In the spring of 2008, the online sporting goods business my wife I had built and operated over the four previous years was growing and things were looking up for us. We were still inexperienced enough to not be considered experts at running a business by most professional standards. Almost everything we’d learned to make our business successful, how to build ecommerce websites, how to find suppliers and set up wholesale accounts with them, how to do search engine optimization, how to accept purchase orders and invoice schools and other organizations, all of those were things we figured out on the job as needed.

As owners of a small, family-owned business, my wife and were the type that handled all the details ourselves. We didn’t really have an accountant, no attorney, no professional help. We both came from pretty humble backgrounds where extra money wasn’t available, so we were extremely frugal, typically only spending money for absolute necessities.

With that background, it shouldn’t come as a surprise that there were often things I encountered during the course of operating the business that were new to me, things that were over my head, big decisions that I had to make that involved dollar amounts I’d never handled before. Our store, a drop-shipping ecommerce website, included products that ranged from ten-dollar practice jerseys to NCAA and NBA quality basketball goals made by companies like Spalding and Gared Sports, some of which cost more than twenty-thousand dollars each. Having items like those listed for sale on our website brought some interesting deals our way.

We once sold a professional basketball goal to a company that made video games. We occasionally outfitted high schools and colleges. We even shipped some basketball goals to the US Army to be used for the troops in Iraq. But as interesting as many of those deals were, they ended up being commonplace compared to one that could have had a huge negative impact on the company and our family’s financial situation. I wouldn’t know how precarious the deal was until many years later, after I’d already sold the company.

One day in May of 2008, I received a phone call from a guy in New York who said that he was the head of what he described as a large conglomerate that includes a sports training organization. He called my company interested in purchasing almost $50,000 worth of basketball goals to outfit a new sports complex he was building. I was excited about the deal, but I was a bit nervous about how this order would be paid for. He wanted to finance his purchase over a period of six months, making monthly payments until it was paid off.

As I mentioned, we were not a big company, and I didn’t have any experience with financing, especially such a big order as that. I made a deal with this customer that if he would provide a credit card for us to authorize (the card is not actually charged, but funds are set aside on the card that I could charge in case he defaulted on his payments), I would put together a financing contract and send him his basketball goals on credit. I felt uncomfortable about the deal, but it seemed like this man and his organization were legit. As I learned several years after the deal was done, I should have done much more vetting before I committed to paying to have our supplier ship something that cost us over $40,000 to a customer I’d recently met, not in person but on the phone, without knowing much about his organization or their integrity.

I was not new to risks associated with selling products online. Previous to this financing deal, I’d had several instances where people used stolen credit cards to place orders on RobbinsSports.com, and we didn’t catch the signs of fraud, which meant that we ended up donating uniforms and other items to thiefs. With experience I learned how to be more cautious with customers, especially after I learned that neither the police local to me nor in the area where the criminals are have any interest in or capability of pursuing the bad guys when that happens. I even wrote and published an article on KSL.com (my local news) about how business owners can avoid online fraud.

But, for some reason, this deal seemed safe to me. It shouldn’t have.

I put an authorization on the guy’s American Express card, then fulfilled the order, shipping six basketball goals to this guy’s gym in New York. When the goals were delivered, I sent an invoice for him to start making his obligated monthly payments for the goals over the next six months.

As a religious person, based on what I learned many years later about what was happening during this deal, I can only say that God must have been watching out specifically for me and my small family and business.

Although it started out a little shaky (his first scheduled payment was a week late), over the following six months, I received six payments over the next six months, all of which cleared the bank. Once the amount was paid in full, I didn’t think much at all about that particular series of interactions until much later.

In 2010, the new owner of that business (which I sold in 2009) forwarded me a piece of certified mail he’d received from a bankruptcy trustee firm called Silverman Acampora in New York. As part of the sales contract, I was obligated to settle any issues that had been caused before the business changed ownership. What I read in that piece of mail was one of the most stressful pieces of news I’ve ever had.

This order from this bankruptcy trustee in connection with a court based in Islip, New York demanded that I pay back to them the nearly $50,000 worth of payments I’d received from this customer. Through a bit of research, I found out that the man I’d dealt with years earlier had been arrested within a few months of paying off the balance of what he owed to me. He was convicted of running a $400M ponzi scheme that had earned him the nickname “mini Madoff” after the titan of ponzi schemes, Bernie Madoff.

As I read through the news accounts of how this man (Nick Cosmo) and his organization (Agape World) had bilked trusting, sometimes sophisticated investors out of big chunks of their money, I couldn’t help but feel sorry for those who were victims while also being grateful that I wasn’t one of them. In fact, when I recently read the Wikipedia entry for Cosmo and his fraud scheme, I was reminded of the fact that the basketball goals we sold unwittingly to this pyramid schemer were used to change a former paintball arena into a sports complex.

For some reason, he decided to pay us in full for the purchase. Many others were not so fortunate with money and resources they tied up into the Agape World company.

Regarding the court order, with some help from my attorney brother, I simply had to prove that in fact my business dealings involved selling basketball goals at their retail value or less, and that my company was not a shell business entity used to hide funds that should have been paid back to Cosmo’s investors.

Looking back these ten years later, I’m still amazed that my business and family were protected from the loss that could have been. I had no idea what a financial cliff that deal was, and I’m grateful that I didn’t fall off of it. That kind of gut-punch would likely have cured much of my interest in building businesses, which have been such an incredible blessing to me and my family in the years since.