A lesson learned

My experience with the Kerodins has been both expensive and valuable. I'm out close to $2800 total between III Arms Company and donations to their dojo and IIIPS. The first I thought of as an investment, and as such I expected the money to be used specifically to get a firearms production company started. Start-up capital. Now, anyone with investment experience knows that start-ups have a very small chance of survival, let alone success. It's a high-risk gamble, but there are certain times when the gamble is worth it, even if it's not a monetary success.

With investments, you don't always expect to see returns, but you do expect a certain degree of accountability and transparency from those to whom you've entrusted your money. With III Arms Company, it's not that it failed, it's the question of accountability on the part of the Kerodins, and their lack of openness with the Founding Members. We gave them money for a specific purpose, we would like to have a detailed accounting of where it went. The problem is also the best lesson learned: while we gave money for the purpose, and while we were "honored" as Founding Members of a new company, none of us received anything indicating us as legal owners of the company. Nothing on the financial record establishing a legal right for any donor to claim over the company. What does this mean exactly? Well, it means that the Founding Members have as much claim to the company assets, records, or profits as anyone not sending money to the Kerodins. Exactly zero. Once the money changed hands, without any legal documents of ownership, it became the Kerodins' property. With only their names on ownership documents and business accounts, the Founders were effectively shut out of any claims or liabilities. That is the one good thing about this, any lawsuits against III Arms Company by the government or purchasers go straight to the Kerodins and no Founding Member will get dragged into it.

So Lesson #1:

When investing in any business enterprise, get a contract, get acknowledgement in writing that you have a legal stake in the business that entitles you to quarterly statements, rights to liquidated assets in case of a bankruptcy, and a share of the profits if it succeeds. Have this documentation signed, dated, notarized if possible and in your possession. 

Now let's talk donations and gifts. After the III Arms debacle, all of the enterprises the Kerodins came up with and promoted fell into the "donation and gift" category. Nothing was sold as a for profit enterprise. No one was offered a stake in the St. Maries dojo, the Kerodins made it very clear that they were soliciting gifts to make the dojo something that would reflect positively on the Patriot community. This was an emotional appeal, "do it for the Community". Of course, the only people who directly benefited from the gifts purchased on Amazon and sent directly to the Kerodins were...you guessed it, the Kerodins. All the money collected for the TOC? Donations/gifts. Money collected as "dues" for the III Patriot Society? Donations/gifts. There was no promise or guarantees made by the Kerodins for any of it, but that doesn't matter. Legally, a donation or monetary gift becomes the property of the recipient and the giver relinquishes all control over it. You can ask for proof, verification or results until you're blue in the face, but the Kerodins are not legally required to respond. As the "recipients of gifts", they have no responsibility to use the funds in any manner other than how they desire.

And now Lesson #2:

When considering donating or gifting money or materials to any person or entity, understand that once that money/material leaves your possession, it becomes the recipient(s)' possession to do with as they will. Be very sure of the nature of the recipient before donating.  Your only recourse, once you believe the recipient is misusing donations, is to stop donating. Period.

So there you have it in a nutshell.

Don't invest without legal documentation, a handshake just isn't enough anymore, and for some, words mean nothing.

Don't donate money/materials and expect to have any say or control over how it's used by the recipient.

I'm not as trusting as I once was, I've grown up.