a percent. So when I realized I was not being able to make numbers, I started pushing numbers around, if you will, torturing the numbers, so they'll tell you what they need to say. And just really wasn't as opposed to just saying, hey, it's not me.

We can't make it under this budget in this area with these expectations and serve the community. and the storeholder the store was not like there just wasn't enough there weren't enough residents to support that store is that it wasn't enough residents it was a very high-end store from that perspective we had the chinese kitchen we had you know all these more high-end departments and going into that type of community they weren't necessarily quite ready for that certain ones did embrace it but bottom line it wasn't a strong enough population. And at the same time, six months previously, Walmart opened up a store. And that was when they began the process of starting to incorporate supermarkets into some

of their platforms, more of their rural communities, which Walmart had that down path. They knew how to go into rural locations. They hadn't even opened a store in Phoenix yet. I mean, Phoenix, Tucson, those were some of the largest markets they ever took on. They built them and you know through the rural community really did the right way so I agreed after a meeting with vice presidents of operation and some of the district managers I just I agreed to step down I just as like hey this isn't going to work and probably really began the time of me not even want not wanting others to see me fail yeah i mean did you step down because they had they realized you were

shifting some of the numbers around or it was just you just thought hey i'm yeah i'm not being given given i'm not being given a platform where i'm going to be able to succeed and i just i'm done with this it wasn't so much not being given the platform to succeed as to me fighting for that platform and being seen potentially as oh hey macmaster can't cut it you know here he could do great in all these locations but as soon as we give him this type of community and marketplace he can't cut it didn't you raise the didn't you ever say like hey man like there's a that's a fucking walmart four miles away yeah it's a it's a it's a rural area there's not enough residents like this is not going to work like what are you i did at the time that i was resigning and had

made that decision too. I had gone in and I had told them, say, hey, look, this is what I'm having to do with the numbers, just so the district and the region can meet the numbers. So under the direction of a gentleman who has since passed away, so I won't share his name, if you will. But really under his tutelage, that's where I learned to push those numbers around. if you will. So I sat down with him. His office was here in Phoenix. So I drove down one day and met with them and just said, hey, look, this is what I've been doing for the last six months. I said, realistically, we're off by two or three percent in our labor. We're off by these. And I've been literally holding those numbers to move them back in when we have certain promos or

sales and just you know you know obviously not stealing anything or anything like that but just moving those numbers around and then holding what we called back in the day green slips in our safe saying okay hey i've got three thousand dollars of labor that i'm going to need to filter in over this next quarter in order to and then i've got another green slip i got 1500 of labor okay hey i'm going to pay cash for the ice that's being delivered. And so we can use that and apply that towards the labor account versus cost of goods. Okay. Things of that nature. All bad things from the perspective of just ethics and business and, right. But one of the things that also had some mentors showing me, but hey, I'm a smart guy. And, you know, a matter of fact, I got probably really good

at teaching them a thing or two if you really want to do this right a spreadsheet kind of guy I love numbers let me you know this is a way to do this so I decided

to resign they were actually hey you know we all have skeletons in our closet you know let's let's figure something out

to put a plan together and we'll recoup and recover from this that may have entailed me stepping down and moving Phoenix, Tucson, Albuquerque, Salt Lake City, El Paso, one of the larger markets and taking over maybe a department or an assistant store manager or a grocery manager or something of that. And I just wasn't interested in it. And again, it was the pride. And looking back, reflecting back, it was the pride within me that was like, hey, no, I'm not going to allow somebody to see me fail and step

down. Hey, I used to fly around in a little jet and visit those guys and say, hey, you need to do this, that, or the other thing. So I stepped down and resign, which led me into putting my college education and degree to work, if you will, from the engineering. side of things. So I helped start a company called TWC manufacturing and distributing. The TWC stood for third world computers. I kid you not. This is back in the day when IBM clone computers were starting to be a bit of the rage.

You know, things called, I don't know if you're familiar with things that were called the 8088s. and 286 is and such. So with another gentleman, we started a company out of literally 100 square foot closet. We began importing parts, hard drives, memory chips, motherboards, Intel chips, AMD, microprocessors, and chips from generally South Korea,

but from different places. and building computers to resell through a magazine called Computer Shopper. I don't know if you ever remember that, a magazine that literally came out monthly that thick. It would be, you know, 1,500 pages of just computers and accessories in the early 90s. You know, the first CD-ROM player, you know, in 93-94-ish, you know, you would buy that from there. So mail order. So we began building computers for other companies and putting their logo on their computers. So we created quite a niche.

While at the same time, doing computer service and repair for businesses, setting up networks, setting up just their hardware and their technology, setting up software platforms specific maybe to the medical field or dental industry, construction industry and construction field, as everybody was moving from paper, pen and paper and manual spreadsheets to, you know, more of a computerized, database-driven business model. So we began building that literally out of 100-square-foot closet. During that time, we landed a radio show because of a thing called the Michelangelo virus. I don't know if you remember that at all.

I feel like I do remember that. Yeah, it was the news story everywhere. So a local radio personality, I think he's in the Hall of Fame of Broadcasters, and Pat McMahon, very as a local celebrity and hero of children's programs, I mean, for decades, to radio and local TV in the Phoenix metro area, as well as a lot of national recognition. So he reached out to us one day, I don't, just kind of different connections and say, hey, I want to have you on the air so we can discuss this Michelangelo thing.

And at that time, McAfee had come out with a free antiviral software that would, you know, really search for this virus and remove it. And what happened was on a, I can't, it was I think on Michelangelo's birthday, if I remember And I don't remember what- How clever. Yeah, whenever that was or is. On that date at midnight, when it reads the BIOS, the clock on the motherboard, it would wipe out your hard drive.

It would literally format your hard drive, give a DOS command. And so we went on the air. We actually did an on-air radio, which kind of weird to how you do that demonstration we we intentionally infected a computer with the virus then went changed the date to about three minutes before midnight and of myclangelo's birthday and boom lo and behold it happened so we decided hey again an engineer by training education but a decade of being a businessman. And we and my partner, like, this is a huge opportunity. We're going to give this thing away for free, this antiviral software. And so Pat McMahon announces on air that

you come down to data doctors and put your business card or fill this out, throw that information into a fish bowl, they will give you a free deal. We had people lining up three to 400 yards deep outside of our one storefront in Tampa, Arizona, right down from Arizona State. And so the news media came in to cover this. They thought this was just, you know, wild. Radio station was there locally. Pat McMahon is covering this.

And Pat says, available at data doctors, five locations around the valley. And so cut to commercial and we're like, Pat, where did that come from? We got one location. He was, I don't know, I just started to throw that out there. So we literally went and signed contracts and leases with places like there was a place called VCR Doctors. It was VCR service and repair and saying, hey, can we use you? your location is one of our addresses and you guys take in and check in computers we'll come

pick them up and so within two days we had 12 locations opened up and then we actually started building locations so long story short we built that into a national franchise that company and it's still in business today it's called data doctors it's got franchise locations all over the United States. We got up to about 10 company-owned stores here in Phoenix Metro and then brought on another business partner that had done past franchise opportunities. Initially, we are actually looking to go public. But if you remember, the Russian Rubel financial crisis back in the 90s. During that time, it really became a bad time to take the company public, which is where we were moving towards so we decided franchise we will franchise this puppy and do our thing so we began that

process but through that process i started getting frozen out if you will by the the partner that we had started the company with he became more and more of the face of the company of the franchise. By that's time now we have a television show. I don't know if you remember Kim Commando. She had a national show and syndicated and columnists and all these different things. So we started one as well and started competing head to head with that. So we were doing national shows, national radio, some national television, doing things throughout different newspapers and such, like a computer corner. Right. You know. And, And so we made my partner the face to that.

He was brilliant at it and just outstanding and just a brilliant, you know, on technology and such. And I moved more behind the scenes to handle the business side of things because, you know, now we've got this big payroll. We've got all these employees. We've got all these storefronts. And then we've got this third partner that we gave one third of the company to, to, you know, initially take us public. but then moved into the franchise direction. And it just became more of a, there was animosity that just started building

between my original partner and I. And not really honestly sure what the cause of it was. It just, I don't know if it's personalities, not sure. And so again, I made a decision where I said, okay, the three of us together, I said, we've got to make a decision. Somebody's getting bought out. You know, him or I is going to get bought out of this. And really, the decision was quite easy.

At that time, this thing was a goldmine, and it still is to this day. He's the face of the company. You know, I had removed myself from doing those types of things. As a matter of fact, we brought on another guy, a kid named Brandon, that became also another based in the media world, if you will, to bring that forth. And that just really led to one conclusion. You guys are going to have to buy me out. So we negotiated that for a while.

They bought me out. The company just continued to do fantastic. And like I say, grew to a nationwide. They still do a lot of television, a lot of radio, a lot of media now, more, you know, blogs, podcasts, those types of things. But, you know, 30 years later, that that thing is still running extremely, extremely strong. I don't make a dime from it, you know. And I, you know, looking back in hindsight, I set my buyout rather low. But nonetheless, it is what it is.

during that same time period, I remarried. I met actually a woman in one of the grocery stores that I had just transferred to, you know, previously, so previous to data doctors and TWC manufacturing and distributing. And so we got married in the Valley here and you know, started just doing life together, moved to Scottsdale and began falling in love with Scottsdale and the everything that Scottsdale is about from Western culture to, you know, the money, the restaurants, this, that, and the other thing. So, you know, just began that journey of, again, from pride and and from some other, you know, I could see things now in retrospect that was just going on. I was like, hey, you know, I need to keep this woman happy.

And she wasn't demanding it, but I figured I got to, you know, I got to keep her happy. I got to, you know, provide for our household, if you will. And I need to go out. I need to figure out a way to make millions of dollars, not hundreds of thousands of dollars. And, you know, and I still had that goal of retiring at 30. and which is just silly but nonetheless had that goal so um so i left that and uh i started a i started building companies at that time period so i built a distributor ship uh that distributed products um like chips snacks beverages and such in phoenix metro and began building

up that distributive ship in acquiring other smaller distribution companies and distributing that to the super, distributing to the supermarkets. You know, I'm getting up at 2 in the morning, going out there running initially solo, eventually with the large crew and my guys managing that, doing deals with the managers at the different stores, building cash accounts, building routes, and building this situation. So I did that for about four years until I sold that. During that same time, I started a company called Greer Land and Investments, which was more of building a portfolio of real estate holdings and finances and financial instruments. So the real estate holdings initially were resort properties.

So a little different than what James when he interviewed him a few weeks back and the way that they went about it from more of a time share for lack of a better term. But like cabin resorts, like I own the largest cabin resort in the White Mountains of Arizona. You know, 10 acres of land, you know, cabins, horses, different things right on the Little Colorado River at 9,500 feet. and just a beautiful god's country and uh acquiring properties and acquiring real estate rental real estate and building a portfolio not a reed per se but that was kind of a goal um with it and then using that at the same time uh began really working in the market and uh and doing not necessarily day trading although i did do some of that but looking more at

some more short-term and long-term opportunities that I can do with personal family dollars as well as business dollars and eventually maybe open that up to accounts and clients. So I actually had that business for about 10 years through 2004. And had varying degrees of success. I moved my biological father and his wife out from Wisconsin to actually run one of the resort properties, which was he and I had had a rough relationship, probably since I moved to Arizona and early adulthood. It just wasn't on solid footing. And I'm not really sure why.

But it just, we didn't. So it was something that my grandfather and his father was really working at reconciling. You know, I've got a couple kids. He's got grandchildren. I want him to meet him and be part of that lives. So we began some communication. And eventually it led him like, hey, my dad would be perfect for running this resort. He's an outdoorsman.

By the way, I'm a big outdoorsman. hunter, fisher, backpacker, hiker, you know, my sister married into a family that had ranches in eastern Arizona, western New Mexico, again, as a huge outdoors guy. So, you know, I fell in love with horses. It fell in love with the cowboy life. So literally, I would do my business dealings Monday through Thursday and Friday morning, boom, I'm out to eastern Arizona, western New Mexico to get on a horse and just, you know, spend all weekend, you know, out there hunting fishing, just riding around, working ranches, doing those types of things. It's, it's one of the things I realize I love about life, but I'm like, that's not going to make me a multimillionaire,

so I can't do it, you know, full time. And so went through that, like I said, had great. rearland investments, eventually sold all those holdings. Again, sold a lot of them during a market downturn. So while we made very good profit during that time period, it also was a time period that challenges with my father began to show up. He made some decisions with the business. And I had empowered him to run this operation like it's your own. And he was. He was doing a phenomenal, job. The challenge was when we're going through some market downturns, he was running the like he owned it, but we're not bringing in the revenue at the same level that we'd been bringing in before. So, you know, I'm like, hey, dad, we don't have the money to spend.

So, you know, one time over the phone, I basically, you know, I'm like, quit effing spending this money. And that really, that hardened him. towards me. It was like, hey, I'm done talking. I actually had to drive up there because he would ignore all my phone calls and then the resort's about four hours away from where I lived in Scottsdale. And, you know, not to confront him, but to like, hey, you know, don't get mad because we had a business, you know, conversation, you know, that's business. And it just never, we never really reconciled that relationship, you know, from that point. So he decided to go by his own small resort and restaurant in the same area and kind of left me hanging them to try to bring in management

to run that resort property and just bad timing all the way around. So eventually I just sold that. I sold that to another former business partner of mine in the technology side. that also had a computer services and consulting business and had did and continues to do extremely well. So I sold that to him because he had also been an original partner with me in acquiring some of the resorts and the properties at different percentages. So I went ahead and sold out of that and really was trying to figure out what on earth am I going to do now. I've got some money. The market's doing well. You know, it's, you know, what am I going to do now?

Now I'm obviously, I'm pushing, you know, I'm over 30, haven't retired yet, but I kind of had. You know, so I took that time. I'm coaching my son's Little League team. He's going into playing, you know, high school ball. I'm coaching with that. I was a, I'm a big time scuba diver fan of. I became an instructor. As a dive master became an instructor. And then actually became a diver on the dive team for Maricopa County's sheriff's office as a volunteer diver, became an officer. So came deputist. and worked my way up through that of leading dive teams. And we were actually the number one dive team in the United States for quite, and I think they still are because unfortunately Arizona leads the nation in water-related accidents, drownings, boat ownership per capita, you know, in the middle of desert. But because we're in the middle of desert where there is water, people want to get out.

So during this time period, I'm pouring a lot of my efforts into spending time with my kids at that age, junior high going into high school or late primary school, elementary school, and spending a lot of time in the sheriff's department, working Lake Patrol, doing, lying around on helicopters, outside of the helicopters on SWAT lines in full scuba gear, and then dropping in just like you see on movies and those types of things and dropping in whether to attempt a water rescue. Unfortunately, most of the time, it was to do some sort of recovery on the lakes and rivers of Arizona, airboats, et cetera, et cetera.

So really poured my time into that and the efforts into that. But then we had the financial crisis coming out of change in the millennium. Y2K you know I built up the NASDAQ and all the things were on fire and we you know that first market bubble well certainly not the first market bubble looking back in time but that market bubble going into 2000 2001 when the NASDAQ you know dropped by 50% and these things and I realized holy cow man I have I've got to go back to work you know what I can't continue to spend money and lose money at this rate and not go broke yeah exactly and go broke you know what the heck am i going to do and this you can relate to um i started looking around i'm like okay

where is there opportunities i've been building businesses technology businesses finance businesses um real estate companies and in consulting and doing some different things where is the opportunity. Well, at that time, the opportunity was in the mortgage industry and in mortgage companies. So I went, I answered an ad in the newspaper for a shotgun interview at like 7 o'clock in the evening. You know, I got a three-piece suit on. I'm, you know, da-da-da-da. And I'm going and these cats are wearing jeans, t-shirts and everything else. I'm sitting in the middle of this thing. And this guy's doing a presentation. What he had done is he had created a call center, calling up title leads and some of the other leads of doing refinances and doing FHA streamlines and such.

And it was really just. What year? So this was 2001. Okay. Right after 9-11. Yeah. So right after 9-11 when everything just crashing down. Yeah.

you got to throw that part in so i i went in there and the guy thought i was a spy for another mortgage you know at that point time he's like no way you know i've got this articulate well he thought articulate not so much as your audience can tell um but i've got this guy interviewing for basically a call center operator to set appointment for the so-called loan officer to put together a deal or some different options that would then schedule the loan officer on the 1003 to go out and meet with them in their home. and yeah this is yeah you this is such an entry level position just for someone who should probably own the company or be running the company right exactly yeah so it doesn't

make legs are going off in his head he's like you know and but um he did hire me you know after a couple more interviews and such and i i literally and one of the things that i've always done And it's been a philosophy of mine in management and business, going back running supermarkets, running technology companies, running service companies, distributorships in finance companies, et cetera, was I want to know how everything works. And that's the engineer in me, right? That can, you know, that created probably not such a great presidency for a guy like Jimmy Carter. instead of just kind of managing from above,

you know, I would fall into that micromanagement trap. But I wanted to know how everything worked bottom to top. And I wanted to always be able to say, I've done whatever it is, whether it's cleaning toilets or putting together a $2 billion budget and everything in between so that I could coach others, teach others and just say, hey, you know, calling their BS when it's time to call their BS.

Right. So I didn't mind start in that position. And I figured at the time, I'm like, I don't really, you know, I know finance from, you know, Greenland and investments. I know real estate, but I didn't, you know, I had a pretty, no, I had an understanding of loans, mortgages, you know, commercial paper and such. but you know I just I didn't just wasn't certain so I thought hey man started the beginning and I always had confidence in myself literally was okay in a year I'll be running this company

right it took nine months in this case but you know and the and that's you know I hate bragging it's you know but that's a true um so I literally I was in the call center for two weeks and they're like and I went to the guy and I said you need me in the first field what they called a field as a field loan officer i said you need me in the field you don't need me sitting in here trying to set an appointment for some other guy or gal who was paying making the largest percentage in the deal you need me out there running eight to ten appointments today meeting with people in their homes and you know yeah closing them yeah getting them to sign up those in the closing the deal telling you know sharing what what's up

And it's closing. Yeah, yeah, yeah. And, and, you know, you were just starting to get some all-day products moving in the marketplace then. And you were just starting to get things like the coffee loan and the, the LIBORs, you know, with the 1%, you know, with the... Yeah, yeah, yeah, the Army product. Yeah, the different arms. And so that was just starting to come about in some different things.

You weren't quite on a full-on, no doc and such, but it was coming quick, right? So I, you know, and they thought, that's a great idea. So I go out there, I start, I'm like, nobody really showed me how to build a presentation. So I start building presentations, how to present to people. I was never in I never have been in my business world if you were in my way I had no problem crawling over your dead body right to win a contract to win an account to win the deal to whatever I just you know from that perspective but if you were an associate of mine or a family member or a friend I could always really leave you with love and empathy and I want to provide and hey here's the shirt off my back you know here's a hundred bucks or a thousand dollars here's ten thousand dollars you know but if you're from a business perspective in my way no problem I'm gonna knock you out I mean that that was my way

but when I would meet with customers and clients and this something that I've had from the very beginning through the supermarkets and all these was client need first if I take of the client's need first and foremost, including those times when my solution isn't the right solution for the client. But let me point you in the right solution, the referrals, the this and that. So I would literally get involved, try to learn everything I could about their financial situation, their housing situation, et cetera. So I wouldn't steer intentionally into a products or closing deals that I didn't think was right for the customer. I was probably broken from a mortgage perspective, business perspective.

But I closed over 95% of my deals. And the 5% I didn't close was quite frankly because I told people, you need to file bankruptcy or this is not the right thing for you. Or, you know, this is really what you should be looking at at doing or just, you know, stay the course you're better off where you're at and um in that honesty brought back a lot but i eventually so i started studying these products and i started really believing in some of these these different alt-eight products and you know some of these armed products and you know especially the libor products and and such in putting a lot of people into those so i was on average closing

eight to nine deals a day i was running appointments from seven a m to ten p m driving three four hundred miles a day in phoenix metro wearing shorts and a company polo shirt showing up at their homes and everybody would like hey thanks for not showing up in a suit and intimidate me right so you know all of a sudden you know i'm like you know i come home one day and at midnight this is when I literally would have to hand fill out a 10.03, then fax it all in at the end of the day. I trained my wife to do all that for me while I'm out running around. And I threw a paycheck that I hadn't even looked at it. It was about my third or fourth paycheck in while doing this.

And she opens it up that next morning. I'm getting ready to go to work. She walks in. She goes, what's this? I said, my paycheck. She was, it's $27,000. And I'm like, that sounds about. right and you know so you know that was growing so that led me to like I say within nine months

I was director of operations and we decided we were going to build a branch network nationwide you know not just off our call center model but and for those that don't know what that is That was opening up branches that could use your license and operate in how these other individuals, whether they had relationships with realtors, with, you know, housing development companies, et cetera, et cetera, specializing in FHA streamlined loans. Some of them making 7% on a deal, some of them making 1% on a deal, but they're doing, you know, 50, 60 to 100 million dollars a month in transactions other guys making seven percent doing you know closing six deals a month but bringing down 100 grand for the month right and so we started building out that type of

operation while i also you know on a parallel track was we are going to become a bank we are going to get warehouse lines of credit eventually we're going to get to the discount window, we're going to buy from the Fed. Right. So I set up, you know, a secondary department. So we were doing hedging. We were buying Fannie and Freddie coupons, primarily Fannie coupons, you know, doing deals on our interest rate, opened up warehouse lines of credit, became a bank, a mid-sized bank, and

eventually had branch offices in 28 states. Okay. I was going to say this is in Arizona. or you were in other states. Yeah, so started in Arizona, started in Mesa, Arizona, and within a couple of years, where it was in 28 states and growing. What was the requirement in Arizona to start a bank?

Because you start a state bank, right? State regulated, yeah. So through the Department of Financial Institution in Arizona. So we're like OTC regulated. So we were state. So at that time, it was qualified. broker, you know, you had to have a QI or an RI responsible individual, which we had that that had the licensing, or the, the, the, the, the resume or the, yeah, they had to have like

three years experience. They had to have X amount. In order to be in the bank, it was close to, there was like seven years. We had to have, you know, on our books, the, the net worth of the company was two million, had to be $2 million at that time versus being $250,000 to be a broker, you know, things of that, that nature. So did you and then you could what you could sell that did you have to have an actual location and yeah yeah you had to have brick and mortar. Okay. So and we and our branches all had to be brick and mortar. Yeah. I mean I just I only mentioned that because I had looked into

opening a bank and I had in Florida and this would have been in 2000 probably 2001 and it was you know you had to have you basically you could had you to you could have someone qualify you as a like they came in they had the they had to be like a VP for three years at a national bank they had to have so much banking history they like really their resume they really were just presenting themselves and you kind of put them on. on the paperwork, but they didn't really have to do much for the bank other than qualify you. And then you could raise, I think it was, I think it might have been a couple million dollars. And half of that you could raise by selling stock.

And there were all these things like, it's like it sounds astronomical at first, but then it's like, yeah, but you could raise half that. So really, you won't even it. It wasn't, it wasn't as difficult as what it seemed. It sounds as possible, but it wasn't. Being the Wild West was like, it wasn't as difficult. as it was in Florida or in Connecticut or actually in many other states, Arizona was actually rather easy from that perspective, from a regulatory perspective. So, you know, we went ahead and did that and signed our first warehouse line of credit for like $20 million. And, you know, so at that time,

we had to do what's called flow loans. So we would fund a loan and already have it sold, you know, set up and the day after funding, we would either sell it through funding at the same day or the day after. So, you know, Chase would come in or first collateral, which is a city group eventually and say, okay, hey, you've got to put 2% of your money in the deal and we'll do 98%, but you've got to tell us where this thing's being sold to. So, you know, if there's Lehman Brothers, it was, you know, whomever it may be at that point in time. Bank of America, Chase. Household bank.

Household, yeah. And we would sell everything with servicing. We weren't going to service. We weren't going to do anything initially, crawl, walk, run. So, and then we were still brokering a certain amount of the deals. Because by that time, we had the business built up that we're doing a couple hundred million dollars a month, you know, between all of our branches.

And now I've got to get all these branches. As much as they have broker relationships, and I've got to get them to use our banking products, which was a whole another animal, which we really got in the lines. A lot of them didn't want to use our banking products because they're committing fraud. Okay. So by using my underwriting team, my banking products and those types of things, and by that eventually, you know, where I'm sending out bid tapes and we are doing subservicing and in, in sure. short-term interim servicing um they didn't want my eyes on that yeah they don't if they want to be caught committing fraud and have an underwriter say hey wait a minute these w-2s are are fake or this doesn't make sense or this appraisal is fucked up like then they don't want their parent company knowing that

i'd rather have i'd rather have like you know household bank figure it out or city group or some other like they'll just deny the loan they're just brokering it through yeah exactly just boom right you figure it out you that might be a hey we need to i'm going to be at your office tomorrow morning type of things like yeah exactly yeah so the you know so that was was going great you know i'm making very good money you know i'm making a half a million to a million dollars a year and I'm traveling all over the country. You know, I'm a road warrior now, which I love to travel. I thought, you know, again, one of the perks, visibility, getting to be seen.

So, you know, I'm in Frisco today. I'm in Chicago tomorrow. I'm in New York. I'm in Boston and I'm in Atlanta, L.A., and just nonstop. You know, probably three weeks out of the year I'm on the road. And meeting with, you know, you know, you know, Lehman Brothers, meeting with Chase, you know, the very top floor, meetings with Jamie Diamond, you know, meeting with regulatory bodies and just starting to build a name

for myself while I'm building a name, you know, for our company. So eventually we build up our warehouse lines of credit to about $2 billion. So we've got a couple billion dollars in warehouse lines of credit so that it allowed us to hold this paper for an interim period of time. So I can now aggregate loans and send out a what's called a bid tape. You know, hey, these tranches of meet these parameters. They're full dock or, you know, by now, Alt-A is the rage. You know, they're limited dock or no appraisal or there's no doc or this, that, the other thing. Their purchases, their refinances, you know, they're in this CRA of, you know, district as to, you know, really ultimately the cause of the

financial crisis. But the, you know, where it was forcing us to land into areas and get loans to people, we shouldn't have been lending to. Right. You know, but the government required it and it had to meet certain percentages. So we kept creating new and more and more different products to meet those requirements, i.e. Okay, so you're a house cleaner and your state and you make 15,000 a month. That sounds plausible. Let's go. And it worked for a while because they could continue to refinance as long as the values were going up. And so now you've got that equity to refinance out of and just always stay ahead of the game, you know, until the financial crisis. And so that is just going fantastic, you know, from that perspective. We're doing, like I say, just billions of

dollars a year. I'm living the life of Riley. I'm living in a multi-million dollar home in North Scottsdale on a couple acres of land. You know, when I am home, the closest restaurant to my house for just date night or, hey, let's go grab dinner was Maastro's the original Mastros and Steakhouse for those that are familiar with it, which I still think is the best steakhouse in the country. And, you know, so for date night, we're running over to Mastros, and for my wife and I, you know, it's $1,800, you know, for that one dinner, I mean, just stupid, stupid stuff. The bottle of wine, it was $5,600, this, that, you know, this is before the outlawed cigars

and things, I'm buying $100 cigar to smoke. I mean, just stupid. And, you know, so all of that is just going fantastic. And then we start getting the grumblings of the financial crisis. So during this time period, so you're familiar with NMLS, with the National Mortgage Licensing System? Yes. You know, they're from government with, they wanted to start regulating us. So there's supposed to be tracking all these mortgages and tracking the mortgages, tracking the loan

officers, tracking, you know, trying to really make the loan officer and the bank's fiduciaries versus, hey, I'm in it for my 7%. Yeah. Yeah, I'm not in it for you. I'm in it for me. So during this time period, and as we're opening up offices and branch offices for the bank, as well as, you know, through our branch network, which way it worked is basically they ran their own shows. They were given a vice president title, and we scraped a percentage off the top.

We controlled their bank accounts, but, you know, I had individuals making $2,000, $400,000 a month out of those branches. And we're seeing maybe $5,000 coming into our coffers out of all that work because they're brokering the deals. many of them fraudulent versus, you know, bringing them in through the bank. So did you ever see them? You saw the movie The Big Short, right? Yeah, that's so I, yeah, so seeing the movie,

first time I read the book, I was actually in federal prison. I was in Beaumont, Texas, which worst prison that exists in our federal system. So I'm in Beaumont and I'm reading the book and as I'm reading that book, I'm breaking out in sweats. and I'm like, oh shit, they're going to name me in this book.

I mean, me personally, you know. Right. And I'm about a quarter away, a third of the way into the book. And I flipped to the back to the index. I'm like, okay, McMaster. I'm like going through. So I was in a number of those meetings and at those tables that those guys were at, and at those dinners, at those conferences.

whether they're ABA, MBA meetings, et cetera, et cetera. I was one of the idiots at the table while they're putting together, you know, their plan on the big short, if you will, creating those financial instruments to and the derivatives against that. You know, it's a great movie because, well, I mean, although I was not at any of those meetings, but, you know, the mortgage conventions, like I would go to the mortgage conventions.

And I'll, I always remember when, shoot, I forget the guy's name that when they fly their team down to Florida and they meet with some, you know, ground level brokers, the mortgage brokers. And they're just dofaces. They're just idiots. And every time I see that, I think, I had 12 of those guys. Those are my 12 mortgage brokers that were just, you know, oh, yeah, bro. Like I focus on strippers, bro. Like I was just like, oh my God. Like driving the porous, driving the Ferrari.

You know, the $5,000 suit. Yeah, when I saw the movie and the way they portrayed them, I'm like, spot on. Because that was, we had at our heyday at our peak, we had just under 300 branches of that type of branch, let alone our own brick and mortar for the bank. But I probably had 150 of those guys. Yeah. And gals, just like that. Yeah. They portrayed it perfectly in that movie, which really portrayed is really bad.

Like, other than mortgage brokers, I'm like, it was just like, you know, what are you going to do? Like, you guys are, you guys are not capable to do anything to make this kind of money. You know, you have no experience in financing. You have no idea what you're doing. You know, you're signing up anybody. Like, it's just, yeah, there's no thought to it. Yeah. Oh, and then they get a graphic artist that can, you know, crank out W-2s.

oh yeah back and it can yeah it's it's just an amazing but you know it's funny because people people always whenever i would tell them what i you know what i got in prison for you know what my charges were they were like oh like you were doing like no dock loans right like your liar loans i was like no they were like no i was like no i didn't do anything i was like why would i i'll make w-2s and paste up exactly i have a company you can call i have a tax ID number. I have, I'm listed in the yellow pages or the business directory at that time. Like, you understand, you can call and you can't figure out it's fake. You know, they, you'd sign the 4506, but they, nobody's pulling a 4506 because they don't really want to know. Oh, yeah, no, it's,

you get the waiver on those all the time. Yeah. So, yeah, it was, um, so it was definitely, you know, back then I was like, so, and why would I do that? I get to charge more yield spread if they go, if they go conventional or even subprime, but not a liar loan. Like I can charge them even. an higher interest rate than why would I do a liar loan like make seven points right so yeah it was um it was uh but still yeah it was those were definitely the guys so but i'm sorry you were you were you were saying so you were 150 you know 150 those guys the branches guys were making everything's everything's going and you said you all started hearing the rumbling of maybe there's something wrong yeah so so obviously i was at those conventions and conferences as well right

whether it's the ABAs and what now, whether in Vegas, whether it was the subprime conventions, whether it's this and that. And we're doing the whole Monty by now. We're doing a paper, you know, conventional. We're selling directly to Fannie, Fannie and Freddie. And we're doing, you know, just some real tranche Z stuff and everything in between, right? With the biggest banks in the world. Yeah. By that time, Fannie Mae had loosened up their guide, lines they're buying paper that they should not have been bought like what are you doing oh it's just yeah and and you know i'll kind of back to that CRA but so you know during that time i'm hiring some really i'm surrounding myself with good people because one of my other management philosophies and still to this

day is not only i want to make sure i know how every position within the company works and operates and how to do that job is I always encourage management. The way I manage managers is hire your replacement. You want to get promoted? You want to make the big time. I hear the guy that's going to replace you that's better than you. And I'm going to promote you because of that. You obviously have that skill set in understanding.

Because so many people in business, right, they won't hire the guy or the gal that they sit there and say she's going to be in my seat you know six months or a year from now right you know and i'm going to be out of the job so many managers not all them but so many of them hire and manage from a position of fear versus you know really moving forward and trying to find the the jumps and so i started hiring some really Wall Street guys, I mean, guys that were doing the very, I hired the guy that did the very first mortgage-backed securitization on the West Coast to Shearson Lehman, back with Shearsome, actually, before the merger was Sherson. I hired him as one of my VPs and started really

hiring some of the top echelon Wall Street guys that have been in the business since the 70s. And they just knew it all. And most importantly, they could introduce me inside the biggest boardrooms and the biggest banks and financial institutions in the world, not just in the U.S., but in Europe and in Asia. And, you know, here on this, well, now turning 40, you know, in that time period. And, you know, so I'm this young guy with all these. mid-60s to mid-70s guys and you know i'm out there on the golf course with them playing wing foot i'm out you know playing pebble with them i'm out um you know having lunch dinners sometimes strip clubs it is but most of these guys that that's what they didn't do that um

but no i understand sometimes those four strip club uh sometimes it's forced on you i don't want to go yeah well i'm going back in the day I didn't mind it. And, you know, it just, again, the fallen whore. I mean, I just, I cringe when I think about it to this day, but it wasn't breaking my heart. I'll tell you that. And, but there was many CEOs and or people they control. You're trying to get a $250 million line from Barclays and an addition. And hey, it took that evening at, you know, the Korean club in, uh, in L.A. you know and went from now this wasn't going to happen to hey the paperwork's being faxed over to you right um but the but i started really being introduced and surrounding myself with these mentors

from goldman and jeffreys and and some of the just the godfathers of finance mortgage back securities in the industry and i started learning from them And they, for whatever reason, they took me under their wing. They started consulting with me for their companies about more, hey, what's happening at the ground level, what's happening at this, that, what do you, you know, just some different things, or whatever reason they saw in me an ability to really visualize the numbers, see-through grow and and you know manage risk because you can't eliminate risk in that business and I was really teaching our team and people that hey if we manage our risk properly we can

open up and we can loans that we would deny in the past we can do and yeah we're going to have to maybe sell this on the scratch and dent market at 98 to 90 or 90 or 90 or 90 to 98 cents on the dollar, but we did $20 million of loans that went ahead and performed. They were selling at 102, 103, 104, up to 110. So, you know, that one loss of a $300,000 loan that I took a 2 to 10% hit on in the negative versus, you know, the extra 5 to 7% I was making on that $20 million. I mean, it was just, right? So the offset is is is it. It's worth it. You know, I do, um, I do speaking engagements at like for like mortgage, you know, conventions and seminars and stuff. And one of the, inevitably, you know, during the Q&A session, right, like I always tell my little story and they, you know, it was so great talking in front of like bankers and mortgage brokers. Because when I say, and so to get around that, I did this that you can see that they're like, you know, they're, they're hitting each other. They're like, oh, they're like where I don't, it's so great because you don't have to

explain to them when you don't they know they know they know as opposed to if you if it's a cyber crime convention or cyber security convention you kind of explain you know but i always get that question where it's like how do we stop mortgage fraud it's like you you don't like you you could you could verify every single thing to a 100% certainty but you would eliminate so many people right you would 90% of legitimate mortgages that still should have gone through would be eliminated and it would be so expensive that you would you'd price out anybody getting a mortgage or 80, 90% of people couldn't afford the fees involved. And as a result of that, I'm like, you know, you can limit it, you can try, but some are going to slip through. And let's face it,

a lot of them slip through and they perform. Absolutely. So to say, oh, that loan shouldn't have happened. It'll fail. The history, even during the crisis, if you look at it, we're significantly low from a percentage perspective. But, you know, when we, when you started collateralizing, you know, on the debt collateral obligations and COLOs and CDOs and such, and you've got one mortgage collateralized nine times over then, yeah. Yeah, even, listen, even if you verify every single thing and is the perfect person to get a mortgage, they still fail. Mortgage is still there's going to be failure rate it's just a you know but yeah i always get that question it's like yeah you can't do that like you got to they're going to you just can't eliminate fraud yeah it's like

saying how do we eliminate every accident out there you know are we going to it's it's just not going to happen um interesting like you talk about where you go out still and meet with um you know speak to some of these brokers and and in the professional industry i was still doing that from prison um so i would have guys come in from Wall Street, literally. And then I would have people come in that maybe worked for me or knew me through the industry from all over the country that I'd have to get on my visitation list.

And they would come sit down and just say, hey, help me with this or guide me through that or those types of things. And it gave me a great opportunity, to share my story and to share my story, and to share my story. story from that exact perspective of, hey, this is what was happening or this is what I did, you know, especially at the end of the, you know, in the financial crisis, which led to me

going to federal prison years later. But, and you know, right away, you just see him go, you know, or it's just because you know they're doing it or they know what's happening within their operations. Right. And really, look. it's just a matter of time. I looked at I had a brokerage business in Tampa contact me and asked me to come in and talk. They have, I don't know, they have like 30 people in-house and they have another 100 people that work out of their home or remotely. And so I came in and did the 45-minute, you know, told my little story and then did the Q&A.

And the reason they had me come in, like they literally were like, how quickly can you come in? I was like, like, what is it an emergency? see they're like kind of and i was like why they said well we we caught a broker that was doing stuff that you know when we when we brought him in he genuinely tried to justify everything he did and was trying to say what's the big deal i only did this i was just trying to help my customer i and he said and the the idea that anybody else is doing anything like this has got I was so terrified because, you know, he was, they're like, you never would have thought that this guy would have done these things. And he's like, so we just want people to realize how bad this can go.

And we thought you come in. So I went in and I talked to 30 or 40 people. They were in the room. And then they had it, you know, they had a webcam set up. So get me to all the remote people. But yeah, it was, you know, but I was there within like a week. I was like, I'll be there next Tuesday at three, you know. But you could tell they were so panicked.

He's like, I felt like nothing like this was happening. He's like, and he's been doing stuff like this for, he's been here for years. They just, but anyway, I'm sorry, you were, so the rumbling, sorry. They worked through. So the rumbling. So by having these connections and these introductions and building these relationships, I mean, to a point that some of these top, top, I mean, you know, I won't throw some of these names out there. They're very well-known names.

They would come out to Scottsdale for, you know, just say meetings of the bank, you know, want to play golf, take them up to Trune and such. And, you know, I had that beautiful home in North Scottsdale that, you know, we'd set up to entertain 100 people just in our backyard and, you know, just craziness. And they would just stay at my house. They wouldn't stay at the four seasons down the street. They wouldn't stay at say, hey, let's just stay at days. hey real quick just wanted to let you guys know that we're looking for guests for the podcast

if you think you'd be a good guest you know somebody do me a favor you can fill out the form the link is in our description box or you can just email me directly email is in the description box so back to the video one of the things that really helped me and endeared me especially on wall street was my outdoor stories right um hey dave tell the guy what your thanksgiv's like I said, well, you know, the turkeys we cook, I killed or my family members killed, you know, while hunting. We serve elk, we serve deer. I usually go out and shoot some quail that morning because I could hunt quail right off my property in Scottsdale, in northeast Scottsdale there, you know, et cetera, et cetera.

And then, hey, tell them about the grizzly bear story in Montana, I'm out horseback. I'm back a couple of days into the Bob Marshall Wilderness area. and long story short we got attacked by a grizzly bear in actually three of them but one of them a male about an 800 pound male with two my first year breeding sowls females by 300 pounds each how that worked out well um i'm here the bear's not so the what had happened is i had killed an elk the day before and I had my surrogate son with me and the day before that well not actually that day I'd killed the day before we had a confrontation I'd killed an elk but while I'd killed that we were climbing up on a side of a glacier off of an avalanche shoot to get over a pass to go collect two

deer that my son and I had killed that day before and as we were coming back in this huge snowstorm blizzard came in and we'd left the horses at camp because we're literally mountain climbing to get up and hunt this particular valley and the guides made the decision is like hey everything stays backpacks everything you keep your GPS and you know and we got to go we're going to make it back otherwise we don't know what's going to happen so we scurry over kind of slide down this avalanche shoot we get we get back into camp so that next day we got all this snow and stuff and this is in september and we got all this the snow and stuff so we're climbing up the other side across this valley this elk and i've got an elk tag a deer tag and a black bear tag for each of us my son and i so i shot the elk

and the guys were like crap we got two deer over here we got that elk over there like what are going to do and i said no problem i said i've been guiding elk and deer hunts and horseback of ranches i mean that's that's what we do that's what my clan does so you know keep in mind my main pack is sitting on the other side of this mountain. So I've got literally got a pocket knife and a couple of that. I said, I'll go take care of the elk. You guys go up, recover the packs and hook back, you know, three, 400 pounds of deer back down to camp and meet up. So I'm literally cutting up this elk with a, with just a pocket, barely a pocket knife and one other knife i mean it's not ideal to be cutting up an 800 pound animal and so geoffrey and you know he's

he's actually working with for with me um for me in the in the mortgage bank in my processing group and we're actually in my secondary markets he's selling the he's helping to sell the mortgages and i said hey hike this stuff down as i'm cutting off chunks of meat and get it down by the horse trail so we can come down we can go back to camp we can grab the horses come back get the stuff take it back to camp and i said hanging in a tree well he couldn't find a tree within 40 50 yards when there's trees everywhere so he piles it all up literally right next to the creek what's called lion creek and this is an area that they hadn't had hunters in about 20 years they were looking for a couple hunters that would be willing to go

back and horseback and then on foot for 10 days and hunt this country and i was like that's us we're in and so i after we get done with this now the day shot and i'm like jeff this stuff's all piled up you know and it's starting to snow on us again and i'm like i'm exhausted i said we'll go back to camp we'll ask malachi our guy hey what do you want to do you know we just got this meat laying out there in the middle of grizzly country and wolf country and they're like it's snowing it should be fine and everybody's just worn out we're drinking a little bit of whiskey and it was like we'll go get it in the morning so we go in the morning and there's about 100 pounds of that meat missing and there's grizzly tracks everywhere and you know I go and find I follow the

tracks I find where he had buried in snow a front shoulder and I'm like oh man dude you know the best part of the meat's gone so we packed it all up throw on some horses and we take it back to camp in the meantime we brought up a mule trained from down below because we got three dead animals sitting in our camp and we got to get this stuff out of here we're just we're waiting for a problem so we bring a guy up he gets into camp he's like man i just ran into three grizzlies it's not good this dude was from Iowa he's being trained to be an outfitter a guy a wrangler really is what he's being trained to do so he's like I'm out here so we load him up he's gone we go out hunting to try to fill Jeffrey's out tag and I got a black bear tag still and we come back into camp

and that grizzly had come back for more and now in our camp and we come around the corner and camp and he stood up on our tent on top of our tent and just crushes this big outfitter tent down and then just comes down charges at us from about 20 yards with the other two grisies just kind of sitting there watching this whole thing and we shot him with a 460 pistol and so when you're hunting that type of not so much black bear country but grizzly country you usually like i get i had a 500 pistol on my hip because you know you're hunting with rifles but you know in a grizzly confrontation you know chances are you're dead by the time or down at least mauled at that point you carry it is so a malachi at a 460 with about 12 inch barrel and just

and shoots three times and at about five yards hits its thing and the grizzly turns around hits it in the ass and turns around and goes and the other go with and so we start tracking it trailing the blood trailing it and we're in there's all this tag alder where you can only get through there through where the grizzlies and the moose have made trails so we're on our hands and knees crawling through this we're about 50 yards into this and we turn around we look at each other like if this grisly doubles back on us we're dead plus what about the other two grizzlies they didn't get it yeah so seems like a bad idea i don't know much about uh i don't know much about hunting So we back out, we go back in a camp, and we watched as, so we're camped in the bottom of this creek, right?

The glacier's melting right there. I mean, it's just a beautiful country. And on the bluff across from our camp, about 300 feet up, there's a bench. And the grizzly crawled, the wounded grizzly crawled up on that bench and just collapsed. And we sat there for two days watching the two females. fight over eating him, eating that carcass. I had to use my satellite radio. I had to call it in because they're protected, you know, and call it in.

And I'm like, man, this is just going to be a nightmare. And it's a two-day horseback ride to even get into us for the U.S. Fish and Wildlife. So it's not Montana. We got to call the feds. And Malachi, the guy who I developed a really good friendship with, he just says, because don't worry about it, Dave, the guy is my college roommate. So he goes, we're fine.

It's a justified shooting. We got pictures of good. So anyway, so the Wall Street crowd loved those type of stories. And I've got, you know, 30 years of those at that time, right? 25 years of those types of stories. I got a story. Yeah. I got a story about a guy that killed a Florida panther.

He comes back to camp one night and there's a Florida panther and it's eating all of his food and it charges him. He pulls his gun out and he shoots it. And the, you know, um, war or fished and wildlife, whatever show up and they arrest him. They take him front of the judge and he's in front of the judge and the judge says what happened. He explains what happened. It charged all our food. It charged me. I shot it and he goes, that seems justified. He said before I let you go though, he said, you know, it's my understanding you, you ate the ate and he said, yeah, well, he'd eaten all our food. So we went ahead and cooked it and ate it and he goes well what does the Florida panther taste like he is it's a mix between a manatee and a bald eagle so I feel you had to have heard that one

oh yeah yeah fantastic yeah so they love the stories they they they oh they do they love the stories and and we take them out on some trade especially fishing trips where go in the middle of nowhere where there might be a hundred white men ever banned there's some places in Eastern Arizona, Western New Mexico with great small mouth fishing that it's one of those you can't get there from here things. It's like either horseback or quads or you're cutting trail and these guys loved those. So I'd take them on some of those adventures. But so, you know, the great benefit to that was I had access to capital knowledge, you know,

consultation at the highest levels in our industry. much earlier than I would have earned it, just under the normal paths, if you will. And so, yeah, the rummlings are there. I'm in actually Greenwich, Connecticut, and I'm playing, well, we were going to, we had played Wingfoot, now we're in Connecticut playing another round of golf.

And a guy from Jeffries, that really godfather of that industry, of our industry, I'm riding in the cart with him and he just grabs my leg and he says Dave I hope you're out of the subprime industry or I hope you and I was like

give me five minutes and we will be you know and I get my cell phone out flip phones that was a very early day of the iPhone and I'm like no no there was still flip phone and you know I make a phone call I'm like cut it we're done I mean I don't you know I just

that's the first rummling mine hearing from the very top something's going to happen you know something coming down uh insider trader trading i don't know i just know a lot of people went on from that group and started short in city right made millions you know shorting city um from that golf out yeah i showed up like you know and and really started shorting you know kind of like the big short thing but started shorting you know the banks that we knew were deep in these tranches because one of the other things during the you know these meetings on the golf course or the meetings around the grill at my house or around mastros or something um or defalcos or wherever it may be or dominics was what are you guys doing with this paper because under the

cdos and the c los that collateralized debt obligations they're selling tranches of all these tapes so instead of selling a tape of hey here's a thousand mortgages valued at X, you know, with an expected performance of Y, seasoned, blah, blah, blah, with all the different things. There's average FICO, boom, boom, boom, boom, type of documentation. The banks had started, and really this was the Russian mathematicians working within these investment firms and the investment arms of the banks, really brilliant minds. we're coming up with these instruments so they're slicing these things up into tranches so literally

an individual loan if you will you know was was being sliced up you know in these pools and you're buying into these pools and say okay hey you got a a b c d you know these different grades what are you doing with the garbage what are you doing with that z paper what are you doing you know with all that type of stuff and it's like nothing it's on our we we hold on to it like but the way the regulatory body works on that's all off balance sheet so it didn't take long for any of us in those conversations start realizing like wait a minute i've sold city this much i've sold chase this much of that paper i've sold you know they've got to have billions non-performing loans on the book non-performing crunches off balance sheet you know at some

point you know so anyway so a lot of guys within that group started shorting um shorting the banks that they knew they were doing business with that they had done those so you know i start hearing these grumblings and we start you know the fraud things start you're starting to see the repurchase trickle-in and what they call the technical crossing the D's dot and I so legitimate

foreclosures or failures maybe three, four years down the row where your covenant no longer you're not required to buy that back unless you made a you violated something like the DU findings

or the LP findings DU Fannie Mae's desktop underwriter automated underwriting LP for Freddie Matt unless The guidelines were so loose. Yeah.

How is that possible? It's so loose at this point. Yeah. So literally what they would look for is technical, literally cross the T.9 type things. Oh, it's missing this one piece of document. You know it's in there. You go through your file. It's right here.

But they were using these to start pushing paper back down the line. So, you know, you start hearing those grumblings. And at that time, the founder of our bank, oh, and by the, the way at this time you know i'd gone from being the executive VP and running the bank and all the operations i'm now interim president and CEO of the company because our president and CEO smarter man than i retired and basically he's like peace out i'm right you know out of these meetings i i don't like what's going on in our branches. I don't, you know what? I'm stepping down. Stayed with the company and I'm stepping down from that role. I think I was in, no, wasn't in Dallas. No, we were here

in Phoenix and all of a sudden they're like, hey, let's go for a ride. They're like, where are we doing? And like, oh, we got to go meet with the attorney and our CPA that's doing our audience. it. I'm like, okay. And our, the founder, owner of the bank of the company, it's 9 a.m., and he's drinking, you know, like, and I'm like, so they finally said, hey, you know, oh, the other thing I've done, during this time, I qualified as the RI or the QE, depending on the state, qualified. employee, qualified individual, responsible individual, RE responsible employee, to be the broker or the banker of record for the licensing within all these states. So, and also the NMLS, I was on the boards helping to bring that about for creating this nationwide mortgage licensing system

that we based on the state of Connecticut. That basically it was their program. So all the investing, the license, all those different things. So I actually got to a point I was licensed in 41 states as originator's license, broker's license, banker's license. And I was the RI in about 28, 29 in the states. That's great if everything is going well. Yeah, yeah, exactly. And in, yeah, by that time, I mean, thousands and thousands of mortgages a month. Just nothing we could ever wrap our hands around.

And so they say, hey, Eric's going to step away. What do you feel about being president's CEO? I'm like, how much is it? Yeah. And yeah, I'll do it based on this. Like, okay. So what year is this? So now this is 2007, 2008.

Yeah. And really for the time I said that I took over that interim roll 2008. in the in around that same time our ownership had brought to me a and to our CEO at the time the that I took his place a banking relationship with with a small bank that dealt with high-end clientele. They were probably in six, seven states. They were in North Dakota. They were in Kansas. They're in Missouri. And they're in Arizona. And they had a branch in, you know, on Camelback and the Biltmore in their headquarters in Phoenix. And then they had a branch in Scottsdale and just really dealt with high net worth clients for the most part. But but as a bank, regulated by the OTC.

And they were wanting to get in, you know, this is 2006, 7, 8, they were wanting to get into the mortgage business. They're seeing all this money being made by all these banks. And they had some small time originations and doing some things. But they wanted to really participate. And really wanted to participate from the perspective as a warehouse lender, providing warehouse lines of credit, you know, to banks like us. Right. and so but the regulator would not allow it the OTC said nope that it's not going to happen for whatever reasons we're that's not going to allow it so they were really trying to find a way

how do we participate in this we're missing out right you talk about FOMO and and so there's this thing and I don't know if you're familiar with with the Matthew called a participation line of credit. Okay. So I mean, is it different than just obtaining a line of credit or you're saying you're participating? No, completely different than because technically it's not even a line of credit, even though the government used that terminology over and over in our case. And I mean, I tell my attorney, I'm like, it's not a line of credit. Right. No, you know, that's, anyway, that's why our case is unique. So,

it's a participation line and what reg z and reg d allowed think of it as a joint venture but reg z and reg d and your banking regulations don't allow banks to bank to bank joint ventures okay just not allowed so but but you can wrap your mind around it from the perspective of a a joint venture. So they would participate in the securitization, the funding, or the sale of an individual mortgage. So they would, they wanted to sign an agreement with our bank that they would fund 98% of the price that we have committed to sell the loan, what's called flow or individually. I'll keep in mind. I'm selling almost everything in bulk and I'm retaining some servicing. We're selling servicing off into different pieces. I mean, we're,

we've become a real bank and a moderate player in this field. I think that people don't understand what servicing is. Servicing is where you're still kind of collecting the payments. You're still making the phone calls. And then you're passing on the mortgage, you know, the, um, uh, you know the payments to whoever holds that and you're just taking a small percentage of it for the for servicing so you're just really running the guys that are making the calls and saying hey you're late or hey this right spending out coupon books back in the day you know yeah making sure that the the escrow account is correct and they have their insurance and all the the busy work yep and where the and honestly

where the real money's at right because you don't really have any liability i mean you don't have the right but you're getting a percentage and just being paid and if you've got to handle the foreclosure you're getting paid a lot more if you're handling you know so i mean there's you know um so you're doing some of that we're doing some of that and then making deals and selling that and doing some subservicing agreements where our name shows up on the you know on the the the statement the monthly statement or the coupon book but it's really another bank behind the scenes handling it you know it's kind of like tPO like third party type stuff or white labeling.

So what they would do is, so they would fund 98% of whatever we sell. Well, those individual loans, I could sell 103 to 105 to 107. We're doing, by this time, we're doing some heckums, you know, reverse mortgages as well. And we're partnering with some of the biggest reverse mortgage players behind the scenes in the industry. so we're you know we're doing everything and so they they want to participate with us and then they would charge us a fee for each one of those and then they would charge us daily while they charge us interest that we'd pay daily for their money until we sold the loan well i would literally well they went back up first so they brought that proposal to us

And my ownership, he brought that proposal to me. And I'm like, this makes no sense. The cost of money is a percent, a 2% higher than what I'm paying right now. I've got lines of up to $2 billion between a quarter billion here, a quarter billion there, half billion, you know, with first collateral and Chase and Washington Mutual before they went under.

And they're offering us $25 to $28 million. I mean, that was nothing at that point in time. I mean, what are we going to do with that? And then they're offering a personal line of credit just for the business of a half million dollar line of credit for operations. And, oh, we have to maintain, basically, we had our banking relationship with Bank of America.

and we have to maintain our operating account, our payroll accounts, et cetera. So just our regular doing business accounts with their bank as opposed to bank in America. And I'm like, this makes no sense. Why would I ever fund one loan through them? It's arduous. It's not set up to our technology. It's not seamless. I'm going to have to add labor to do it.

And I'm going to sell one stinking loan at a time. and I'm going to pay one or two percent more for the services. What I didn't know at that time, but realistically, our ownership was trying to get another bank player where this family that had about $900 million in that bank, so they were billionaires. and we had a consultant that had come in with us that had also gone to federal prison or state prison, I'm sorry, in California a while back. Somebody, again, just a personality bigger than life.

Selling financial instruments, him and his wife, his wife was the license party on it. He had some pretty high-end network clientele, good friends with Arnold Schwarzenegger and, you know, he's from that bodybuilding era. I mean, you see him in the old shows during that era. He's one of the guys right there. Right.

And just full of personality. And unfortunately, full of some other stuff too. And so he was trying to work a deal basically using us to bring these two banks together in a merger, which would be worth some money. right and worth an opportunity of maybe millions of dollars invested into our bank as well and here now we're going to own federally regulated banks it was kind of that next step for us he didn't really explain that at the time eventually that's what I you know what came to like for all of us so we signed the agreement because well basically he said hey look

I'm telling you to sign this agreement and I'm like okay and then even Eventually, I found out why, and I was like, okay, this makes sense. So we're now using this really at a small level, million dollars here, $500,000 there, you know, and I started getting pressured from ownership, like, you got to up this line, you got to up this line, you got to use these guys, like, okay, and use that $500,000 operating line of credit. So I started borrowing a quarter million paying payroll, paying it back the next day, you know, stuff like that. And the, so that bank was just wanting so bad to participate.

So that got them into business within the regulatory fashion without issuing a line of credit, you know, for funding mortgages. I mean, business line of credit, which is a different animal, that was the $500,000. and you know so now we're just moving forward and and the ownership is pushing us hey you need to do this you need to do you know use these guys more and more and more the meantime the cracks are happening in our industry and things are starting um to fall so you know i pulled us out of subprime unfortunately they didn't stop the repurchases you know some of the alt-aid dealings start going away you start hearing the rumblings um i'm flying back to new york a lot i'm flying back to indianapolis going into federal court and we're negotiating with with federal judges mitigation on

repurchases of different securities and different things and i was like hey i really don't have a real estate arm or division to get rid of the real estate asset i don't you know how much is it going to cost us for you to do all that and you know i was like okay okay half a million here 250 000 there you know versus us taking maybe 5 10 15 20 million dollars back you know we're stroking checks now and money's going the wrong way and then the whole leman brother's thing starts happening and you know we start going down this path meanwhile we're continuing to do pretty good solid business you know through our portfolio a lot of fraud going on in our branches you know does the financial crisis start to happen and so the warehouse lines of credit as this

starts happening number one some of those banks start going out of business you know your countrywide your Wammuz and such bank, you know, so, you know, the Fed and the Treasury, they're starting to put deals together. Hey, B of A, you're going to take these guys, Chase, you're going to take these guys, the Lehman Brothers is the one that deal that didn't work because nobody liked Dick Fold. By the way, the original guy that I hired that I told you that got me in to all these Wall Street guys, he was a guy that was very well known for punching Dick Fold back in the 80s or 90s. for being a jerk. Didn't lose the job, but the, you know,

it just, you know, Dick rubbed a lot of people the wrong way. And so, you know, his was left to fail. And that started the implodometer and the bank's going along. So now our warehouse lines of credit are starting to dry up and go. In the meantime, the bank that we had, that we're doing this participation,

line with, or this participation agreement. So it's really just participation agreement. Comes to us and says, hey, we're looking at your financials. We're looking at all this and we're looking at the regulatory. Everything we're doing with you is required to be off balance sheet. So I'm like, I'm bringing in my CFO. I'm bringing our CPAs going through. And just like a lot of this tranche stuff,

For them to participate, it's off balance sheet. I'm like, okay, that's not a horrible thing in my book. Other than the fact I can't forward book the expected profits of those deals sitting there. But, you know, so now we got to go back and we got to redo two years worth of financial statements, which is always not good, you know, but, you know, we had to explain why, et cetera,

and we had ringing auditors. And we're, you know, also during the, this time period, I'm being audited by 20 to 40 different states, some every three years, some every two years, some annually. And during this same period of time, so we've got that going on. I'm taking this off-balance sheet. During that same time period, I get another, hey, Dave, what are you doing? 9 a.m. phone call in my office. I'm like, hey, whatever, I'm doing. Like, meet us downstairs. We got to go to a meeting. I'm like, we're at. I said, we'll tell you. So the original CEO and president, matter of fact, this is the day he had decided to resign. And

the owner, they're driving one car and they say, hey, you ride along with the CPA for the firm that does all of our audited financials. He's going to fill you in on something. So we're guy even a lot and he goes you do you have any dealings with the irs stop the car yeah and i'm like no what's going and he proceeds to tell me well we're behind on payroll taxes and i'm paying payroll taxes i'm like what and how long how long has this been happening like well it turns out it was about 18 to 20 months and but I get told we're a quarter behind I'm like you know I'm like how much and I'm like why isn't this brought to me I just raise the rates a quarter point on on our rate sheet and I'll have this taken care of in in a month you know he's like Scott doesn't want you to raise

rates I'm like you know because he's still trying to get the branches to bring it we're we're trying to get the branches to bring in their business. And so we're driving here. We go meet with the IRS, and I'm just sitting here, and Eric informs the IRS. He's no longer president's CEO. And the ownership and all this, and they make these. And so they're like, oh, hey, we believe David is going to be.

So I sit there and I said, you have my word as long as I'm here. And so we work out a payment agreement. The IRS doesn't want to close you down. They want their money. Yeah. And they want you to succeed. So I said, that payment agreement will be made, period, end of story. And that will be the highest priority.

So we go back. I'm like, oh, man. So, you know, these grumblings and these things are just happening, right? Repurchases are coming. And so I look at this participation agreement. So I start reading through the contracts. And I'm going, it's like, we've got 60 to 120 days to pay on these contracts. Now, you know, obviously we're loan.

Because at that point in time, whenever I'd use them, I'd have loans sold the same day. I'd like, hey, we're going to pay your $50 transaction fee. and I think there was another $100 fee and one day's interest tops. You know, I literally would flow that. I'd fund that loan and flow that loan. And my team was excellent at it and right in to Chase or B of A or city or whomever it may be. And so I'm looking, I'm like, if I sell those loans, but I don't have to pay it back for, you know, I pay it back in a week. I've always got this extra capital, and that capital, when I fund the loan and sell the loan,

went right into an operating account. It didn't go into a funding account because it's off-balance sheet. So there's no, it's off-balance sheet. So this is straight, this is considered pure profit right into, you know, into an operating account. And they had set that up to start, because I'd called one day. I'm like, why are these funds going into this operating account? Oh, that's waiting. And I'm talking to the CEO of the other bank.

And she's a brilliant woman. She's a great banker, finance person. I believe still with that company today. Her family was the founding family of this bank. And a real good family, a great family. and you know and I'm like I don't get it but I get it so I'm like okay so that money's there we just have to strip it out and you know and you know account for it you know whenever we pay you guys and like yeah I'm like okay so you know that's going on so now I'm looking I'm

like how am I going to make sure that this IRS payment is paid period end of story And how am I going to increase revenue and things? And as we've removed subprime now, things are starting, you know, I'm starting to lose warehouse lines of credit. You know, and all of a sudden I'm down, eventually it was down to $250 million from $2 billion available to me at any time. So now I'm like, I can't hold on to these loans for very long because I've got to get the capital back.

You know, I've got to cycle this thing two, three, four times a month. Right. And so I'm like, okay, if I use this participation agreement and I owe, I have to send the IRS 150 grand, you know, and I, so I identify, hey, there's a $175,000 mortgage. We sell that thing. I get, you know, plus whatever, we sell it. So I may drop $200,000 into the account, and I can use that $125, pay the IRS. And then I won't pay back the other bank, their participation, in a week or two, because I'll sell some more. And basically it started becoming a Peter and Paul type situation, right?

All within the letter of the contract. Not the spirit of the contract, but within the letter of the way the contract's written, we're within realm. So I'm doing this and making sure that IRS bills getting paid. Then when we'd sell a big security, maybe I'd catch it all up. Or I would draw off in that $500,000 business line of credit, business, business, and use that. So, you know, we got payroll, we got operating expenses, and we got these damn repurchases that I got to keep flying to New York or flying to Indianapolis. I don't know why so many of them use Indianapolis as the deal. but into federal court, and I'm negotiating these repurchases.

Well, you're buying the, what are you guys doing with the repurchases? Are you've got a team that's trying to get rid of the properties? So I had a choice, build that team. I had a small team that could do some one-offs. Right. But I'm like, and now the signs are really there. I mean, banks are starting to file. You know, we're seeing a decrease in product availability.

you've got banks that were like, hey, we're going to buy this. What was called, remember the term forward locks, like, hey, I'm going to take down five million. And they say, okay, boom, you're locked at, you know, 4.25% and you've got to fill it within 90 to 110% without paying the penalty. And you've got 60 days to do it or 30 days to do it or whatever. So you go out really searching, you know, you send it out to your own officers. This is what I need. I mean within this parameter, you know, hey, we'll give them an eighth of a percent or we'll give them an eighth. We'll give them a quarter off, whatever, to fill this forward because we're going to make an extra $250,000 by doing so.

And so I'd fill it forward. So all of a sudden, these forward contracts are being canceled on us. And I'm building these loans to fill it. And all of a sudden the pricing is changing on these loans. I'm like, shit, what am I going to do? You know, so you start dumping and doing some different things. Or it's like you have a loan. I could sell it today.

I can't sell it tomorrow anymore. So I'm going back to borrowers. And I could either scratch and dent it for 80 cents on the dollar all of a sudden, a million dollar, especially the, you know, anything above the Fannie Freddie limit, your jumbos and your super jumbos. That just was here, one day, gone tomorrow and just, and you've got loans that you just funded through the pipeline of this stuff. You know, loans that oftentimes, you're making $50, $60,000, $100,000 profit on that one loan. Right.

Gross profit before you pay your commissions and whatnot. And the, you know, so we're going back to those borrowers and saying, hey, this million dollar mortgage we did with you, we're going to rewrite it at $900,000 and I'm going to get that and I'm going to pay all your fees and I'm going to close this thing in three days or seven days or whatever well seven days at that time and because I can use the original appraisal and they're like why would you do that and I'm like well you know some some things are happening I'm either going to lose you know I'm going to lose and I tell them well I'm going to lose eight or nine percent really I was going to lose 20 percent so I'd rather give the money to you my client

and keep a happy customer and referrals and stuff like that. So not necessarily being straightforward on, it's being more of a sales guy now. Because I'm the one making these phone calls to these borrowers at this point in time. So we're refinancing, so I can, boom, I can, I can fit this one into here and get rid of it. I can do this, I can get rid of that.

And, you know, volume is decreasing. We start closing branches because we don't have a choice. At the peak, we're just under 3,000 employees nationwide. You know, now it's just down and down and down. So I began relying more and more upon, hey, we're going to fund these loans. And now maybe instead of taking a week to pay it back on the participation agreement,

I'm going to take two weeks, three weeks. I'm going to go 30 days. I'm going to go 60 days. Because at 60 days, that was the first hurdle you had to get through. I had 60 days to sell it for the agreement, even though in practice and in the spirit of the agreement was the day you sell the loan, you pay us back our money plus our funding fee. and you keep the profits from, you know, above and beyond. But the contract wasn't written that way, just a failure in the contract. The contract was written, you know, you have these options of when to pay it back,

when it became due. So at 60 days, you had an accelerator clause of a 1% penalty. And now you had 120. days then 120 days it boom it became due period and really we'd be in default if we had any loan extend out beyond 120 days so for the next period from now we're at well into 2009 so i'd kept the bank running through this time period um you know the implodometer is up to about 27 2800 banks that had failed. I built this reputation over the last eight years

as a knowledge base, you know, if you've got questions in our industry or if you want to, you know, let's bring Dave in on McMaster in on one of these committees, let's do this, you know, and with some of the largest financial companies in the world, you know, but for those divisions. That's why I was in a lot of those meetings and dinners

and different things, you know, that, you know, I mentioned in the big short. And I was like, I can't let everybody, this bank's not going to fail on my watch. Pride, I mean, pure pride. And that's at the heart of me making the decision of reading that contract and going, aha, I've got an option to do this. I am brilliant. I'm going to save our bank. And everybody's going to continue to look at me from an international basis,

not just a nationwide and Wall Street basis, but from an international basis, because we're securitized and overseas and doing all the different things, as days the man. I mean, just stupid. But the day is the man. Not only does he kill him.

grizzly bears he you know he brought his bank all the way through this mess so i keep extending this thing further and further out as to when we're paying back you know on on these loans and then using that capital a to pay the irs b to pay the current irs bill and payroll and pay current expenses and then to pay whatever i negotiated on the repurchases so back to your question as to did we have this team to dispose of all of these real estate assets and such other than just a couple things people on the side and we had some contracts was no so i would go in that i'd say look and i'd tell the the federal judge i'm like we don't have money to pay it to take it back you know they're asking for two million dollars they're asking for 10 million dollars

they're asking for 20 million dollars on an asset that's worth you know 75 percent of that or 50 percent of that because you know values are tanking and so you know I just said you can we can come to that agreement or we can go to court and you can order that and we go out of business tomorrow I said so hey I'm going to offer you know I've got $50,000 you dispose of the assets here's $50,000. You know we go back and forth and then that would rain. they would end up anywhere usually between a hundred thousand and a half and five hundred thousand that was usually the deal i could strike somewhere in there and i got really good at it of just and it basically it wasn't hard to be good at it it was i can give you this you dispose of the asset and i would

go through and really go through it and like hey look this one's a performing loan this one's actually worth more if this one if you hold it for any length of time you you're you're going to make a fortune on it. If you do this, you do that, you do some of the other things. And there was companies now starting to go on there and look for those. Like, wow, we can buy that 10 cents on the dollar. That mortgage is going to perform all day long. Is the government offering the, you know, the TARP yet?

Like, have they started refinancing? Not quite, yeah. So I was flying back a lot as a lot of these negotiations were going on. And a lot of times I was like one room removed from some of those real high power, high leverage meetings in there, but I'd be there, you know, and then get debriefed on some different things. So, you know, so all of that is going on during that time period. And so I would negotiate, you guys keep the asset.

We give you this. otherwise we go out of business you get nothing it's you know and i did that time and time again so now i've got monthly or quarterly these different obligations so i keep extending i'm like okay oh i got a 28 million dollar line it's not a line but you know for all intensive purposes from this joint venture that's not a joint venture from this participation agreement available to me plus i got this half a million that I can keep doing some things with. So I can keep, you know, informing my accounting team, pay this, pay this, pay this, pay this, pay this, pay this. Meanwhile, we're down to 1,500 employees, 1,000 employees, 800 employees.

Eventually, you know, we're down to 75 employees. We've got 7, 8 branches open, you know, around the country. And so I'm trying to nut down every expense and, you know, talking about TARP in, you know, a meeting with Barney Frank, you know, representative from Massachusetts, who really saved the whole deal, by the way, give him all the credit in the world. He was the guy, the politician behind it that saved this thing, right, when Nancy Pelosi was about to screw it all up and make it a political thing versus this. country the grid the power grid all your major corporations everybody nobody can make payroll i mean everything is about to fail we are about to be um well this is probably a little fast forward on it but during that time period all these wall street buddies were calling me saying can we come out to

arizona can we be ready do you have places to go that you have access to food and water do you have ammo do you have your stuff and i'm like i do i have places within family lands or within things or that I know that I can go, that I can provide food, and I can provide clean water. Because at the highest levels, they were convinced it was all over. Right. Did you see... It was done. Too big to fail?

Yeah. I'm sure you read the book. Yep. Did you see, like, they had that whole scene with Nancy Pelosi in there where he's, like, you know, on his hands and knees. It takes, literally, it takes that might from her and eventually in one of the things. And like, yeah, it just, you know, Barney Frank, really from that perspective, saved the day. But what we had been presenting from our side, because we're a mid-sized bank, right? We're not, we're not Goldman.

We're not chased. By the way, those banks were all insolving. I was going to say you're getting bigger and bigger by the day, though. Yeah. Because the bigger banks are going under. So you're kind of moving out. Yeah, because our doors are open. Right.

Which makes us a target for repurchasing. because oh they're still open so now they'll skip some of the in-between banks because sometimes these things you know old resold resold yeah yeah because some of these things five six seven years old now yeah and you know but hey we're still open so boom so the expectation my expectation was well there's two things one too prideful to fail you know i got this name I got this reputation, I got this, you know, all my friendships, all my family ties, all are tied to Dave's business success, not who Dave is as a man, as a husband, as a father, as a son, uncle, brother, you know, it's, you know, to me, just such a broken philosophy and mindset as to, you know, nobody's. going to like me all you know or this or you know my millions of dollars and you know my homes and my hummers and my Mercedes and my trips around the world to go scuba diving and running

private yachts all over the world which I was doing all of that too and you know or these epic hunts or you know just whatever you know what was going on and great dinners entertainment being very philanthropic not out of here but out of my pride all right they look what I'm doing, but you know, da-da-da. And so, but also that same time, the expectation was we're near the end. We're near the end of this thing. And, you know, whenever we've gone through these cycles, now, and if you can be there in position yourself, look out, because we will become one of the big banks out of this mess. You know, the amount of money that they were talking about at the time, we thought, look, all you got to do is backstop the individual mortgages,

right down to the thing. Instead of pushing the repurchases, just take it over in one of the agencies. And just like you did with the savings and loan back in the day, when we had our technology company, we did all the technology out here in Phoenix when they came in, when Western savings and the Keating scandals and all those, I was doing the technology for the, oh, God, the, the, the, Not the RTB, but anyway, you know, but the same premise, backstop the loans. If you've got to give every American mortgagee, $100,000 off their mortgage, I mean, we're talking the same amount of dollars at the end of the day.

Put it directly to use, and we will. stop this thing, will bring liquidity back into it because the markets were failing everywhere. I mean, you know, trading paper and all the things, whether it's a company like Caterpillar trying to make payroll, they can't because even though they've got the money, you know, they do overnight sweeps or monies and investments because they got so much, you know, cash on hand, if you will, just, you know, it's all machine numbers, if you will. And now we can't trade paper because nobody trusts, no bank trusts each other. And at the end of the day, every bank was insolvent. you know that's that's the thing that was underlying this there wasn't a bank in the world that was

not in solving b of a's the chases all of that type of stuff because they have all that off balance sheet paper right that was worth more than the bank that that on paper was more than the banks and they got to do something with it at some point so that was the expectation was, I just need to get us through. Dave looks successful through this and carries the day because Dave's brilliant when I'm not. And at the- I don't think brilliant would help.

I mean, not only that, you know. No, no, it wouldn't have at that time. The brilliant thing would have been, you know, go to my ownership, shut it down, shut it down now. And we're all going, you know, in Phila, really, and I had, after we did shut down, I had great opportunity and actually was making more money and more successful than I ever was coming out of this thing in the mortgage industry still. And so I just should have done that a couple years earlier. That would have been the smart move. And that would have been listening properly to my conscience and following spirits of contracts versus letter of contracts.

and so that was the expectation was we would the government would step in and this thing would turn around because they can't shut out the housing industry right and they can't they got to keep liquidity in the market and really that's what the treasury department and fanny and freddy and all that and especially with the government taking them over and you know with the gsas and all that type of stuff so going on, I'm literally now extending out 30 to 60 days to make ends meet for all these. It's all off balance sheet, so I'm not having to disclose any of it. But I start getting some phone calls, hey, we're calling about this loan here. I'm like, yeah, that should be sold on, you know, it looks like that's going to be sold tomorrow.

And then tomorrow comes and I'm like, pay that loan off. right you know even though we sold that loan 45 days ago you know but now pay it off for the contract and but literally violating the spirit of the contract all day long and i'm the decision maker in that the owner of the company and so i'm interim CEO and president at this time or really president CEO um i had the interim tag but it was i was that was it was my role roll my baby at that point. And I brought him in. He says, how is this working? How are we making this work? And I said, this is what we're doing. He goes, brilliant. Can you keep it up? I'm like, you bet you. I said, go get me the business because he was great at getting business and great at

motivating the sales guy. The guy's the top mortgage seller. I mean, just the guy's brilliant in building teams and getting people and the rah-rah guy. He was a football coach. He played football at ASU. I mean, just, you know, there's only so much you can do in a market that's just Oh, yeah, that's just collapsing around you. Yeah. And so I said, that's your marching orders.

Mine is, he goes, just keep doing it, what you're doing. And then one day he comes into my office, he's like, I'm worried we're going to go to jail. Or we're going to go to jail. I'm like, no. And then about two weeks later, he comes in the same thing. And I said, you know, if you don't start selling some freaking mortgages yeah we might because I'm making this happen over here but we don't

have a pipeline of shit coming in you know something's gonna fail and I don't know how they'll look at it legally we're following the contract but you know I don't know if that is fraud or not but you know if that bank fails and And it shuts off that credit line. You're just done. Yeah. Yeah. So then the TARP comes out, right?

And the TARP is going down and it stops at our level. No TARP for us. Whoa. The bank with the participation agreement, they get TARP. Okay. Okay. And, but with us, us no tarp so now I'm like but I thought okay tarps in the system these repurchases are going

to stop city chase Wells Fargo all these banks are they're going to quit because boom boom boom they're even giving 25 billion here they've been getting you know boom boom boom they're going to step up and it's going to stop affecting us and we're going to be fine because we're going to continue sell and and make mortgages and we're going to be back on track here soon so the bleeding should stop and that was really a last second change to the tarp program of giving it to the banks the way they gave it to them and that changed my world completely that really opened up the pathway i think i'm going to go to prison you know versus there we're we're going to be covered so what did the banks do if if there was a bank still open downstream

from that security, push it back. Push it back. Loan modifications, all the different things. Push it back. Push it back. And I mean, it started, it started porn. And, you know, on Tuesday I'd get 20 million. On Thursday, it'd get 60 million.

You know, they'd show up in the FedEx envelopes of repurchase demands and just going and going. And, you know, and I'm sitting here and I'm going. we've got $28.5 million we're in debt. That we, that I don't see the pipeline out of this because I've got all these repurchases. I got nothing left to renegotiate this with. We might have two or three million in our pipe. And, you know, I need 30, 40, 50 million in our pipe. And I could put together a pathway in 12 to 18 months.

I can pay back that 28 mil. And, you know, we'll just go to town. I'm like, I'll start originating. I'll, you know, we'll just, we'll go back out there with the home run hitters and we'll make this thing happen. You know, and interest rates now all of a sudden are starting to get sliced, right, way down. So it's like, hey, there's opportunity out there. And when that starts showing up, you know, we're now pushing into, we're in early 2010.

Okay. And I go to the ownership and I'm like, I'm getting an attorney. And my suggestion is, you got to shut this thing down. If you want to salvage any of your money out of this, you've got to shut it down. And we need a strategic plan to close this operation and be able to bankrupt it in such a way that keeps us out of prison and meets the obligations. And this is now March of 2010 when Phil Mickelson's about to finally get his green jack. Yeah, because I remember sitting in my attorney's office on that Sunday and speaking to him about, you know, when, you know, fast forward in April. And so I find an attorney.

He finds an attorney, unbeknownst to me at the time, although I thought he was acting weird, He'd walk into my office and he'd say, tell me again how we got here. So he's already wired? He's already cooperating. Okay. Yeah. So he's recording and he, he's wearing a wire for, so the attorney kids, he ends up changing. Eventually he goes with a divorce attorney, friend of his that we did some mortgages from, but negotiates out a deal.

and he's wearing a wire against myself, our CFO, and our new CPA that we had, and going forward. So we shut down operations in April of 2010, and it's horrific. This guy that I told you about, the consultant was doing the financial things of Guy Donald Schwarzenegger and all that. So he's lighting up my phone and such. And I got all these people like, hey, we can't get it. And he leaves a message, I'm coming over to your house. And he lives in North Scottsdale as well.

And so I tell my wife, I said, hey, get in the Hummer. We're going to go for a ride. And then so we go over to Fountain Hills and we spend the day. And I walk around the lake in Fountain Hills, man-made Lake with the world's tallest fountain. And for hours, I'm like, what are we going to do? What are we going to do? What are we going to do? What are we going to do? You know, I contacted my attorney and say, hey, this is what happened? So my attorney says, let's go meet. And I go and meet with him on a Sunday. And he's, and he brings in, he's got a boutique law firm within another major law firm of white collar stuff. Right. Yeah. Really good guy. Good attorney. And he's also, he has a passion for death penalty cases. The feds contact him a lot to say, will you represent? Like the shooting that went down, went out in Tucson with the guy that this shot. Gabby Giffords, the U.S. House representative down there. Okay. And killed, you know, Lothler was his name. But anyway, you know, he was asked for. representing him, stuff like that.

So he brings in one of their grizzled veteran attorneys. He goes, hey, I'm bringing him in. I want him to sit there. So we rehash everything for $8. I just say, hey, here's the story beginning to end. Everything, much greater detail, because obviously it's very fresh in mind. And I've got paperwork and facts in front of me. And I said, I think we committed a crime.

I said, I don't know, but if we committed the crime, I'm ready to walk in and turn myself in. And let's make this thing right. And, you know, my pride finally probably got myself, got itself in check. I was like, I was just horrified. I'm like, you know. So they discuss and they're talking it over and they're looking at the contracts or looking at everything. and they finally, they come to the decision after consulting with this much more senior gentleman attorney and say, and they bring in some of their contacts within the U.S. Attorney's Office in Arizona

and Phoenix and some things just, you know, on, hey, just talk about this at a very high level. Let's talk about this. And so describe, and they come to the conclusion and there's their recommendation. They said, we are not, you know, I paid my retainer. This is a funny thing because the bank refused to cash, the check I wrote to them four times. So I finally got them to, I went to the bank. They were like, the signature doesn't match your card. I'm like, that's, you know, I mean, it's just craziness.

I mean, the money was there. I had that time hundreds of thousands of dollars in actual liquid cash capital network, you know, three million or so. and but he says we're not going to march you into the u.s. attorney's office and turn you're in we don't think you committed a crime we think you're going to have civil litigation out your ass but this is a pimple on an elephant's ass and this is a bank-to-bank civil issue this is not criminal we are not going to do that to you because if you walk in and tell them

that is a criminal thing, they will try to find a way to make a criminal deal out of it. I'm like, be sure? And he goes, yeah, he goes, but we're going to represent you through. He goes, but be prepared because you're going to get sued.

I'm like, all right. So that I can deal with. You know, I just, you know. And so, you know, I come back. People are still trying to find me. And a lot of people had been my home. We used to entertain literally for hundreds at our home and stop it. So we've got investors.

We've got all these different things. People trying to find former employees. And the last thing I did was made sure payroll was made. Everybody got their payroll. So we paid payroll right up to, you know. People are just wanting to know like what's going on. They're not upset. Are they upset?

There's a few. They're upset. And, but most people are like, actually, as it turned out, they're real concerned about me. I was like, hey, you know, what's going on? Like, you know what's happening in the financial industry? Like, you know, this is not me. Hey, I managed this badly. Like, nobody's surviving this.

Yeah. Legitimate banks that are doing the right thing are failing. Yes. So, you know, they don't have, they don't necessarily know what's happening. But my pride couldn't even get me over that top. I was like, I see, I'm better. than those guys. But you're right. But from my peers and my employees and my associates and my family where I thought, hey, they saw me fail. It's going to be, you know, just I'm going to lose

all those friendships. I'm going to lose this. I'm going to lose that. I'm going to lose my house. I mean, then they weren't friendships to begin with. Yeah. Well, it turned out I didn't lose any of not one. Then they were friends. Then they were friends and they cared about me, not about me as Dave, the banker. They cared about me, Dave, Dave. And so I load up our toy hauler, and I'm like, we're heading to eastern Arizona. I'm going in an area that satellite phone only, and I had satellite phones on, or satellite TV built in all my cars, and I had it on, you know, my toy haulers. And I'm going deep into the wilderness where there's going to be about 10 people on Earth and nowhere I'm at. it could even find me.

I can tell millions, but only those 10 would be able to actually. They know what I'm talking about, where I'm going. And I go take my wife, I take her two dogs and tell my kids, hey, we're, you know, we're getting out of Dodge. And we go and we stay there about two, three weeks, you know, and then eventually make her way back home. And, you know, I meet with the attorney. and he goes, hey, I got word out in the U.S. Attorney's Office. If anything just comes up or sniff of anything, they'll reach out. We'll go forward.

You paid your due upon receipt, retainer, and go enjoy your life. Go get a job. Go do, you know, quit worrying about this. You're fine. So this is, you know, April, May of 2010. So I move forward. Still in my heart and of hearts and mind, I'm like, this doesn't feel right. It doesn't feel right that this is the end all be all.

I get it and I understand it. I could logically think through it. Like you say, all these banks are failing. All this was going on. and I defaulted on, you know, about $100 million worth of repurchases and other things on warehouse lines of credit. I didn't feel any, I felt horrible from a pride perspective, but no remorse like I had done anything wrong because in those situations, I hadn't.

They had the paper, collateralized, they could do with what they wanted with that type of stuff. The government was pouring tart money into all those. banks and entities, they're fine. With this other bank, I really was feeling rotten inside about those individuals and those people I say is a really good family, you know, some, just, you know, some good things. And I was like, oh, did I or didn't die? And I was really struggling with that. But I then moved forward and was like, okay, I got to pull myself out. I contacted some of my top key people on the origination side. So, hey, I'm going to reach out to another bank that survived this thing.

By the way, we're number 5,000 exactly on the implodometer. So we're bank number 5,000 that failed. And I'm going to reach out to them because they need a retail origination arm. They do minimal retail. They're doing wholesale. They're doing correspondent lending. So they're acting as a bank to small banks as a broker. They're handling Wells Fargo's reverse mortgage portfolio behind the scenes.

They've got about $25 billion in servicing. They are a technology company in the mortgage industry as well. So they weathered the storm. They did what I was hoping to do. but they did it, they never did subprime, they never did Alt-A. They always did Fannie, Freddie, conventional paper, FHA, VA, and Hecum mortgages. And so I started, and I had been selling them paper, and we had built a relationship. And so I contact their CEO and say, hey, look, I got this small team, Arizona, processors, I've got underwriters,

got da-da-da-da-da-da and let's put this together let me open a branch under you and put this together and so I did we agreed and we got a facility up in Scottsdale that we made an operation center and we started offering and building a retail arm off of that I started building some branches controlling with my people eventually I figured out these are the cats doing fraud these are the guys that are really rock solid mortgage originators rock solid underwriters rock solid risk assessment people you know and so built a small team under that and this mortgage bank at that time because of coming in you know out of the financial crisis in 2010 doing about 80 million dollars a month so I started of building that origination platform eventually again just fast-track it got brought in to you know as a c-suite executive of hey dave we're going to close another you know 250 million dollar line with such and such you know that you know how to do that you know that do you mind flying out to l a

Maybe you mind flying in New York and having dinner with us. We want you to pick out the wine. The ownership, that wasn't their thing. They're great at taking you to the strip clubs and these things and understood the business side of things phenomenally well. And had these great teams back in India and different things, some brilliant minds to really from a technology side of things. Put it together.

Like I say, it was, you know, between servicing, handling Wells Fargo, behind the scenes, all this stuff. So I started doing that and started all of a sudden, I'm building up my resume, my team, and I'm being integrated into the highest levels of this particular bank. And I helped build that from $80 million a month

to $1.2 billion a month in 2010, 2011, 2012. I'm out of I am being paid for my in this this if you remember compensation laws had changed then right gone were the days of making 7% it was all built into your contracts you know you're getting paid 1% boom that's it so and that was building the rates for loan officers branch managers and everything else so my compensation was based on a percentage really a tick you know, 16th and eights of, of a point. Basis points, right? Yeah, a basis points of, you know, the overall volume of my team. And then I've got sub-managers and done it and da-da-da. And really build is just an incredible rock-solid team. And we build out a great retail operation and then help build their correspondent lending,

even though they have that down, build their warehouse lending lines because we are a warehouse lender. We go to we're servicing 98% of all our own paper. Not sub-servicing. We're sub-servicing for other banks, plus what we're doing for Wells Fargo. And, you know, we're doing some big securityizations worldwide. The biggest little bank that nobody ever heard of, but inside the industry, everybody knew it. And so all of a sudden, you know, I'm making money hand over fist, you know, $100,000 paycheck, $180,000 paycheck, da-da-da-da-da, you know, so I'm making, you know, in a month, you know, three, four, five times with the average annual wage is something, you know, $180, $200,000 or so in a month.

And, you know, just through our little origination arm, we're doing $400 million, all in Fannie Freddie and selling direct to Fannie Freddie and keeping the servicing and VA and FHA. And we interest rates are screaming coming down. So now the housing industry again. So we're

striking deals with realtors and home builders all over the country. And we're in 49 states, Puerto Rico, and Guam. We take over Wells Fargo hands us. their Puerto Rico division. We just take it over. We're doing commercial paper through Fanning, primarily through Freddie.

And it just is like, life is good. This is awesome. I'm making millions of dollars. I'm spending it stupidly on fantastic dinners. All these things back to, hey, look what I'm doing. I'm giving a lot of it away, but out of pride, not out of my heart. And this goes great until November of 2011. I'm in L.A. for a week.

What used to happen was, hey, Dave, we need you over in L.A. Because we're corporately based out of, in the L.A. area, Orange County area, actually. And they wouldn't let me fly first class. I mean, they controlled every dime. It was just kind of a crazy thing. so I've upgraded myself to first class. I'd fly over there, pretentious as hell. And invariably, I'd be stuck there for five days.

I'm going to buy new suits, new shirt, new tie, new underwear. And it just was a nonstop thing. So I'm over there getting stuck. And my wife calls me. My wife is, you know, she was working in, the bitch who was working processing and doing a lot of different things for us and such and is this a target letter and no it's not a target letter go up in the front door and say can we meet with you my wife in the conference room

and she's trying to call me and I'm in meetings with I think Barclays at the time and finally I get away and I call back and she's driving home, and she's just straught. I'm like, pull over the side of the road. And she said, you know, these people, they show me their badges, their investigators for, I think, the FBI and all this. And they're saying that I did all these things wrong and that my life was going to change and you're going to prison and I'm going to prison and they're doing all these.

And I'm like, well, slow, you know, so I'm like, slow down. Let me get my attorney. I said, let me get him on the line. And that was in November of, 2011. And that's when I realized they are looking at us, you know, three years later, you know. And so begin the, begin the process, I have my attorney reach out to them. And he starts having some conversations with.

And they're like, hey, you know, they're saying, you know, so he's like, I'm not sure where this can work out he goes i don't he goes but you're going to need to you know oh as a matter fact a week before he had refunded half of my retainer unheard of in the legal field yeah called me one why is that because it's just had we yeah he goes it's been over two years crickets nothing he goes there is nothing ever going to happen here i don't think anything civilly i think they took that tart many they used that tart money to cover your deal and they moved forward and incidentally the tart money was exactly the amount that covers covered our participation that we own them just one of those quirks of fate and so he had just

the week before refunded me half right so then i started getting phone calls from like former vice presidents and former people in my my operation groups and such saying And the feds just came asking about the bank and asking about you and asking about, and they named the other people and all these different things. And I'm like, oh, okay, here we go. And so, you know, they're going through and then, like, we would hear something, then we would hear nothing. You know, so I'd ask, I'm like, am I under indictment?

And he goes, no. He goes, am I free to travel? And he goes, yeah. And he said, well, because, you know, my wife and I are going down to Cosmel or we're going down to Cancun or you're going to wherever. I said, will you let them know I'm leaving the country? He goes, what? And I'm like, yeah.

I said, I don't want these guys thinking I'm hauling off millions of dollars or something or doing or running. And he goes, you're not under indictment. You're not under anything. They haven't even given you a target letter. They, you know, and I'm like, yeah, do me a favor. He goes, okay. I said, just let them know, you know, because I'm making millions of dollars.

I'm, you know. And but then we'd hear back from them in different things. And, you know, I figured out eventually why they would go quiet for so long. And then, you know, when they, as my attorney put it, reared their ugly head again. So from that point forward, I put my nose of the grindstone. I'm like, I had two thoughts in mind. One, I may as well be dead. You know, my attorney started going through guidelines with me and different things.

He's like, hey, I think you're looking at, you know, 48 to 60 months. And I'm like, oh, God, it's the death sentence. It's over, you know. And so, and, you know, so. But, you know, I'm still working. still there's no I'm under no restrictions I'm like saying not under an indictment or anything like that so I just start knows of the grindstone work wise like I'm going to make as much money as humanly possible so that my wife is going to get through my sentence and she won't have to sell

the house I mean stupid shit I'm like how much money does she need to make the payment all the way through okay you know so you know basically she needs five grand a month for you know four or five years how much cash am i going to need to have on hand for that how much you know boom boom boom and so i just start hammering away business is increasing i'm making more money than than i ever had my life but i can't sleep at night i'm drinking like a fish the and i in the other decision i made okay i got to make as much as possible to set aside But, you know, my attorney had figured it out as kind of things would come up. Basically, he's like, I figure yourself reporting to prison in three months.

Like, okay, so I got to try to make, you know, half a million dollars in three months. And nothing really had happened. He was always kind of counseling. And I said, so I told him, I said, just try to keep me working as long as I can and out of prison as long as I can so that I can try to take care. in my family. But they haven't indicted you. You haven't played guilty. Like, even if you had played guilty, you right? Yeah. I mean, just, you know, so I thought worst case, by April of 2012, I'm in prison. And so, you know, I'm like, okay, so I'm going to live like I'm dying. I actually, I remember

making a conscious point. I mean, you can see, you know, I've got this cross around my neck. I am a pastor today, but at that point, I remember thinking, you know, there is no God, there is no life after this. There is no meaning to anything. So I'm going to have as much fun with me and my family and my friends that I possibly can before I go to prison and may as well be death because that's it. That's the end of my life. You know, I'm 48 years old, you know. Now you have to realize how silly that was. Oh, right. Right. Yeah. Oh, well, without a doubt. But I understand having been at this level and knowing, okay, I'm going to be at this level, it seems like I might as well be dead. But the truth is, you get in there and you're there for three months and you're like, yeah,

not that bad. So I'm thinking again, no, I'm going to lose all my friends and family. I'm thinking I'm going to lose, you know, all this stuff. You know, I'm blowing my kids inheritance and, you know, all these things. You know, my kids are in their mid-20s at this point. And, you know, and so I'm living like I'm dying. I mean, I'm going on great vacations, great trips. You know, it might be a Thursday. I'm like, hey, call these 10 people and I get a private room or table at Mastros or this

and that. And it'd be a $10, $10,000, $20,000 dinner. And it just cuts. and, you know, let's boom, let's this, let's that, head to Napa, let's, you know, add to my wine collection, let's, you know, and I mean, literally living like I'm dying, like checking off bucket lists and then also trying to put away a bunch of cash. So, you know, things are going, you know, we're starting to proceed. I, you know, I fly back to Washington, D.C. for a proffer.

what they call queen for a day so i'm meeting in the the federal building there and you talk about surreal and they're just going through and they're pushing paper in front of me and this and that they're like you know things because then you know now i know that he had been wearing a wire and you know they're going basically they've narrowed it down they're going after four of us you know they're going after me they're going after the founder they're going after our cfo and they're going after our CPA. And they want to know if there's anybody else that should be going after.

So we go back there for the proper. And my attorney lets them know, say, hey, I've let them know that you came to me three years ago. And basically any sales, and they're rather upset with me because I didn't have walking in at that point in. But I thought, that's got to be a tech mark for me, right?

And kudos for me as to, you know, mitigating you would think. You would think. Nope. And they're saying it's what? It's, what is it something of guilt? What? That they're saying that, oh, that means that it was an admission of guilt by his company. Yeah, exactly.

Yeah. And so now I'm just, you know, hiding from it. And so we go through this proper and we go through. through everything and I realize they have no clue what the actual crime is because to understand it at the level that you know I had been involved in versus the level of U.S. attorneys and investigators not because their education is any it's just right they know what they know and I know and you know I'm like you know so they're pushing things across I'm like, no, that's not how the business works.

Boom, they couldn't figure out how we were turning such a profit on mortgages. So I'm having to walk them through every transaction that they're pushing in front of me, or the fact that something's off balance sheet, like, no, none of that stuff's there. What's this in your financial is it sees, it's this, it's from this warehouse line of credit, it's from that, it's from, you know, all the different things. And so just going through explaining all this and going through and going through and going through and you know and basically what the proffer is anything you say can't be used against you supposedly right now they can go out and build a case and find other evidence

against that but you know i just you know so i you know i had i had already resigned to the fact thinking okay hey life's over and such so i you know i had nothing i wasn't hiding anything And, you know, explaining they had asked me about certain people, like the guy who resigned or stepped down as CEO and president, asked me, I'm like, nothing to do with it. You know what? Nothing. I mean, this was me making the decision to delay payments. Now, why were they there? What brought this about? it was because that other bank had defaulted on their TARP payment. Okay. And down the line, there's two things that happened. Number one, the Treasury Department had determined basically any person, persons, or entity

causing default in TARP could be held criminally liable. You know, so it's an agency making that decision. I don't necessarily disagree with that decision, but an agency making that decision. It wasn't a law in the books per se. And then, you know, so that gave them the opportunity. So the other bank, when they defaulted on their TARP payment, they blamed us for the default, our bank. We defaulted because of them.

So that's what opened up and allowed the investigation. The other thing that happened, Congress had been calling for the heads in the platter of the bankers that caused the financial crisis and the 401Ks to collapse and not everything else. They were just screaming for us guys. Right. So the DOJ formed a task force and it was a task force that met with me out of Washington, D.C. It wasn't out of Arizona. It wasn't And we eventually were sentenced out in North Dakota. It wasn't, North Dakota wasn't involved in there. This was strictly a task force out of Washington, D.C.

That put together specifically go after the banks and the bankers. So, you know, so we're sitting there. We're meeting with them. After the meeting, I asked my attorney, and he said, hey, he goes, something they shared with me. You know, I guess I was the last one. they had done the proper with. They said I was the only one that they believed, told the truth, top to bottom.

Didn't hide anything, didn't, and such. It's true because I didn't know about the others, but I said, in my case, yeah, I did. I didn't withhold or hide anything. So I fly home. literally at that same time 2012 again i have this mindset i'm still working because i'm not under indictment or anything so i'm bringing in a lot of cash and in my paychecks legit you know and and just just burning it at both ends and i decide i'm going to do a um oh goodness loan modification on my mortgage. I had a million dollar mortgage, $900,000 mortgage on a home

that at the before the financial crisis or even about the peak of that stuff was worth about $3.5 million. And I had about $900,000 mortgage on it. So I thought I'm going to do a loan mod because there was an arm. And so obviously the rate didn't go enough. I'm going to kind of lock this thing in, down low, lock in a payment for my wife so she can keep this home.

And move full. Because I asked her, do you want to keep it? What do you want to do? What do you want to? And she goes, if I can stay in the house, I'd like to stay in the house. I mean, stupid decision. It's, you know, I'm going to be going to prison. That's, you know, in any asset that we have that's worth anything, the government's going to take. So

so I start that process so I'm through that process so one of the things they make you do even though it was the jumble mortgage was do all the FHA paperwork to see if you qualify on the FHA program and I'm talking to the bank I said look I'm in that industry I said I don't qualify for that program here's all the reasons why they're like it's just our process you got to do it you got to be denied that then we take it because we got to go go back to whoever's holding the paper, the security, and see if we can blah, blah, blah. So that takes a couple months. We go through.

So I signed the thing. And I put on the 103 because now this is February and March of 2012. I'm expecting to self-report to prison in April, what my attorney told him. Wait, did you plead guilty? No. I had no idea how the timelines worked. Why do you keep saying that? There's no way.

And, and so, so I put down, you know, my income as zero. And I put down my wife's income. And at that time, she was making about $11,000 a month. And, you know, to try to get that payment down into, you know, where it's at. Or where, you know, just as low as possible, lock it in that, hey, you could do this off of that budget. And the, so I literally signed and completed that loan modification a week after I got back from Washington, D.C. Why that's important is because they used that against me to basically add 10 years to my sentence.

Right. So you're saying zero because you will not be a participant. And I will have and it, and I know that to disclose on a 1003 income that you know will not last right is a violation of federal law punishable up to 10 years right which i had to explain all this during my sentencing by the way and so you know so i knew i wasn't lying at that point everybody's told me i'm going to prison right and so i'm zero my wife's boom boom so we go through when we complete that process, it lowered the mortgage payment by $150. And it was a useless, worthless thing other than adding 10 years to my sentence.

So we go forward and it goes completely dark. We hear nothing. I mean, absolutely nothing. and my turn is like just keep living your life you know and so I'm going it's still in the back of my mind I mean you know I'm I'm drinking two or three or even a bottle of wine at night or a bunch of whiskeys or something like that I'm falling asleep easy enough but two in the morning man I'm wide away just sweat just thinking of all this stuff right so just a horrible thing I'm going to the gym three days a week trying to offset all of that. I'm learning to fight in the gym, figuring I'm going to prison. I've got to learn to fight.

I mean, you know, I'm paying personal trainer a few thousand a month, all this stuff. And figure I got to keep myself from getting a heart attack, even though I'm going to drink myself into a heart attack, and I better know how to fight in a shower, in a prison shower. And, I mean, you just talk about probably a mental health breakdown in crisis. And at the same time, still helping run this mortgage bank that we're doing great things. And I'm able to really keep my mind focused on that part.

Listen, last month I had someone fly me out to Las Vegas to spend a couple hours with them just explaining what prison's going to be like and white collar criminal. He was also studying with people self-defense. He was and I was just like, look, a lot of this is just, you're going to a camp, bro. Like at worst, you're going to a low. Yeah. You're not. It's like a rough, it's like a rough high school.

Like keep your head down. Don't talk about people. Don't run up debts. Like, you're going to be fine. Exactly. Yeah. He was terrified though. And I understand I did it.

Oh, I get. Yeah. Yeah. Same thing. I'd run, you know, obviously the journey, the my prison journey, which was off the chain, this, yeah, I've ran into a lot. And then since, you know, and that being home. And I've had that opportunity as well to say, hey, you know, because I'll get a call from

attorney like we talked to my guy or gal like sure yeah no problem and so you know i'm preparing still all this but it's definitely quiet so i like cool i'm to make as much as pandaned as that unbeknownst to me i didn't find this out until my PSR you know they are impaneled the grand jury in Arizona because the bank that we that had defaulted on the TARP payment was headquartered in Phoenix, Arizona. Our bank was headquartered in Scottsdale, Arizona. Everything that went on between us was, I mean, literally hand-delivered drive between our branches were, I mean, sometimes I walked to their branch. I'm like, hey, I'm going to grab lunch on the way out. I'd grab one of my guys. I'm like, let's go get some steps.

going to walk up we're going to deliver the funding package for for today you know instead of having one of my guys career it over um so Arizona case right Arizona jurisdiction so a grand jury had been impaneled in Arizona grand jury never in but indicted us they just they just refused to they were like I don't or tossed it or you know no crime here this is civil or what have you um because a couple things that came out facts later so the other bank when did they default on that tarp payment which opened up with the target on our bank right all your stuff had happened prior to that right so yeah so they defaulted In February of 2010, it was their first, they were a first payment default on TARP.

And February of 2010. Now, for those that went through it, anybody that was on the, you know, the certain levels in banks, understand, everybody defaulted on their first payment of TARP. That's what opened up the window and the negotiation with the regulators as to, how are you going to repay this TARP payment? Even though they put all that money in, there was an expectation of this money is going to get paid back eventually. And most of it was to great benefit and profit to the taxpayers of the country.

I remember everybody was saying, you know, we'll never see this money back and it's like 94% or something or 98% of it. It's a ridiculous amount of money was paid back. Pay back. So the, we didn't go out of business until April of 2010. Up until that point, we were still doing business with them as normal. Now, obviously, I was delaying payments, but that wasn't causing, we didn't cause their tarp default.

So what opened up the investigation, and I'm not trying to run from my responsibilities, don't get me wrong. but it's just interesting that that was not the reason it was a false premise and then they basically figured that out which i don't know if that's why the attorney or the the grand jury it's like this you know we don't see a violation of the contract we don't see you know this that the other thing so that's why i went quiet no indictment right so i'm just pressing the head now the federal government never tells you nothing yeah yeah they're not going to tell you that they're going to work trying to do a work around re-indict you come to you and say look sign this go ahead and we don't have to indict just accept it because you don't they don't have to indict you no you can

sign off on the indictment you know what we've got an agreement here don't make us go through we'll give you a little bit of just go ahead and sign here even though you didn't sign it never happened exactly yeah so um yeah the term gosh the terminology just just slipped out of my mind i've used it for 11 years i've used this term um but anyway so that's what we ended up doing so in september of 2012 i get a cough my attorney and so i walk outside my office and walk in in the parking lot, September, and Scotts to Arizona, it's like 110 freaking degrees. I got a suit on. I'm just pouring sweat for a lot of reasons.

And he says, hey, he named one of the AUSAs from the task force, just raised his ugly head. And they want you to, they want to set up. and they want you to plea in the state of North Dakota, in Bismarck, North Dakota. And basically, that's what it is, turn yourself in. I can't remember the legal term. I can't believe that. I forgot that.

But anyway, for all intents of purposes, they just want you to turn yourself in, wave and down. Yeah, yeah. And in Bismarck, North Dakota. So I pushed back and I'm like None of this took place in North Dakota This isn't, you know, of course we don't know about the grandeur

They can't touch us in Arizona now Right Yeah, they can't touch us at that point in time We don't know that of course So anyway, I said a couple things. One, I've never been to North Dakota in my life I have traveled all over the world I've been in every state except for North and South Dakota.

The only place I didn't have branch offices, it's the one, da-da-da-da. And I said, but number two is I know the other bank was founded in Bismarck, North Dakota, before moving their headquarters to Arizona. And I know the type of bank, they are, you know, very high-end clientele. to bring a case against us in North Dakota with this particular bank, it's going to be impossible that there's a judge or anybody involved in this that's not involved in their bank. They're going to slay us, right?

In this little small town, da-da-da-da-da. And I really didn't understand jurisdiction at the time, but I'm just like, we can't go to North Dakota. We're going to get crushed. You know, I'm thinking, you know, in Phoenix, I'm like, I got a fighting chance as to people see I'm a good guy. One of the things that I didn't cover kind of my back. Well, no, I did. You know, so I'd been on the dive team of the Sheriff's Department and all that.

So, you know, I've got connection to law enforcement, right? I'd been former law enforcement, if you will, even though it was as a diver, you know, in doing these things. Not working as law enforcement per se, but doing water rescues. and recovering bodies and all that type of stuff. And so people are gonna see I'm a good guy. And I killed the grizzly bear, come on. And I figured in Phoenix I had a decent shot at maybe getting parole or something or probation.

Right. And so I really pushed back on this, not knowing about the indictment thing. So eventually they get us to sign everything, a plea and everything put in place at the end of September. They want to close it out before the quarter. They're pushing hard the government is. And they basically, they come and they say, hey, look, he's looking at 30 to 40 months. In my attorney's thinking it's below guideline, which it should be, it's a white collar.

and all of these different things. You know, they want this deal signed. We're going to put this in play. And so they're going back and forth. And one of the things, though, that they wanted is they spelled out the enhancements. And by doing so, there was two enhancements that they added, four levels each, that one was well actually there's a couple different enhancements that were really critical but one was as like a leader supervisor organizer of five or more people right of a conspiracy

and by the way what they had assigned for was conspiracy to commit bank fraud because they're like hey nobody stole anything nobody did this that just you know conspiracy to commit bank fraud and they got four of us to sign on that but they they wanted then that was a four level enhancement and now i'm starting to learn about the guidelines and the different things and like no that you know number one in a financial crime we didn't have five or more i mean they've only got four of us and really there was only two of us that under that even knew what was going on with my delay in the payments right that's you know that was the crime is my delaying the payments of not following the spirit of the

thing it's not that we didn't pay it's that we delayed the payments basically the government presented it and all their stuff was they defaulted on this line of credit it's not a line of credit there is no default there is you know but nonetheless and so you know i was pushing back on that and then they added a four-level enhancement for sophisticated means like what's sophisticated means you know and basically my attorney's like do you use the phone computer you send anything sophisticated and I'm like isn't sophisticated means the definition of fraud and isn't it already covered in the you know yeah anything rose going to say they pretty much can say anything sophisticated means yeah they'll do um specialty device or use of a specialty

device and I've seen them say a computer yeah oh yeah that's what they said Like how to come? Everybody uses a computer. Well, so they all get the enhancement? You can put that on anybody. They, they, yeah. Yeah. So just bringing it up.

And then the other thing was really arguing the, the enhancement, which was a 20 or 22 level enhancement for dollar amount. You know, they wanted the 28 million. My attorney wanted it at 14 million because they had recovered and recouped. you know, a certain amount, they had, you know, potential loss. Yeah, well, basically the amount of the participation agreement is what they went with. And so my attorney, you know, so we got the, so the parties out, they got me to sign, and all of us to sign all four of us was we'll agree to disagree.

We'll just let the judge decide that we will have a hearing specific to those. And I'm naive enough thinking, awesome, we'll win this one, you know, because the proof is the proof. Their actual loss in the bank, it's in their records, their public filings, they lost about $9 million. So there's that. There wasn't, there was, there was only two of us that even knew what was going on. And the enhancement says it's got to be five in a thing. and then causing failure to a federally regulated financial institution, which again, we didn't meet that criteria either.

Because you weren't the cause of the failure. And we weren't the cause of the failure. And that bank, by the way, never did fail. They made it through to their credit, to their people, their team. They weathered it and went on to do big, beautiful things. okay so i mean it's and that's all to their credit their people um so you know so all the way through this and insurance paid and did some different things now insurance companies wanted to come after us civilly not criminally but civilly so we can negotiate we go back and forth

i finally sign and agree okay we'll let the courts do their thing I haven't resigned from the bank yet, you know, at this point because I'm still, and I said, well, when all of this take place is, well, you got to go do a change of plea, you got to apply to Bismarck, North Dakota, blah, blah, blah. So I go up there at the end of October of 2012, do my change of plea, plead guilty, and the magistrate judge and meet with the district judge to do, you know, all these things. I go shake hands with the task force, the USA, we have good conversations. you know, we're still expecting.

They're going to ask for about 30 months. plea on information. That was what we did. So waived indictment and plea of information. And so I called my, the CEO of the bank I was working for, said, hey, you're going to see it on CNBC. You're going to see it on some things. This is what's getting ready to happen.

I said, in an hour, I'm going into this courtroom in Bismarck, North Dakota, da, da, da, da, da, da, I'm going to have to resign. I said, I already reached out to NMLS and I'd mothball resigned from all my licenses, you know, my 40-some-odd licenses around the country. I did all these things so that I could do it cleanly before I pled guilty to a financial crime, financial felony. And, you know, called my in-laws who were rather ill at the time, one with Alzheimer's. And, you know, I was like, hey, you're going to hear that I'm going to be on the news. You're going to see me on different things. And I was. I was on CNBC and they're covering.

Matter of fact, my wife called me, she wasn't at the change of plea because she had just had back surgery and was recovering and had to be in bed. And she goes, how many TV cameras did you see outside? and I said, I don't think I saw any, he said, you're all over the news. You're in Fox News, you're in Fox Business, you're on CNBC, you're on them. I'm like, oh, freaking great. So, well, we better get your dad on the phone and give him a heads up because he's going to hear it. Their dad was very high up in USA track and field, international Olympic teams, all these things. And I did a lot of volunteer work for them and a lot of technology work and stuff.

And so I knew a lot of those people that had built relationships over 20-plus years. at that time my wife and I had been married for 25 years 24 years and the you know so news hits everything else but we're still expecting this I resign I fly home I fly over to LA I meet with you know the executives the banks the board all this I'm like hey let me help you transition through this here's who needs to replace me we've got my operation you you know if you want 400 million a month plus i said my fear is you're going to have people within this bank fight over that they're going to fight over that money in the amount of payroll that they can make and i said you just need to promote these guys and let that puppy go and let it rain

and they also agreed because i had this pipeline so i still had about another half a million dollars in payroll coming to me that they'd pay out you know over time so i went ahead and you know we did all of that and uh i all of a sudden now i'm not working and i'm just planning and preparing for prison and i'm consulting with people all over the country as to this is what you need to do in your role in the bank and consulting with other Wall Street bankers as to what happened because they're worried about themselves. Like they went after you and I don't know if you remember at that time, this is the time the B of A and Wells Fargo and Chase are paying, you know, $13 billion to $20 billion in criminal

penalties through the same task force. So what the agreements were going after the banks was we're going after you criminal. And there was only one person out of the big banks out of B of A that actually did prison time. It was more of the smaller banks like ourselves was if you could stroke a check for X. And our offer was basically if you can stroke a check for $28.5 million, your bank will take, your former bank will take the criminal hit. Right. And that's it. I probably had the most wealth of any of the four of us with, you know, liquid hundreds of

dollars, but, you know, net worth about $3 million at the time, although our house, the home value was collapsing from $3 million down to, well, my wife ended up selling it as a short sell a year into my prison sentence for $550,000, you know, in that home today is worth. about 4.8. So it was worth well over 2 million within two years after that sale. I mean, I was hoping somebody would buy that. But part of the rules of that, it could be nobody affiliated or the newest. It just had to be a thing. So the, you know, but so as we're, as I'm going through all that, I'm preparing for prison and consulting. I'm like, okay, I'm going to have these other checks come in and negotiate that out. I'm helping, you know, all the transitions.

with these teams and preparing for sentencing. So this is October of 2012. Sentencing eventually gets scheduled for March of 2013. Like, okay, at least now I know a date. That gets postponed to April. That gets postponed to early May of 2013. And so we're just going along, going along. My wife's turning a train wreck.

Every time it's postponed, she's this in tears. She goes, I just want to know. I want to get this behind us so we can move forward. They keep postponing, keep postponing, keep doing this, keep doing that. So I start receiving my checks now in April of, you know, all that money that's owed to me that we had agreed to. I said, hey, can you break it up into three or four checks? because these are you know i don't want a huge hold on and blah blah blah i want my wife to be able to use them and my wife went to deposit one of the checks into her account wells fargo rejected it

because they said it was third party even though we had joint account so anyway long story short she took all of the checks she went deposited on one day the following day i'm at jack in the box I'm getting ready to I'm at Jack in the Box getting a breakfast burrito after working out at the gym and I'm like hey I'm going to grab a breakfast burrito I have a weakness for breakfast burritos from Jack in the Box

I use stuff now it's McDonald's number five breakfast only fast food I ever do in my life and the I go and use my debit cards declined like give it to again decline I'm like oh shit And I'm thinking, I know there's like $6,000, $800,000.

I know there's a lot of money just in this checking account. And so I give a credit card. I pull over the side. I call my wife. I'm like, check the bank accounts. She calls me back. And in about five minutes, she goes, they're all zero. Every single one, I'm like, oh, my God.

And we had signed as a substitute asset forfeit. they had started the paperwork and we were pushing back as to hey yeah this is mine but this is my wife's right here's her pay stuff's direct deposit in these accounts so here's this is my wife's accounts these are my kids assets where i co-signed maybe in college for a car or something that you know they now own free and clear that my name and their name, dad's name's still untitled, because we just, who knew dad was going to prison and such. So I'm like, you know, so we're pushing back. And then we're supposed to have a hearing 10 days after the fact. The judge decided, nah, we're not doing any of that.

Even though that's the law, signed it. So the day that she makes that deposit that night, everything was gone. you know and and that was it um for for the cash assets and so which really obviously that was like oh my god what do we do now so and then the sentencing keep getting postponed while the government comes back they're doing the sentencing memorandons and such and they're like well no they're doing the PSR now finally so we're doing the PSR at the same time April. And I disclosed in my interview with the probation officer out here in Arizona, even though we had been, you know, we're up in North Dakota where I had done my change of plea.

And so I disclosed, oh, hey, I had done a loan modification because they want to know, how much is your mortgage payment, how much utility bills, the whole thing. And so she had put in there, and she has asked those questions. And so again, I was disclosing everything. I was very upfront about all the things. And the government comes back and they said, we see that McMaster signed a 1003 for an FHA loan modification that he applied for.

And he put down zero income, and at that time, We determined that his base income was $60,000 a month. And, you know, and he did it right after while we were literally meeting in Washington, D.C., and he had all these growing things, and we thought very highly of them. And so they were pissed. And then they started going through and they looked. And during that time, my wife had started withdrawing cash from our account.

right and the ATM where we lived in Scottsdale you could literally get two three thousand dollars cash out of the ATM and so she was doing that because she started and ultimately she withdrew a hundred and eighty thousand dollars cash out of our checking account over i don't know about a year period which was the exact amount of her take home pay that had been direct deposited in the account she had had a friend recommend to her you better go get yours right before the government which actually wise but yeah they brought our attorneys in on this and so that really made the government mad they thought you guys were withdrawing cash trying to keep it under the $10,000 reporting limit and you've got

all these cash withdraws and so all of this information is going to the the government agency that was put in charge of TARP, of falling back TARP. So I'm getting reports from them. Once a month, I get literally FedEx envelopes this thick, saying, hey, we went through this bank account, went through this, we're looking at this financial transaction. I mean, they want to know everything. So now they want to know where'd you use all that cash. So I'm giving receipts.

Well, let's say we put a new septic system into our backyard. Here's the pictures of digging up, and they gave me a $1,000 discount if I paid cash. Oh, by the way, here's my dental. bill that I paid a $600 discount. Here's the, you know, so I said, these were cash transactions, these, da, da, da, and so the government all of a sudden was starting to, they were changing their tune and they were pissed. That's why they kept postponing now the sentencing. In the meantime, our CPA and our CFO went to sentencing the day or the week before

we were supposed to go to our, no, the day before, we were supposed to go to our sentencing for the founder of the company and myself. And they were both given two years probation, no jail time, which is what I was looking for and hoping, and I'd written my allocution, because I'd already turned in my allocution, we'd already turned in our sentencing memorandum, we had done all these different things. And, but the government had held off and turning in there. sentencing memorandum. Or actually, no, they had. So when that sentencing came out, there was a huge

uproar. You're giving these guys, what, 24 months probation from those in Bismarck, North Dakota from the bank. Because the courthouse shared a parking lot with the original bank where it was founded. So those employees literally walked across the parking lot and filled that courtroom. So we went ahead. And so boom, they stopped our sentencing. Postponed it again to the end of June for nearly 60 days. And in that time, the tenor completely changed. My attorney actually ran into the AUSA in Bismar, North Dakota, went out at a restaurant. And the AUSA walked up to my attorney. He said, we're going after your boy.

We're going after him for 240 months. And here we had had a verbal agreement on 30, 40 months. And we had, you know, we're working out, you know, hey, where is the guideline range you're going to come out with the recommendation? Like, no, he's not good. He did this loan modification and they took this $180,000 cash. And so, I mean, so my attorney, he calls me and he says, look, he goes, I don't think you're going to be able to self-report. He says, when we go to North Dakota, you better be prepared to be remanded because they're going after you.

And I don't think a court's going to let you self-report with a 20-year sentence. And I just, you talk about my life just cratered and crushed, whatever cash that we still had available and stuff. I mean, I just was like, and that's where I remember at one of those points where I was just like, again, there is no God. There is, you know, this is just, yeah, it's, it's, you know, life is over. I'm not leaving prison. I will be dead. You know, I'm 69 years old or, you know, all this stuff. And so we finally go to Bismarck, North Dakota. But in June, we've done a bunch of filings back and forth. We do our presentation on these enhancements.

And hands down, we won the legal argument on these enhancements do not apply. And these eight levels of enhancements are worth about 66 months on the sentence. Right. For the guideline. Judge rules against us. And he even puts, you know, protecting for appeals and all that. But, you know, he goes, it's just, in my heart, he goes, hey, you're saying there was only two of you, but you know what? You had over 2,000 employees.

To me, that's a financial conspiracy of 2,000 that you control. Cut the, cut the shit. Then you should have been died in 2000. Yeah. Yeah. So, you know, so we lost that and blah, blah, blah. And my attorney grabs my leg while this is going out. And he says, you know, he covers the mic and while we're sitting at the table and he says, you know where this is going. Right. And he goes, you better go off script on your allocution. He goes, because I think they're going to take you for 20 years. And when he had said that and I said, yeah, I'm fucked. And he said, yeah. He goes, we're in trouble.

and you know and i'd already had my elucution written out and also right in during that time the sentencing memorandums you know we had supplied i had supplied nearly 200 support letters right well three bankers politicians government officials right did a the family of that i had saved their son life from a diving accident in a river to the family of a kid that I helped get out of the Mexican prison when he didn't realize on his first day, going to college, he is on a rodeo scholarship. They have such things. Down in Douglas, Arizona, on the border, were out preempta, Mexico, and they had a gun.

These are kids that grew up that we helped teach hunting fish from this little Greenlee County, Arizona, and they drove across the border unbeknownst to them reporting to that college down there for their deal and got caught with the guns, and they were going away for life. And I was some politicians and some others, and anyway, we went down there. And long story short, after a couple weeks, negotiations, different things, we were able to get both boys out of prison. Their family wrote great letters to my family, to, you know, a lot of wonderful support. And the bank actually wrote, the people from the bank wrote some initial letters,

hey, we just want them to repay. They seem remorseful because those letters were shared with them along with our deals. Well, then the owner. of the bank submits, you know, I didn't know what wearing the wire, but his plea was half my sentence. That was the agreement. Wearing the wire cooperating from that perspective, even though we all turned ourselves in. There was no operation to be used against us. That his sentence would be half my sentence. Right. So he changed his attorneys again for the third or fourth time in about in this period leading right up the sentencing, I think, because he ran out of money.

And he still owned a real estate company and some other companies in town to his wife. So he submitted a sentencing memorandum that said he still doesn't understand exactly what we did, but McMaster was doing it all in charge. Okay, that's fine. But then he said that I was running, doing this directly with the C.O. Of the other bank and that I was involved having an affair, the sexual affair. We weren't. She was married.

I was married. We became pretty deep good friends, but nothing beyond that. All these, you know, these accusations. So now the government's really pissed. and this gets shared with the other bank. All false. They're pissed. So they asked for more letters.

They asked for 30 years for us. They ask for, you know, throw away the keys. They, you know, the whole thing in statute to limit or the statute is 30 years. And, oh, by the way, when all this came up, when we signed this thing, was right up against the statute of limitations. We were right prior to that. Another reason the government obviously was pushing. But that's their prerogative, right? And so, you know, everybody was out for blood at that point in time, for us.

But at my sentencing, I filled that courtroom. We had over 150 people show up from all over the country to support me during the sentencing and to support my wife and to be there. And be prepared if I'm getting remanded to get my wife. back home to, you know, my kids, family members, my parents. You know, just a fantastic turnout of support of love. And it's now time for my allocution. So I literally, I turn, I ask the court if I can turn,

and I literally address the executives for the bank, the other bank, and their CEO is sitting in the front row. And, you know, I addressed it to them first of that these are the accusations against, you know, her name and that are false. I'm grotesque by them. Da-da-da-da-da-da-da-da. So I go through and I, so I go script and off-script in my allocution. And during this time, the judge continues now to look over at the, the, a usa's table you can tell the judge is a little pissed it's like wait a minute he didn't commit

fraud on the the 103 on the f h a because they were like well we think you know these enhancements we won't charge them with a new charge you just need to go you know top of the guideline 235 months and so he's looking over because i'm explaining i said your honor i'm in that business I said, I've spent over a decade in that business at the highest level for me to have put down income knowing that you, you know, I knew I was going to prison. I'd already, all of this had taken place. If I had put down income knowing it would not, now you could have a reason. So, you know, he's, you tell he's like, and then I explained the cash. I said, we have provided to the government every one of my wife.

wife's pay stubs and show directly where. So, et cetera. So now the, you know, it's like, all right, he's not happy. And also right before our sentencing, because during this time period, we were submitting, hey, look, this is, this is my wife's paychecks. This is the things. This is, you guys are, you're going after this cat, these cash withdraws. Nothing's illegal about it. It's my wife withdrawn her money she don't trust you guys even though you guys have said you will not go after anything of my children's or hers like yeah and I said she doesn't trust you I that's not my call right you know and they so my attorney contacted and said you know said my wife's name makes good amount of money at that point in time because she was hired she was also receiving a

stipend for every loan we funded to a bank. We're doing 400 million plus, you know, through that division. She's getting a piece of that. So she's averaging about 20,000 a month running her department. And which at the time I thought was nothing, you know. Right. And so the task force sends in agents to the bank that I had resigned from, the bank that my wife was still working for. Because when I had resigned, that bank said, hey, Dave, your family, your wife is family. She has a job for the rest of her life. What you did for this company and this bank, we can never repay it for. So we will take care of your wife all the way through this. I'm like, oh, thank God. and they went in and as the CEO said of that when he got me on the phone right afterwards

all gunned and bad stuff into the conference room and wanted to know if they were continuing to pay me under the table through my wife which they weren't right she'd been there for going on four years now earning her own way and she'd been in the mortgage of business prior to that and ran a funding department and all these different things. I mean, she had made her own way through the industry. And so they basically gave it the inedic. You either terminate her or we start investigating your bank. And there's not a bank in the world.

There's not a bank in the United States that can withstand, a federal investigation right they just you know not you know not even because they're doing anything intentionally it's just impossible and they're you know you will find something something criminal we've just got too many regulations on the books right and there too many agencies involved and to me too much gray area that these agencies love to work within they love to work within the gray area gives them opportunity. So she gets fired. She gets a golden parachute of basically two months payroll. So about $40,000. And now she's out of a job. So I explained all that during my allocution. You know, her money with this, what's caused and all the different things. And plus,

I just went through step by step. Now, and obviously, taking responsibility and saying, look, this is all on me apologizing to all my former employees, obviously to my family, to all the employees of the other bank, congratulating them on making it through the financial crisis and coming out better on the other side, just, you know, all these things. And because of that allocution, the court had pretty much already baked himself into going top of the guideline 235 months because he had agreed with these other enhancements so obviously instead the government withdrew any you know 30 to 40 months sentence from their offering which the initial offering when we did our change of plea and they opened up the case

was 60 months that was what they had initially put in there to the court was for me six 60 months. Right. And so the judge went ahead and he took it down to 188 months to the bottom end of the guidelines, but he didn't go below that. So he sentenced me to 188 months, 15 years, eight months. And I could hear my wife just completely crack and break down in the background. Now, one of the things that he mentioned in this, you know, in becoming a man of God and going through seminary and Bible college and becoming a pastor is, I know it was really God speaking to me at that moment, even though I hadn't turned myself over to him yet, was the judge mentioned he really expected me to do half my time. He goes, our prisons are overcrowded. We've got da-da-da-da. I expect something will come down and I wish you the best of luck.

I really hope this allows you to put your life back together moving forward and, you know, a lot of judgy things, you know, I think heartfelt things, I believe, from him. And, you know, that always stuck in the back of my mind. so then he said we went ahead and asked for time to get my ducks in a row to self-report the 188 month sentence and the judge agreed he goes I don't have any concerns I don't have you've shown up for everything da da da da da da da da is 60 to 90 days enough time I'm like yeah yeah that's your honor And then he recommended, well, he was, he goes, you should be in a camp like setting. And I said, you know, excuse me, your honor. I've done a lot of research on this because he sentenced me to greater than 120 months.

I'm not going to be eligible for a camp. So if you could, yes, he recommended, you know, FPC Tucson, 90 miles from my home. But I said, can you also recognize? recommend FCI Saford, which is about three hours from my home, but I have a lot of family that lives within 20 minutes of that location in eastern Arizona. And so he did. And then, like I say, and let me self-report

at the end of August of 2013. And you know, and it just, you talk about it's surreal. In that 60 days, again, you know, the government taken almost all the money you know laura had my wife had some money left and i was just like oh my god you know i'm gonna die then i really upped my game that my trainer's like dude you don't have to pay for training but yeah we're gonna teach you to fight we're gonna do this so i'm i'm meeting with a trainer three hours a day i'm running eight to 10 miles a day on my own i'm working out three times a day i'm And, you know, I'm preparing myself for the gladiator wars and battles of federal prison.

You probably walked into the, to the low security, the toughest guy that was in the place that thought you were going to be, thought you were going to have problems. You were probably the most physically prepared person. Yeah. But it was interesting, you know, with that thing because I'm a middle-aged white guy. I'm 48 years old. Or no, I just turned 49 because I turned 49 the month before I self-reported. um i'm 49 years old i got no tats i got no no this or that so you know there's there's always this underlying tension of a okay who cooperated who's the sex offender who's this and

you know and i fit the bill of you know white collar guys go to camps yeah and so i start getting in the When I self-report to FCI Saffer, there's, number one, a whole caravan went with me of all these local people. They freaked them out. They thought something's going on. We get 15 vehicles show up in the parking lot, and they come running out with, you know, all the COs and staff. And they're like, no, they just, you know, I'm here to self-report. I'm like, tell those people to leave. But they let my mom come with me, actually walk in to self-report.

and they're like hey we were expecting you you called us ahead of time we were da da da da da da da da da da and they actually made it a real like hey you know don't it was under the circumstances and the stress let my mom stay with me while they're getting me processed in for for a while and then there you go you know I walked in with I don't know 1500 bucks of cash to get on my books and you know these types of things But, so the FCI Saffir at the time was built to hold 700 men. We had 1,200 there. I mean, it's way overcrowded. So we were in what's called the freeways.

So I was assigned a bunk in a hallway in the bathrooms and showers. And they're open showers. We didn't have individual showers. It's just an open shower room. Right. And, I mean, just, they called that the freeway. And the strip club, because you're looking right into the showers from your bunk, you know, about it's just and i'm thinking i've got 15 more years of this left oh you know it's like take me now

and i remember that first day i saw i'm on that bunk and they come up it's four o'clock right before chow in the afternoon and the biggest baddest guys are like what are you in for what did that the other thing and they're like they will know if you're lying they will know because they're that I'm trying to determine, you know, hey, whose car is a guy belonged to and who's da-da-da-da-da, and all the different things. And finally, this real large black man just and muscle up is huge. This guy, matter of fact, the only reason he wasn't dead, he had so much muscle, he got shot in the back by police. And then they told his mom's like, he had so much muscle mass to save his life. It's like, just, you know, couldn't go through. I ended up eventually bunk.

in a cube with that guy really good guy but anyway he was on 25 year bid he comes up because everybody's like you know dude you got paperwork and everything and i'd mailed in all my stuff as last thing i did i did i gave my daughter and said here drop this in the mail tomorrow you know and you know there's all illegal mail and all this stuff and he comes up and he goes i saw you on see nbc you're that guy he goes hey this guy in cnbc that is so and then all of a sudden it was like everything's fine yeah right now it's like hey here's a toothbrush here's toothpaste here's your soap our slides yeah yeah exactly your slides um you're eating with us you're gonna we'll take care you we'll show you around and all the things we'll get you hooked up in

laundry we'll get you know in all the things we'll get you moved into a cube you don't you know i was only on a freeway for a week and yeah and you know it just all the different things. But, yeah, it just, it was such a surreal thing, but thinking, you know, I, you know, from my life's over to really, I woke up that next morning that Saturday, it was Labor Day weekend, I self-reported. So college football kickoff. I remember going out there and watch.

All of our TVs were outside. All of our phones were outside. This was an old school camp that they converted to a low from, the Korean War, or I'm sorry, World War II originally where they put the Navy, the German naval sailors and U-Pote guys in the middle of the desert. And then there was a prisoner war camp during the Korean War and then eventually a BOP camp and then that they turned him and upgraded it to a SCI to a low, put the fence around and et cetera.

You used to have a swimming pool until an inmate drowned there and then now it's a basketball court. But everything's outside. TV, phones, the computers were out, up there. I mean, none of this stuff existed in the dorms of units. And I woke up that next morning, Saturday morning, and all of a sudden it was on my heart. And I was like, you know, God is real. Jesus is real.

I'm going to commit myself to him. I don't know anything about it. And I'd been raised to Christian. I had been raised in Methodist household, all the thing, went to Sunday school, all the different things. But, you know, I'm going to, like, while in here, I'm going to make it my mission to learn everything I can. But I know it's real. And I walked over to the chapel.

I found the priest. The chaplain happened to be a Catholic priest. And, you know, I just said, help point me the way and direction and et cetera. But the, so all of a sudden I had this peace about me in that moment. And I knew I was going to be fine. And, you know, I started really. mentoring guys while I was in there, you know, because I realized, okay, hey, I've got a lot higher education than most of them. You know, they're always intrigued by people on CNBC and that type of

stuff. And so I just started mentoring all the different gangs, races, groups. It turned out I had this great skill set of doing legal paperwork, writing motions, digging into different things. I was doing my appeal at the same time and looked like at the time that we were actually going to win that thing and I was going to get my sentence reduced by at least 66 months. And so I just, I started doing legal work for guys. I started, you know, going through that entire process, which really ingratiated me within across all groups, right, to where I became like a protected person. Then nobody messed with this guy. you know kind of deal and uh started you know my appellate process started my appeals

and went through all of that and right was was actually given 15 minutes of oral argument in front of the eighth circuit um it really looked like i was going to win on these enhancements on the getting rid of the eight levels of enhancement and at the last second the court of appeals came back and said, hey, unfortunately, you signed a plea agreement waiving your right to appeal, which they no longer do. I was going to say, which is invalid now. I did the same thing, but yeah, you're not, you can't stop me. Yeah.

So I took that to the Supreme Court, lost there, wasn't granted cert at that point in time. So my attorney, when he said, look, you're the one doing the time. You're the one doing a sentence you should not be doing. this is wrong, you need to come after me, you know, filing 2255s and ineffective assistance of counsel and going after. So that started a journey of literally three plus years all the way again to the Supreme Court on 2255s. During that time, we hired, we hired private investigators. We found out that the judge indeed did have accounts at that bank. That he actually closed those accounts a month before or, you know, right after the,

right after my case really was moving forward in his court. He did close those accounts, but he failed to disclose because the requirement is it's recusal or put on record why you're not recusing. but that was part of my 2255, which ultimately really upset my judge because now I'm going after my judge. Right. And anybody that's done in 2255 or doesn't know what that process is, you're basically, you're, you know, it's a type of an appeal for different things, claim of innocence to, you know, this. Your attorney could have potentially been ineffective. ineffective assistance of counsel, a bad plea deal, you know, some different things.

Your judge did some things wrong, and you don't waive that right. You never weighed that right, but you have time limits, you know. Yeah, you have one year from one year or you can add three months if you don't do, if you don't apply for cert, you know, because of the three-month waiting period for Supreme Court. But, yeah, basically it's a year. from the time that your appeal is denied and but the judge that makes that decision even if you're going after that judge is the judge that sentenced you right yeah it's so so it just it right so i'm asking that judge to throw out this out for resentencing and to recuse himself and all that

and he obviously doesn't doesn't do that and it ended upset him and I think he was under the circumstances you know I don't think I had a hanging judge or anything like that but I know he was you can tell by the opinion he was rather upset and then he barred me from appealing and they can't they can bar you from appealing that

really that his thing so I appealed it anyway and lost that at the Eighth Circuit. I appealed his decision to bar me from appealing, lost it at the Eighth Circuit, and then took it to the Supreme Court because, hey, this is a thing the Supreme Court had recently decided on of a judge with accounts at a Bank of America account,

with the Bank of America employee. You know, I mean, this is a mirror match. And I'm being barred from appealing that judge's decision on right is you know and the the the Supreme Court never granted cert by the way that took me all the way through 2017 that was a four and a half year process right then when I was like okay I'm serving this entire sentence you know through that but it was just but doing that I was exposed to some top attorneys in the

country that had been incarcerated that throughout my journey and so i started working law libraries with a lot of these men and which gave me i don't know the ability or opportunity i started doing legal work or really helping guys and i won every motion i filed for others and rightfully i would never and i used to tell guys that like i will not do frivolous cases for you. I won't file frivolous paperwork. I began really trying to advocate for drugs minus two. And then I did over 1,500 filings of people to get the two level reduction and get guys sent home and et cetera, et cetera. So started that journey. But part of that journey, and God being God, after I committed myself to him that next day, August 30th of 2013,

was I went through my first prison riot on D-Day or on Pearl Harbor Day, which also happened to be the first Pac-12 football championship, which Arizona State was playing in, my alum, or, you know, my school, and I'm sitting outside. It's December afternoon. It's 22 freaking degrees outside. I got every stitch of clothing I own in prison on. I'm sitting out in the Native Americans TV area because nobody else cared to watch Arizona State football, but those guys did.

So I'm like, hey, what's it going to cost me to watch? I know, Dave, you're a good guy. So you can come out here and watch the game. And it was much ASB was getting blown out that by the third quarter, I'm like, I can't take this anymore. I'm freezing. I'll go inside listening to the rest of the game on my bunk. and go inside and a riot breaks out. So I get my first prison riot over somebody stealing an MP3 player.

And it was basically a race riot of Pisces and whites against blacks. I mean, just... Listen, that's a big deal. It's a big deal. Yeah, it's a big deal. And so I'm watching this and I'm watching the paint guns and tear gas. This thing's going off and, you know. And then I got guys coming up my bunk and they're like, I have a regular window.

We don't, no bars on, because it's like, say it used to be a camp. So like the windows are sitting right here in my office, my home office, I could break the thing and slide it open and actually go out that window. They're like, be ready to go out that window. This thing breaks off the way it is. And all of our cubes had been integrated. They would not. So you had to have two blacks.

You had to have two Hispanics. He had to have two whites, and you had to have one Native American in every eight-man cube, and then the other guy's kind of fell in there. But that was mandated across. And so we've got that all within our group, and I'm watching this thing, and this thing just go off. I'm like, oh, man. So that caused, we had basically had an open yard. The doors were always open between the hours, very simple.

similar to a camp, they never locked our doors because TVs are outside, because computers are outside, phones were outside. They didn't do moves, if you will. Right. In prison moves are on the hour. You got maybe five minutes going out, five minutes inbound, that type of thing. And we could go out to the rec yard where education and everything was, where our computers were, the library, all that stuff, or different parts of the compound. So they brought in a new captain after this riot and they installed a wrought iron gate in between the inner compound and the outer compound basically locking off 75% of all of our phones half the TVs and all of the computers and they instituted moves during this time and so there basically was going to be a laydown

So throughout the prison, they said, hey, nobody's going to wreck or everybody's going to go to wreck. Because what happened was the staff is really upset about this because this yard was not set up to operate in that fashion. And it was really a smooth running yard. And it required, anytime they do something like that and they require these new rules, it's just more, it's more trouble for the staff. They're like, I don't, you're making my job harder. Exactly. And so a lot of the staff that had been there a long time went to the leaders of all these different cars and groups and said

you either all go out to the rec yard or nobody goes out to the wreckyard when they do these moves. So they came back and said, look, this is the dude or da-da-da. Or everybody's going to the dining hall or nobody go to the dining hall or something. Because it was basically you literally had to make a choice in the morning. They open it up. You go out to the wreck yard. use the phone, get on the computers, check your emails, go to the library, what have you, get a workout in.

But they're going to lock that gate. You can't get back to the dining hall for breakfast. So if you wanted to go to breakfast, you couldn't go out. You wanted that. So they passed the word around. Everybody go to the rec yard because nobody's going to go to the dining hall. Everybody go to the rec yard, use phones, do your thing, and da-da-da-da-da. you know, 1,200 inmates, right? And I'm like, and now I'm in, now I've been, this is June now

of 2014. And, you know, I'd already been through one riot and a couple other small really, well, really riots. And now they're finally getting around to this because now the new captain finally shows up. And it's like, hey, I look back at, you know, on December 7th, that whole incident, blah, blah, blah. And so I, I literally, I'm like, this sounds like a really bad idea. I think I'm sleeping in that day. I'm doing a Bible study. I'm going to do this.

I was going to college. I was actually taking all their business classes. Matter of fact, the college that had come on campus there teaching the classes, they had asked me if I would teach a lot of their business classes. Matter of fact, one of the things we were doing was too big to fail. We were going through that documentary and such. And so I was like, yeah, so I was helped teach in some of these classes. So I was working on a project for that and I'm like, I just, I'm staying here.

Well, that breaks loose because now, right, you got probably a thousand guys go out to the yard and you've got everybody else that came inside and or that stayed inside like myself. And I'd made, and I rarely went to breakfast. I usually made my own or I fasted through that time. and then I tried to just eat between like 10 and 4, which lunch is at 10 a.m., 10.30. And they locked us down. They brought in the sort team. So in all their turtle suits, and they basically, that's the prisons type of riot team, SWAT team. They bring them in from USP, Tucson, on, and they descend upon us, and they start yanking guys out.

So this went on for three, four days now. Now they got us locked down. And it's like, hey, none of you guys are doing this and that. So during one of those days, he said, okay, the captain came in and gave speeches to each individual run. So we're going to open the doors. You guys are going to file out. This is direct order.

You guys are all going to look at the dining hall. Let it up. And so the word got around. So the guys, we're the first unit. And they're yelling at us out of the windows because our windows open and all this. And they're like, you guys are traitors, that is up. And the word was out that anybody eats.

It's the last thing you're ever going to do. Right. I mean, just direct threats. And then that's like, and I had actually just ate. So I said, but the captain gave us a direct order. You know, yeah, you're going to. take file that direct order you're going to go in there and you sit down in the dine hall till they dismiss you and then we'll bring the next run in and anybody goes up there and gets

food and so you know the different thing so I said what if we go get food and it's just there and we just don't eat it he's like all right you're we're okay with that said so I went got my food I set it down and I'm sitting down and we had four at a table I'm sitting down with guys I'm talking to. And all of a sudden, an SIS, sergeant, lieutenant walks up to our table and the table behind asks for all of our IDs, so eight IDs, writes them down in different things. And I was like, what's that about? And he goes out, my case manager.

And then so the captain comes in and sees all these other guys, now he dismisses this off. Act, you're yelling at us. And, you know, it's really getting off the chain now. it's actually getting dangerous. And it's like I'm starting to worry about my own safety. And I'm starting. I am worried about my own safety. And they go back in,

in the very next day they come, and I am the third name they call. And they take me outside. And by the way, by self-serrowning through this, I'd never been handcuffed, never been nothing through this entire process. I mean, nothing.

All of a sudden I got belly chain. I got shackles on my ankles. I'm chained up. I got a camera stuck in my face. They're patering down. And they walk me up to the psychology room. They have 30 chairs lined out enough for a bus. And 30 of us, boom, boom, boom.

And they start taking bus loads of us out with the sort teams. They take us out through R&D, strip us down. I'm telling this guy. And they got machine guns. they got the all this stuff i'm like you got a mistake and they're like well you fucked up now because you're going to usp and didn't you do all you they sent me to usp tucson i was on the same no i was on the same run with whitey bulger i'm 10 months into this this deal and i'm accused when they had wrote down our IDs a riot a thing had broke out with one of the other group with one of the other runs

through that by through all the confusion yes i asked lieutenants like i know i got these nine eight names and IDs written out okay they grabbed us along with and basically grabbed leaders of all these cars so they accused me of starting a riot they're such pieces of shit they spent two million dollars on this bringing us all out taking us all the usp two son they say why do he bulgers down the run the da da da da And we're fighting a tooth and nail. They eventually five bus loads out over a week. And I guess, so that it morphed into a food strike because of it.

And that went on for like two or three weeks. And then finally. So and I think ultimately the reason they push so hard me was because I've been doing all this legal work for guys. Right. It was at the end I'll be all. So now I'm in USP Tucson. And now here I went, you know, I'm thinking, I'm in a great position. I just got to do a few years.

I'm going to, I'm going to be able to furlough the camp in Tucson, which I hear is phenomenal. And I'm never going to do this Con Air thing I hear guys talking about. I'm never to be shackled and hear all these horrible stories. Yep. And I mean, USB Tucson for... four months. I'm out and the dog runs and, you know, in and out of the shoe. All of our cases are moving forward. They finding this all guilty through DHO. I mean, it's just a real thing. We got attorneys from all over. We got BOP officials coming in saying, hey, look, cool it with the

attorneys. We'll take care of you guys. And they're like, cool it. No, no. And it's got to quit putting pressure on us. You've got to quit. And eventually they decided, okay, we're going to bust them down to medium from USP to medium, throw me to Oklahoma City, send me to USP Atlanta, which is now a medium, you know, turned into a medium. And that's, oh, that's a hellhole, worst food, unedible, I mean, just terrible place. Then they moved me to Williamsburg, South Carolina, a medium. And during that time, I win my appeal and get the case against me on the charges of starting a riot thrown out. And I'm thinking, and I've got the staff there and everything. We don't even know why you're in prison, McMaster.

We read your case. Why you're in a medium is beyond us. But will you start a new GED program for us while you're here? So I was going into all the units. And I could go through the units. and I was teaching GED and doing all this. I was teaching classes. I'd get 500 guys to sign up for my classes.

I was teaching real estate finance, you know, stocks, all these different things. And so I win my appeal. And so the staff, my case manager, the unit manager, the education department. And at that time, the associate warden was like, look, we're going to get you sent straight to a campaign. It says you should be in a camp. We can get your management variable down. Then a new warden comes in is like, there ain't nobody going to a camp from a medium on my watch. I don't care who it is. So the BOP, even though I'd won that, decides to continue to punish me. And then they send me to Beaumont, Texas. So I'm back to Atlanta. I'm there for a while. Back to Oklahoma City. I'm there for a couple months. Send me to Beaumont, the worst prison.

on the thing. Meantime, I started correspondence courses on, you know, on Christian leadership and Christian counseling and pastoralship and such. And so I do two years in Beaumont, bloody Beaumont, for a reason. Even though I'm in the low, it was worse with the low and medium than the USP. Oh, yeah. Yeah. my last six weeks at

Beaumont five guys died. Yeah, my cousin was at Beaumont and he was like he said and he'd gone from the medium at Coleman to the medium at Beaumont and he was like, there's nothing. He said, this is worse than any pen I've ever been in.

Oh, yeah, yeah. Yeah, it's, yeah, Beaumont's, you know, on its own, you know, do the thing. But, you know, doing the same thing. doing tons of legal work and just meeting a lot of interesting people, some really good people, and just starting that process. And eventually they, you know, I'm supposed to be going to finally to the camp in Tucson, but something happened.

They couldn't, oh, they wouldn't send me to Tucson because the warden that was at Safford, eventually because all these things got overturned the warden at safford was now a warden in Tucson over that camp right they're like we're not sending you back there for your own protection we're worried about retaliation so they eventually sent me to the camp in Taft California which happened to have a Bible college on campus an actual full you know they decided a long time ago that we wanted to have a Bible college on a prison. So I was able to go through that through my doctorate degrees and all that. COVID breaks out and an earthquake hits that tap camp. And all of a sudden, they have to close a camp in the middle of COVID, middle of earthquake

damage, while they're supposed to be sending this home and cares that. And they ship me and 150 other guys in our camp, they shipped us off to another medium and put us in the shoe. for nine straight months and then when they're finally the day before they're supposed to send me home under CARES Act home confinement because of COVID they ship 50 of us to her long the medium and her law put us in quarantine supposed to be going out to the camp there put us in quarantine they're still supposed to be processing me home COVID breaks out and we got guys dying inside the unit that we're in And they leave us locked in there from November 4th to the day before, or two days before Christmas. No phone calls, no showers, no mail, no contact with our families.

They don't know if we're dead or alive. You know, we can't get old. Just everything complete shutdown. They finally send us out to the camp. Finally called my family for the first time. They're like, just freak. I spend Christmas, so I'm there on the camp for seven days. I'm running the track, one of those mornings is 17 degrees outside.

It's snowing. I'm just so happy. I've been from nine straight months. I've been locked in a cell. And I'm just, I'm in shorts and freaking t-shirt running that track, man. And just so happy to be outside in my, the guy I'd been sold with this. entire process and he was my bunky in the camp he comes out and this guy hates the cold he's like dude they're looking for you they're kind to send you home and the intercoms are busted so i go in

they're like you got five minutes pack up your stuff you're going back into quarantine you're going home like can i call my family they're like nope like can i shoot an email i said you got five minutes you got your choice you send an email and pack up your stuff so i shot an email out real quick to to my wife and said, hey, they're sending me home. I think I'll be home in two weeks. Got to go. I go, I throw stuff in a bag as best I can and go pop in to the deal. And I'm sitting in again in basically the shoe in quarantine.

But there is a TV. They got up so I can see out my door and I'm watching January 6th. Okay. And now they're talking about shutting down all the transfers and everybody going home. do that thing but God being God they threw me on a bus in Reno Nevada 30 hours from home

and and you know I made it home on home confinement but you know just and here's the beauty of all that that judge had said I would do half my time right

the day they came and knocked on my cell and Mendota was the day it was exactly to the day half my time right my time served with good time not counting first step back because they hadn't still hadn't gotten around to figuring that out properly and the day i actually went home was half my time exactly of my full sentence yeah but uh so made it home and uh been blessed to

like you say got a job as an executive in a in a company i'm a vice president of business development for a water manufacturer and distributor and nationwide accounts and operations. And I get to, I'm a volunteer pastor in the church that I attend. I do a lot of the baptisms. I teach a lot of the Bible studies. I do these different things. I get to see my grandchildren. I get to, you know, see my family, whether it's over at our house here or, you know,

every now and then get approved to go to their events and such. when do you get your when do you get the ankle monitor so right now i'm scheduled after my first step act reduced my sentence by year i'm scheduled to get my monitor off january 4th of 27 or 2027 so year and a half the 2026 i'm sorry 2026 oh i was going to say that's okay yeah yeah 2026 it was from j was from 2027 um interesting enough when the sentencing commission did the the two-level reduction for what they call zero point offenders, first-time offenders, non-violent, which I qualify for, that would have reduced my sentence by 37 more months, meaning I should have my monitor off two and a half years ago.

But they put a stipulation that nobody could be immediate release until February 1st of this year. So I began the process to file my paperwork. In North Dakota, they determined the court ordered, hey, we want the Federal Public Defender's Office just to handle all this. They'll determine everything. They'll get to you when they get to you. We want them to process it. If they do, we're just rubber stamping them and it'd be approved.

I'm like, okay. So I reach out to North Dakota, and I said, hey, I qualify. I can do all the legal. I can do this motion. I mean, I've done over 1,500 of these motions, one every one, not of those types that's, you know, falling out of bed. And you're like, no, we'll do it, but don't call us, we'll call you, we've got a lot to review. Eventually, I looked, I was like, you guys have, well, they estimate there are 70 cases that qualified, but they had to review everybody that's been sentenced.

And they didn't respond to me until the end of March. of this year, even though it's going on past my time. I'm like, should. And they said, hey, the sentencing commission has determined that you don't qualify under one of the stipulations. There was 10 criteria. And if you had any of those 10, you don't qualify. I'm like, what are you talking about?

They said on the 10th one, it says, if you have the enhancement, the 3B1.1, which is basically the leadership of that, you know, five or more thing that I fought so hard. If you had that, and the way it said was if you have that and continuing criminal enterprise, which we did not have, you don't qualify. So I was like, no, it's. And not or. And not or. And in the determination, because they were filling these sentences and everything else,

So what happened was there was a lot of people with continuing criminal enterprise that were going back trying to get this saying, hey, I didn't, I didn't get the 3B1.1. So the sentencing commission says, well, and means or. So if I had just filed my motion back in October when I was going to file it, the judge were ruled on it sometime in November. December or December for media release February 1st, I would have been done. But I thought, no, okay, I won't make waves. I'll just let the public defender's office do the thing because they're going to rubber stamp it. And I remember I pissed my judge off seven, eight years ago now by bringing up the fact that he had the accounts of the bank and failed to just walls. So I thought, I don't know how long as memory goes back.

But I know mine was one of the largest, if not the largest case in North Dakota. Right. In that court. I'll tell you a real quick story and wrap it up for you on that. But so long story short, I will probably still file in motion so I can appeal it or I'll just ride out these 18 months. You know, but, you know, it's, you know, but about our case and the fact they did. the task force so after i was sentenced to 188 months my attorney comes up to me because i was you know continue to be out on oar never pay never bail or anything i was always oar um so even the

judge is like uh call u s probation in north dakota once a week just to check in i'm like okay and the my attorney says hey the AUSA for North Dakota for Bismarck wants to talk with you and he goes I think we should talk with him and I'm just shell shocked I'm like okay whatever you think so I told my parents to say hey get my wife back to the hotel my attorney will take you take me back and blah blah blah and I sit down and he and he says hey it's a pleasure to meet you I want to shake your hand He says, first off, we've never had a turnout like that in our courtroom. He goes, I talked to every single person.

He goes, they're all, they traveled thousands of miles to get here. We've never had somebody given an allocution like that ever in this court. I'm just here to tell you the judge got the sentence wrong and you need to appeal it. This is the U.S. Attorney for North Dakota, you know, the AUSA for North Dakota. Tell them to appeal this, this sentence was. wrong. They were going in. He was going to give you 235 months. Your allocution got him

down to 188, but he'd painted himself into a box. He goes, I don't even know if, you know, if you guys meet the criteria for, you know, whatever, but you certainly shouldn't be sent to 188 months. You've got to appeal this. And

he goes, you know, so anyway, just that was an interesting sidebar to this, which I brought up during my later appeals. Right. It's at that point, it was like, you know, what do I have to lose? But, you know, not that it helped, but yeah, it just, you know, that process.

So, you know, I know I've got either at the worst case, 18 more months, then get to start the supervised release and start that process and look forward to that. But in the meantime, you know, I see now. looking back, this was the best thing that ever happened to me. Don't recommend it. I did lose, I lost my wife because of that long sentence. She actually opened up her home to me. We were still married legally separated when I came home

on CARES Act and she tried for a couple weeks to to resurrect marriage it just from her side it was just it was never going to happen I tried obviously now I'm a pastor I'm ordained I you know it's just but nothing happened but so through that divorce and all that and I got approval then you know to rent my own place and I've got you know I have a job that you know paid me well and you know certainly can put food on my table and um nothing like what i used to make you know and honestly i don't care about money anymore i know i need to pay the bills um you know i other than that i just don't need it and i met a woman

in bible study that that i was teaching um that led to us being married we just had our one-year anniversary nice as a matter of fact and um you know i'm i'm i'm I mean, her beautiful home that she owns and that she, you know, she's in the education. You know, she's a teacher for special needs and administrator and, you know, somebody else that does not make much money at all. But it's been a blessing, this journey, this, you know, that led me to her, that led me to my relationship that I have with God and Christ, led me into, I work with a number of ministries.

including the ministry that I met in Taft, California with Johnny Erickson Tata and Wheels for the World. And, you know, my life, other than the fact, yes, I lost a marriage. And I hate that. That's not me. And it caused a lot of turmoil for a lot of others, you know, because of my decisions I made through pride. And but outside of that, again, and I did half my time. and i can't you know i cannot look look that gift that blessing without being ever grateful and thankful and as a matter of fact throughout my journey i told you about the gentleman the big guy that

had been shot in the back yeah he said to me my first week that i had moved into that cube with him and the guys i was invited into he said i don't know what something's on my heart and this guy wasn't a christian um something's telling me you're gonna do you're gonna do half your time. And I said, it's funny you say that. The judge said that. Every, and I went to 13 different institutions, by the way, from becoming being accused starting this route. And in every institution I landed, except for TAP, I had to answer for that riot, even though it was supposed to be expunged every single time, right up until 2020 in 2020 when I ended up out in Herlong, finally, right before Christmas when they put me in the camp, I had to answer.

answer for that. You know, you started this riot and this food strike. Right. But every place I went, somebody would walk up to me within the first month and say, I don't know, it's on my heart to say some Christian men and men are men and others not. And you're going to do half your time. Even to a point at Taft, a guy who was a pastor at the church that I'm part of, which is a very large church here in Phoenix Metro,

came up to me because he was one of the teachers of the Bible College and said, give a number. And he goes, that number is seven and a half. He goes, that's when you're going home. I don't see the mechanism. And he goes, I'm just telling you, that's when you're going home. And that's exactly when it all played out, you know, at the end of the day. So I know I'm blessed in the journey.

I know that I did not suffer in the fashion that so many others of our brothers and sisters have suffered through their prison journey, through their, you know, through the prosecution, through some really bad prosecutions, and through some very questionable cases and questionable reasons. or questionable sentences where they pile on, but I guess I wouldn't trade it in hindsight or retrospect. I know that for a fact. And it's really given me, I work, and I won't speak real deeply to this, but I work a lot with Washington, D.C. I work a lot with both Republicans and Democrats

on both sides of the aisles on a lot of criminal justice reform. I work a lot with, senators, congressmen, and I work a lot with different advocacy groups and agencies, both very conservative, some very progressive and some very, you know, nonpartisan, very neutral. And I work at the highest levels with those and have a voice at that table. It doesn't help me necessarily. And I don't, I got all the help I already need. I'm, you know, but really, to help make, you know, changes in our system that hopefully things like the First Step Act in proper implementation and, you know, a better pre-release custody experience that's more

helpful for, you know, getting people in a job all the way down to, you know, consulting and doing some different things. And consulting in the business world like you've done and are doing across just some of that insight. you know cautionary tale to hey this is the way i would do it hey i appreciate you guys watching the interview if you liked it please hit the thumbs up hit the subscribe button hit the bell so you get notified videos just like this um also please consider joining my patreon and i really appreciate you guys watching see you