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Old 05-13-2013, 01:17 PM   #81
BaDiNfLuEnCe
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I see thats biggest mistake was switching insurance companies.. At a time like that, knowing your expecting big lump sum back, i would have waited to switch companies
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Old 05-13-2013, 01:33 PM   #82
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Originally Posted by BaDiNfLuEnCe View Post
I see thats biggest mistake was switching insurance companies.. At a time like that, knowing your expecting big lump sum back, i would have waited to switch companies
When he switched insurance companies, the theft had not occured. Had it occured with the other insurance company HPF would have staying in business.
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Old 05-13-2013, 01:47 PM   #83
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Originally Posted by Forcefed M3 View Post
When he switched insurance companies, the theft had not occured. Had it occured with the other insurance company HPF would have staying in business.
Read it wrong.. Understand now... Props to you keeping a level head during this situation
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Old 05-13-2013, 02:02 PM   #84
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Was the website revamp the reason hpf was dropped from Amazon? Or the fraud? Or the cashflow?
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Old 05-13-2013, 02:59 PM   #85
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Originally Posted by SPDu4ea View Post
Was the website revamp the reason hpf was dropped from Amazon? Or the fraud? Or the cashflow?
I don't know the answer on that, it seemed like a small issue compared to the issues at hand.
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Old 05-13-2013, 04:52 PM   #86
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Quote:
Originally Posted by Forcefed M3 View Post
Your not as smart as you think Kenton, for instance. The company is not doing a bankruptcy for one! 52% of small business's fail with in 15 years. You somehow take your personal views and twist them into some sort of fact with our having a single fact correct! There was not a single law broken that's a fact. The stupid commemts about drug use shows the dept if stupidity in this thread. The amount of "lawyers" on this forum is pretty shocking. I will let you in on a couple of details.
1. Chris contacted the Portland police dept the second theft was known, they took 3 weeks to watch David. Remember it's not a murder and is not high up on the list. Problem was it wasn't just Credit Card fraud, there was wire fraud. Hate to burst people's bubble but there was a lot of other customers than our cars. The credit card companies and banks waited until David was convicted. All hell broke loose with them the week prior to closing.

2. More than 6 months before the theft Chris changed insurance companies for a cheaper rate with what was to be "same" type of coverage. The emails between the agent and Chris supported that argument. Problem was the theft coverage and the damage to reputation because of theft changed from $500,000 to $25,000.

3. Here was a big portion of why they failed, they had a sliding scale lease clause. At the 10 year mark the rent would reset to current market value. HPF rent went from $8500 permonth to more than $13,000. Chris and I had been working on sub leasing out more than half of his space. We had completed that two weeks before they closed.

4. The turbo kit sales plunged from 3 per month to one every other month, the only reason this happened was the massive delay in the AEM Infinity. It was supposed to be released 9 months ago. This was a major blow to HPF, that set it up for the next event that killed them.

5. HPF was tagged as a possible fraud location with the credit card companies due to the credit card charge backs looming during David's trial. They raised the processing fee from 1.5% to more than 7.75%. This was brought back down to 1.5% during the repayment talks. But the 7.75 had been cutting deep for 6 months.

6. HPF released a major update to their website 4 weeks before closing, at this point HPF treading water and had worked out repayment plans to the credit card companies. This is a very important part to understand. Each credit card company would get a minimum amount each month. This wasn't a bad deal because HPF was going to appeal the prior case a freeze the payments. They had released Josh the companies 2nd highest paid employee. With the subleases done and Joshes wages freed up it added $125,000 per year! The software update was released on a Tuesday, prior to this the online side did $50,000 per week. Over the next 10 days the sales plunged to $4500-$6000. They quickly switched back to the old version. Kirk can verify this plunge. What ever it was it followed it back to version 3. HPF worked frantically trying to find what they problem was. We are 10 days from closing when Chris hires an outside company to try to find and stop the problem. The problem was located 4 days before they closed. Monday the day they closed, sales had dropped by 75% and everyone had forgotten about the payment plan. Everyone at HPF was focused on the website sales plunging. The first major payment to the credit card companies was to happen that Monday, $32,000 worth of payment. Attempts were made to delay it for 10 days. Calls to their attorneys did not stop it fast enough, in fact it started a frenzy of debit attempts. By 1:00pm it was clear that HPF had no way to make payroll. Under Oregon law, you have to close the second you know you can't make payroll. That's why there was a mid day closure.

7. HPF's property management locked the building delaying the shipping.

They were other mistakes made also, such as that stupid drag car. My point is there was no crazy mismanagement or drug use as people have claimed. My accountant and attorney had been watching the spending. HPF could have entered into chapter 11 bankruptcy had it seen the what was going to happen on Monday. But with the funds yanked out, it left no money for payroll. I was trying to free up the funds to keep it open, but I was weeks out not days. I paid the $26,100 to the property management company to get access back in. Keys will be delivered hopefully today. I expect the orders by the back door to leave very quickly. Guys with cars in the shop, you will hear from Kirk shortly. Once I sell off the website and turbo kit rights I think there should be enough to repay the cash deposit guys. HPF did 94% drop shipping, there was no warehouse full of parts to sell. I really wish there was!
Wow, good stuff and thanks for explaining and clearing up rumors.
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Old 05-14-2013, 08:30 AM   #87
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I orderd a clutch and flywheel on 5/3/2013. Invoice # 243057. Please PM me or contact me at kyleg086@gmail.com and I will send you the invoice. Any help is greatly appreciated. Thanks for sticking with the customers.

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Old 05-14-2013, 09:17 AM   #88
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Quote:
Originally Posted by Forcefed M3 View Post
Your not as smart as you think Kenton, for instance. The company is not doing a bankruptcy for one! 52% of small business's fail with in 15 years. You somehow take your personal views and twist them into some sort of fact with our having a single fact correct! There was not a single law broken that's a fact. The stupid commemts about drug use shows the dept if stupidity in this thread. The amount of "lawyers" on this forum is pretty shocking. I will let you in on a couple of details.
1. Chris contacted the Portland police dept the second theft was known, they took 3 weeks to watch David. Remember it's not a murder and is not high up on the list. Problem was it wasn't just Credit Card fraud, there was wire fraud. Hate to burst people's bubble but there was a lot of other customers than our cars. The credit card companies and banks waited until David was convicted. All hell broke loose with them the week prior to closing.

2. More than 6 months before the theft Chris changed insurance companies for a cheaper rate with what was to be "same" type of coverage. The emails between the agent and Chris supported that argument. Problem was the theft coverage and the damage to reputation because of theft changed from $500,000 to $25,000.

3. Here was a big portion of why they failed, they had a sliding scale lease clause. At the 10 year mark the rent would reset to current market value. HPF rent went from $8500 permonth to more than $13,000. Chris and I had been working on sub leasing out more than half of his space. We had completed that two weeks before they closed.

4. The turbo kit sales plunged from 3 per month to one every other month, the only reason this happened was the massive delay in the AEM Infinity. It was supposed to be released 9 months ago. This was a major blow to HPF, that set it up for the next event that killed them.

5. HPF was tagged as a possible fraud location with the credit card companies due to the credit card charge backs looming during David's trial. They raised the processing fee from 1.5% to more than 7.75%. This was brought back down to 1.5% during the repayment talks. But the 7.75 had been cutting deep for 6 months.

6. HPF released a major update to their website 4 weeks before closing, at this point HPF treading water and had worked out repayment plans to the credit card companies. This is a very important part to understand. Each credit card company would get a minimum amount each month. This wasn't a bad deal because HPF was going to appeal the prior case a freeze the payments. They had released Josh the companies 2nd highest paid employee. With the subleases done and Joshes wages freed up it added $125,000 per year! The software update was released on a Tuesday, prior to this the online side did $50,000 per week. Over the next 10 days the sales plunged to $4500-$6000. They quickly switched back to the old version. Kirk can verify this plunge. What ever it was it followed it back to version 3. HPF worked frantically trying to find what they problem was. We are 10 days from closing when Chris hires an outside company to try to find and stop the problem. The problem was located 4 days before they closed. Monday the day they closed, sales had dropped by 75% and everyone had forgotten about the payment plan. Everyone at HPF was focused on the website sales plunging. The first major payment to the credit card companies was to happen that Monday, $32,000 worth of payment. Attempts were made to delay it for 10 days. Calls to their attorneys did not stop it fast enough, in fact it started a frenzy of debit attempts. By 1:00pm it was clear that HPF had no way to make payroll. Under Oregon law, you have to close the second you know you can't make payroll. That's why there was a mid day closure.

7. HPF's property management locked the building delaying the shipping.

They were other mistakes made also, such as that stupid drag car. My point is there was no crazy mismanagement or drug use as people have claimed. My accountant and attorney had been watching the spending. HPF could have entered into chapter 11 bankruptcy had it seen the what was going to happen on Monday. But with the funds yanked out, it left no money for payroll. I was trying to free up the funds to keep it open, but I was weeks out not days. I paid the $26,100 to the property management company to get access back in. Keys will be delivered hopefully today. I expect the orders by the back door to leave very quickly. Guys with cars in the shop, you will hear from Kirk shortly. Once I sell off the website and turbo kit rights I think there should be enough to repay the cash deposit guys. HPF did 94% drop shipping, there was no warehouse full of parts to sell. I really wish there was!
Good to hear the full story. Major props to both Derek and Kirk for handling this situation the way they are.
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Old 05-14-2013, 02:40 PM   #89
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Since I put a deposit down for a turbo kit can I just use the money for parts ?... Would that be easier ?... Or do I wait to see if I get my deposit back?
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Old 05-14-2013, 03:26 PM   #90
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Kirk am i going to be able to get my money back ?
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Old 05-14-2013, 06:23 PM   #91
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Quote:
Originally Posted by Forcefed M3 View Post
Your not as smart as you think Kenton, for instance. The company is not doing a bankruptcy for one! 52% of small business's fail with in 15 years. You somehow take your personal views and twist them into some sort of fact with our having a single fact correct! There was not a single law broken that's a fact. The stupid commemts about drug use shows the dept if stupidity in this thread. The amount of "lawyers" on this forum is pretty shocking. I will let you in on a couple of details.
1. Chris contacted the Portland police dept the second theft was known, they took 3 weeks to watch David. Remember it's not a murder and is not high up on the list. Problem was it wasn't just Credit Card fraud, there was wire fraud. Hate to burst people's bubble but there was a lot of other customers than our cars. The credit card companies and banks waited until David was convicted. All hell broke loose with them the week prior to closing.

2. More than 6 months before the theft Chris changed insurance companies for a cheaper rate with what was to be "same" type of coverage. The emails between the agent and Chris supported that argument. Problem was the theft coverage and the damage to reputation because of theft changed from $500,000 to $25,000.

3. Here was a big portion of why they failed, they had a sliding scale lease clause. At the 10 year mark the rent would reset to current market value. HPF rent went from $8500 permonth to more than $13,000. Chris and I had been working on sub leasing out more than half of his space. We had completed that two weeks before they closed.

4. The turbo kit sales plunged from 3 per month to one every other month, the only reason this happened was the massive delay in the AEM Infinity. It was supposed to be released 9 months ago. This was a major blow to HPF, that set it up for the next event that killed them.

5. HPF was tagged as a possible fraud location with the credit card companies due to the credit card charge backs looming during David's trial. They raised the processing fee from 1.5% to more than 7.75%. This was brought back down to 1.5% during the repayment talks. But the 7.75 had been cutting deep for 6 months.

6. HPF released a major update to their website 4 weeks before closing, at this point HPF treading water and had worked out repayment plans to the credit card companies. This is a very important part to understand. Each credit card company would get a minimum amount each month. This wasn't a bad deal because HPF was going to appeal the prior case a freeze the payments. They had released Josh the companies 2nd highest paid employee. With the subleases done and Joshes wages freed up it added $125,000 per year! The software update was released on a Tuesday, prior to this the online side did $50,000 per week. Over the next 10 days the sales plunged to $4500-$6000. They quickly switched back to the old version. Kirk can verify this plunge. What ever it was it followed it back to version 3. HPF worked frantically trying to find what they problem was. We are 10 days from closing when Chris hires an outside company to try to find and stop the problem. The problem was located 4 days before they closed. Monday the day they closed, sales had dropped by 75% and everyone had forgotten about the payment plan. Everyone at HPF was focused on the website sales plunging. The first major payment to the credit card companies was to happen that Monday, $32,000 worth of payment. Attempts were made to delay it for 10 days. Calls to their attorneys did not stop it fast enough, in fact it started a frenzy of debit attempts. By 1:00pm it was clear that HPF had no way to make payroll. Under Oregon law, you have to close the second you know you can't make payroll. That's why there was a mid day closure.

7. HPF's property management locked the building delaying the shipping.

They were other mistakes made also, such as that stupid drag car. My point is there was no crazy mismanagement or drug use as people have claimed. My accountant and attorney had been watching the spending. HPF could have entered into chapter 11 bankruptcy had it seen the what was going to happen on Monday. But with the funds yanked out, it left no money for payroll. I was trying to free up the funds to keep it open, but I was weeks out not days. I paid the $26,100 to the property management company to get access back in. Keys will be delivered hopefully today. I expect the orders by the back door to leave very quickly. Guys with cars in the shop, you will hear from Kirk shortly. Once I sell off the website and turbo kit rights I think there should be enough to repay the cash deposit guys. HPF did 94% drop shipping, there was no warehouse full of parts to sell. I really wish there was!
posted this on e90post, hope you dont mind.

but the absolute garbage people have posted in some places is disgusting.
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Old 05-14-2013, 06:27 PM   #92
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Quote:
Originally Posted by tipsyhemi View Post
posted this on e90post, hope you dont mind.

but the absolute garbage people have posted in some places is disgusting.
You in the market for a bridge?
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Old 05-14-2013, 06:43 PM   #93
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If Oregan law is anything like Australia if you keep trying to trade while insolvent the financial responsibility all moves to directors. When it gets to that point you can't blame Chris for closing up.

Insolvent trading can have serious consequences for directors. There are various penalties associated with insolvent trading, including civil penalties, compensation proceedings and criminal charges.

That's Australia but I assume America has the same if not close to the same consequences

Quote:
Originally Posted by nicholse46 View Post
Since I put a deposit down for a turbo kit can I just use the money for parts ?... Would that be easier ?... Or do I wait to see if I get my deposit back?
Not likely I'd say. As Forcefed said they had no parts to sell off. So you might be lucky to even get your cash deposit back. It sounds like Forcefed is making an effort to sell what he can but it will be creditors, tax office, banks that will get paid first, then employees, then at the end the customers. And if there is no money at the end to pay customers it's too bad. If there is nothing left that's it. You can't squeeze blood out of a stone.

It's sad for people to lose money but it's a good lesson to protect yourself in the future. Use a credit card for deposits so your money is secure in situations like this.
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Old 05-14-2013, 09:47 PM   #94
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Thanks Derek. ~7% processing fees with less business coming in because of various logical reasons? Crippling.
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Old 05-15-2013, 01:54 AM   #95
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i'm not an attorney but i've had some psycho ex girlfriends who've tried to ''come up" on my toys.
so someone please tell me why no one has mentioned this....

call the police and request a civil ''stand by'' to get your car. have the police contact whomever has the keys to the building and keys to YOUR car.
its YOUR car , GO get IT!

i'm sure there is some BS oregon law (because oregon maintains the blue ribbon in those) that negates a civil stand by but if you love your toys as much as i do then it's only coming from my cold dead fingers! give it a try.
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Old 05-15-2013, 02:00 AM   #96
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People with cars might get their vehicles but us people outside the States might not ever see the parts we paid for. I am depending on derek to make things right and ship the parts I paid for as the parts are way more important to me than the Money.

Thanks for Derek and Kirk for their support in this situation.
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Old 05-15-2013, 02:27 AM   #97
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Quote:
Originally Posted by ForceFed M3
Your not as smart as you think Kenton
Object, Kenton is one of the youngest people in his field and does VERY well. Which doesn't necessarly make him smart.. but that aside I've had the pleasure of knowing him now for almost two years.. and he is one smart dude overall.. not just within his industry. He's smart enough not to dump money into a sinking ship. Truth be told I think you're smart enough not to do that as well, which is why I think the transfer of the turbo kit assets was pre-planned.
Quote:
Originally Posted by ForceFed M3
The company is not doing a bankruptcy for one!
It should be.. once your done liquidating the assets yourself as opposed to doing it so through bankruptcy court and a trustee which if items aren't sold at FMV and proceeds aren't used to pay back outstanding debts someone's going to get in hot water.
Quote:
Originally Posted by ForceFed M3
52% of small business's fail with in 15 years.
The quote you're looking for is from the SBA and its that 50% of small businesses fail within the first 5 years.
Quote:
Originally Posted by ForceFed M3
There was not a single law broken that's a fact.
Taking someone's money and not delivering them the goods is theft in my opinion.. protecting yourself behind an LLC may protect you but call me the moral police.. I call that theft. Selling off goods prior to immenint insolvancy is pretty questionable as well. ESPECIALLY if those assets aren't going back into the company to pay off debts/liabilities.

Quote:
Originally Posted by ForceFed M3
1. Chris contacted the Portland police dept the second theft was known, they took 3 weeks to watch David. Remember it's not a murder and is not high up on the list. Problem was it wasn't just Credit Card fraud, there was wire fraud. Hate to burst people's bubble but there was a lot of other customers than our cars. The credit card companies and banks waited until David was convicted. All hell broke loose with them the week prior to closing.
I'm seriously having a difficult time understanding how David skimming tanked the business 2 years later. That and the scheme was taking money primarly from HPF not the customer, in some cases like my situation David attempted to take money from me but that was as he left the company knowing his scheme was colapsing on itself. Blame is being redirected torwards David for the businesses failure.. its an easy cop-out and many forums/individuals are actually buying it. I'm not saying it didn't hurt HPF but it wasn't as if David emptied the bank account and ran off to Mexico and 3 weeks later checks couldn't be printed for rent/etc.
Source: I know David's scheme, 14 years ago I worked fraud cases simlar to davids all day long for a large retailer... I wrote a 4 page email to Chris detailing exactly how the fraud was being commited the minute I discovered it. I made frantic calls to Chris, Maverick, Kenton, and Kirk the minute I saw the pattern and knew what he was doing.
Quote:
Originally Posted by ForceFed M3
2. More than 6 months before the theft Chris changed insurance companies for a cheaper rate with what was to be "same" type of coverage. The emails between the agent and Chris supported that argument. Problem was the theft coverage and the damage to reputation because of theft changed from $500,000 to $25,000.
This is a bummer, but if Chris was banking on recieving $200k from the lawsuit that was hedging a bad bet... which leads back to mismanagement, poor decisions.
Quote:
Originally Posted by ForceFed M3
3. Here was a big portion of why they failed, they had a sliding scale lease clause. At the 10 year mark the rent would reset to current market value. HPF rent went from $8500 permonth to more than $13,000. Chris and I had been working on sub leasing out more than half of his space. We had completed that two weeks before they closed.
I've never heard of a sliding scale lease clause.. this isn't a mortage or commercial loan, they don't generally do that, the whole point of a 10 year lease is to lock in at favorable rates.
Source: I have many property leases, both commercial and otherwise.
Quote:
Originally Posted by ForceFed M3
4. The turbo kit sales plunged from 3 per month to one every other month, the only reason this happened was the massive delay in the AEM Infinity. It was supposed to be released 9 months ago. This was a major blow to HPF, that set it up for the next event that killed them.
Buying $50k in AEM Infinities likely net'd Chris a much deeper discount than if he was to have bought them piece meal.. not to mention the volume of AEM Chris was doing likely would have put him in a wholesale bracket. The idea to get a few extra points on product with a $50k purchase of the Infinity was very poor judgement, especially when the kit was now selling at 15% of the rate it was previously. He should have piece mealed the Infinities as kits were sold, keeping only a handfull instock. I believe the reasoning behind sending off a check to AEM prior to going under was to extract more money and protect future profits of sold kits once "Derek's Speed Shop" opens up on E46F. That and $50k sounds like it would have covered about 4 months of rent.. if I was going broke and I had the choice between paying my back rent or paying the electricity.. obviously there's no ****ing point in paying the electricity if you can't make your rent payment.. so I question the motive there. I believe the slump in kit sales was not due to the infinity alone but MaxPSI, the Infinity, ProEFI .. all these options surfacing likely put everyone on a 'wait and see' list before making the decision... which certainly hurt HPF's cash flow, no doubt there.
Quote:
Originally Posted by ForceFed M3
5. HPF was tagged as a possible fraud location with the credit card companies due to the credit card charge backs looming during David's trial. They raised the processing fee from 1.5% to more than 7.75%. This was brought back down to 1.5% during the repayment talks. But the 7.75 had been cutting deep for 6 months.
I'm just going to flat out call BS on this one. There are high risk CC processing companies out there that don't charge anywhere near 7.75%.. who was charging back items? Did David pull a fraud that none of us are aware of, such as taking customers credit cards and charging them up or doing cash advances on them? Who was charging back items? His whole scheme primarly revolved around alerting invoices post sale and then reapplying those credits to new invoices. That hurts HPF not the customer.. but like I mentioned, in some cases he didn't have enough margin to cover the difference and thats why I wound up with $4k+ extra on my invoice. I think there were only a few customers with invoices the size of mine that would have had that big of a gap.

Quote:
Originally Posted by ForceFed M3
6. HPF released a major update to their website 4 weeks before closing, at this point HPF treading water and had worked out repayment plans to the credit card companies. This is a very important part to understand. Each credit card company would get a minimum amount each month. This wasn't a bad deal because HPF was going to appeal the prior case a freeze the payments. They had released Josh the companies 2nd highest paid employee. With the subleases done and Joshes wages freed up it added $125,000 per year! The software update was released on a Tuesday, prior to this the online side did $50,000 per week. Over the next 10 days the sales plunged to $4500-$6000. They quickly switched back to the old version. Kirk can verify this plunge. What ever it was it followed it back to version 3. HPF worked frantically trying to find what they problem was. We are 10 days from closing when Chris hires an outside company to try to find and stop the problem. The problem was located 4 days before they closed. Monday the day they closed, sales had dropped by 75% and everyone had forgotten about the payment plan. Everyone at HPF was focused on the website sales plunging. The first major payment to the credit card companies was to happen that Monday, $32,000 worth of payment. Attempts were made to delay it for 10 days. Calls to their attorneys did not stop it fast enough, in fact it started a frenzy of debit attempts. By 1:00pm it was clear that HPF had no way to make payroll. Under Oregon law, you have to close the second you know you can't make payroll. That's why there was a mid day closure.
HPF let go of MANY staff members over the last 2 years, I can think of 4 or 5 off the top of my head. Most of which were not replaced with outside staff but instead internal staff movements. Like Eric moving to the shop side from the Store side (iirc). That was a smart move as most were on the shop side and with turbo kit sales sliding so fast that made sense. What didn't make sense was knocking a hole in the wall and expanding to an additional 5ksqft that was previously sublet. It does make sense to sublet the shop/other space but seemed to little to late. I remember seeing the new website roll out, and then roll back. The new website was a great investment and I actually heard from a friend that previously all items would show up as compatible with his car which he knew weren't and that the new version resolved that. I also saw some shipping issues with the new website but heard those were resolved in another update. I did see the website flip back n forth for a few weeks/month there.. when you run a cash flow business and the cash stops flowing.. that can screw up some ****. I don't doubt it for a minute. This is likely more plausable than most of the other items listed. I'm still not following all these credit card company payments, unless I'm mistaken your dealings with merchant services was inbound cash.. why would you owe them anything, if someone does a charge back (at least with my merchant accounts) it comes out of my next deposit from the merchant.
Quote:
Originally Posted by ForceFed M3
7. HPF's property management locked the building delaying the shipping.
Who was planning on doing these shipments, Chris had just let go of everyone involved in that. Was he going to let everyone go and then go back into that area and start randomly labling and shipping items? How would he even know what to ship where? Why not give everyone till the end of the day.. it is pretty apparent while everyone there would likely hate Chris for the situation they clearly would have tried to pull through for their customers.
Quote:
Originally Posted by ForceFed M3
They were other mistakes made also, such as that stupid drag car.
I have a bit of experience building expensive cars with short time frames (all joking aside) and I can attest.. that was an awful idea and an expensive one. Not to mention reworking the track car. Truth be told both cars should have been sold 2-3 years ago.. they were past their marketing prime. We'd seen them over and over and over again at event after event.
Quote:
Originally Posted by ForceFed M3
My point is there was no crazy mismanagement or drug use as people have claimed.
There was clearly mismanagement.. and when I say mismangement I'm not saying extrapolating all the money from the company knowing you're not going to make payroll/etc.. I'm saying just day to day mismanagement.. as in spending $50k on ECU's for a Turbo kit thats doing 1/6th of the sales it was just a year ago.
Quote:
Originally Posted by ForceFed M3
My accountant and attorney had been watching the spending. HPF could have entered into chapter 11 bankruptcy had it seen the what was going to happen on Monday. But with the funds yanked out, it left no money for payroll. I was trying to free up the funds to keep it open, but I was weeks out not days. I paid the $26,100 to the property management company to get access back in.
Fire your accountant and attorney asap. They are giving you horendous advice. Why are you continuing to dump money into the company. Where is your bennefit to trying to clean up all of this. I get that Kirk is trying to help out his customers and that makes sense, and it would make sense if you were trying to coordinate and assist as well but your involvement in all of this seems to be way more than makes sense. Where is Chris? Did Chris sell you the company for pennies on the dollar and dip? There are huge holes in all of this.. and while I believe Chris was trying to run a legitmate business and did so obviously for many many years.. the behavoir the last few weeks here seems to be more of an every many for himself move. Is he trying now to protect his customers and whats left of the business or is he trying to protect his lifestyle?
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Old 05-15-2013, 06:05 AM   #98
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Old 05-15-2013, 06:17 AM   #99
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Quote:
Originally Posted by MarcusLSB View Post
Object, Kenton is one of the youngest people in his field and does VERY well. Which doesn't necessarly make him smart.. but that aside I've had the pleasure of knowing him now for almost two years.. and he is one smart dude overall.. not just within his industry. He's smart enough not to dump money into a sinking ship. Truth be told I think you're smart enough not to do that as well, which is why I think the transfer of the turbo kit assets was pre-planned.

It should be.. once your done liquidating the assets yourself as opposed to doing it so through bankruptcy court and a trustee which if items aren't sold at FMV and proceeds aren't used to pay back outstanding debts someone's going to get in hot water.

The quote you're looking for is from the SBA and its that 50% of small businesses fail within the first 5 years.

Taking someone's money and not delivering them the goods is theft in my opinion.. protecting yourself behind an LLC may protect you but call me the moral police.. I call that theft. Selling off goods prior to immenint insolvancy is pretty questionable as well. ESPECIALLY if those assets aren't going back into the company to pay off debts/liabilities.


I'm seriously having a difficult time understanding how David skimming tanked the business 2 years later. That and the scheme was taking money primarly from HPF not the customer, in some cases like my situation David attempted to take money from me but that was as he left the company knowing his scheme was colapsing on itself. Blame is being redirected torwards David for the businesses failure.. its an easy cop-out and many forums/individuals are actually buying it. I'm not saying it didn't hurt HPF but it wasn't as if David emptied the bank account and ran off to Mexico and 3 weeks later checks couldn't be printed for rent/etc.
Source: I know David's scheme, 14 years ago I worked fraud cases simlar to davids all day long for a large retailer... I wrote a 4 page email to Chris detailing exactly how the fraud was being commited the minute I discovered it. I made frantic calls to Chris, Maverick, Kenton, and Kirk the minute I saw the pattern and knew what he was doing.

This is a bummer, but if Chris was banking on recieving $200k from the lawsuit that was hedging a bad bet... which leads back to mismanagement, poor decisions.

I've never heard of a sliding scale lease clause.. this isn't a mortage or commercial loan, they don't generally do that, the whole point of a 10 year lease is to lock in at favorable rates.
Source: I have many property leases, both commercial and otherwise.

Buying $50k in AEM Infinities likely net'd Chris a much deeper discount than if he was to have bought them piece meal.. not to mention the volume of AEM Chris was doing likely would have put him in a wholesale bracket. The idea to get a few extra points on product with a $50k purchase of the Infinity was very poor judgement, especially when the kit was now selling at 15% of the rate it was previously. He should have piece mealed the Infinities as kits were sold, keeping only a handfull instock. I believe the reasoning behind sending off a check to AEM prior to going under was to extract more money and protect future profits of sold kits once "Derek's Speed Shop" opens up on E46F. That and $50k sounds like it would have covered about 4 months of rent.. if I was going broke and I had the choice between paying my back rent or paying the electricity.. obviously there's no ****ing point in paying the electricity if you can't make your rent payment.. so I question the motive there. I believe the slump in kit sales was not due to the infinity alone but MaxPSI, the Infinity, ProEFI .. all these options surfacing likely put everyone on a 'wait and see' list before making the decision... which certainly hurt HPF's cash flow, no doubt there.

I'm just going to flat out call BS on this one. There are high risk CC processing companies out there that don't charge anywhere near 7.75%.. who was charging back items? Did David pull a fraud that none of us are aware of, such as taking customers credit cards and charging them up or doing cash advances on them? Who was charging back items? His whole scheme primarly revolved around alerting invoices post sale and then reapplying those credits to new invoices. That hurts HPF not the customer.. but like I mentioned, in some cases he didn't have enough margin to cover the difference and thats why I wound up with $4k+ extra on my invoice. I think there were only a few customers with invoices the size of mine that would have had that big of a gap.


HPF let go of MANY staff members over the last 2 years, I can think of 4 or 5 off the top of my head. Most of which were not replaced with outside staff but instead internal staff movements. Like Eric moving to the shop side from the Store side (iirc). That was a smart move as most were on the shop side and with turbo kit sales sliding so fast that made sense. What didn't make sense was knocking a hole in the wall and expanding to an additional 5ksqft that was previously sublet. It does make sense to sublet the shop/other space but seemed to little to late. I remember seeing the new website roll out, and then roll back. The new website was a great investment and I actually heard from a friend that previously all items would show up as compatible with his car which he knew weren't and that the new version resolved that. I also saw some shipping issues with the new website but heard those were resolved in another update. I did see the website flip back n forth for a few weeks/month there.. when you run a cash flow business and the cash stops flowing.. that can screw up some ****. I don't doubt it for a minute. This is likely more plausable than most of the other items listed. I'm still not following all these credit card company payments, unless I'm mistaken your dealings with merchant services was inbound cash.. why would you owe them anything, if someone does a charge back (at least with my merchant accounts) it comes out of my next deposit from the merchant.

Who was planning on doing these shipments, Chris had just let go of everyone involved in that. Was he going to let everyone go and then go back into that area and start randomly labling and shipping items? How would he even know what to ship where? Why not give everyone till the end of the day.. it is pretty apparent while everyone there would likely hate Chris for the situation they clearly would have tried to pull through for their customers.

I have a bit of experience building expensive cars with short time frames (all joking aside) and I can attest.. that was an awful idea and an expensive one. Not to mention reworking the track car. Truth be told both cars should have been sold 2-3 years ago.. they were past their marketing prime. We'd seen them over and over and over again at event after event.

There was clearly mismanagement.. and when I say mismangement I'm not saying extrapolating all the money from the company knowing you're not going to make payroll/etc.. I'm saying just day to day mismanagement.. as in spending $50k on ECU's for a Turbo kit thats doing 1/6th of the sales it was just a year ago.

Fire your accountant and attorney asap. They are giving you horendous advice. Why are you continuing to dump money into the company. Where is your bennefit to trying to clean up all of this. I get that Kirk is trying to help out his customers and that makes sense, and it would make sense if you were trying to coordinate and assist as well but your involvement in all of this seems to be way more than makes sense. Where is Chris? Did Chris sell you the company for pennies on the dollar and dip? There are huge holes in all of this.. and while I believe Chris was trying to run a legitmate business and did so obviously for many many years.. the behavoir the last few weeks here seems to be more of an every many for himself move. Is he trying now to protect his customers and whats left of the business or is he trying to protect his lifestyle?
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Old 05-15-2013, 08:19 AM   #100
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Regarding the AEMs -- iirc that was hpf's primary direct supplier. As you alluded, the more of a product you buy, the deeper your discount. The online parts industry is incredibly inbred -- what seem like fierce competitors on the forums often work together behind the scenes with one shop focusing on becoming a master distributor for brand A while another shop focuses on brand b. To maintain their distributor status, they need to move a lot of product so they offer these brands to each other at prices lower than their competitors can get direct from the manufacturer.

For hpf, this was AEM. The explosion of popularity of the AEM EMS ten years ago is what got HPF out of Chris's garage and into that big storefront/warehouse so quickly (he would sell scores of EMS's and wind up with a better distributor status than longtime brick & mortar outfits selling hundreds of cold air intakes & cam gears).

Long story short, few are buying the ems anymore, so it wasn't unreasonable to gamble on the infinity to maintain top tier distribution pricing. If AEM had delivered in a timely manner, a lot of existing users would have upgraded just for e85/flexfuel alone. Besides, it would have cost much more than 50k to reach the same distribution status for another brand -- and without that quid pro quo, his fierce competitors wouldn't be inclined to offer as deep discounts on the remaining brands.
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