How to Recover From Losing $1,000,000

Hey there, real quick, before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, Grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Imagine what it would be like to lose one third of everything you own just completely wiped out by some con man. What would you do? Could you recover? How would you recover? What would it take? Well, in this episode, we're gonna go deep into that. We're gonna talk about who this happened to, how much it was, and how they recovered. Enjoy this episode of the Affluent Entrepreneur Show.

All right, welcome back to this episode of the Affluent Entrepreneur Show. This one. Let me just ask, can you. I mean, if you've done any kind of investing, I am sure that you've probably lost money because there's no way you could be doing investing and have every investment win. It doesn't for me. But what happens when you invest with someone and it turns out to be a Ponzi scheme? It turns out to be a con. And not only do you invest, you repeatedly invest. And when it's all said and done, you wipe out one third of everything you own. Three people getting into this investment wiped out over four and a half million dollars. I was one of those people. I want to talk about it. I want to talk about what happened to me, how it happened, how I recovered, and what it took. The lessons in hopes for you to start to understand how to keep yourself safe and how to build your financial future.

Not that you lost anything, but no matter where you're at, okay, so here's what happened. Let me just give you a how this all happened. You know, I was doing well. I'm building my wealth. I got my business. I'm doing great. And a good friend of mine that, That I, that I know comes up to me, says, hey, you know what? I've been investing with this guy. And this guy actually has been paying me, you know, outrageous rates, like 20%, 15, 20% every eight weeks. And I go, okay, and how long have you been investing with him? He says, it's been a year and a half. It's like gold. It's going to completely change my life. So what do I do? I said, okay, I'm curious. And I said, make an introduction. So he makes an introduction. This guy is a family dude. He's got kids, he's got a wife. He seems to be good natured, he seems to be successful. He's living on a bluff in, in Malibu. He's doing all the things, right? So what do I do? He. He decides to, to pitch me. I say, give me some more information. He shows me reports, he shows me all the data, he shows me what he's doing. And so I invest. Now, in the end, what this turned out to be was a big con. It was a Ponzi scheme. Not only did I invest, I actually gave him more money before I realized it. And like I said, between me and three friends, we lost over four and a half million dollars with this guy. It wiped out one third of everything I owned in an instant. And now we had recovery. Now we had to sit back and say, what do we do with this? Now, mind you, we got him. He got put in jail. He's supposed to make restitution. We're never going to see a dime. This was in 2005, okay? And, and so here's what happened. And I think that this, it's important because I want you to understand how I got. Dude, look, I'm a financial dude. I'm here to keep you safe. I'm here to keep me safe. I'm here to keep my clients safe. I know what I'm, what numbers look like. I know what to look for. And I still got taken. If I got taken, you could too. And we're going to make sure it doesn't happen on my watch, okay? But here's what happened. There was three of us that went into it. There was more that went into it. Some people lost their whole livelihood, they lost their whole life because they put their whole savings in there and they didn't have a chance of recovery. I had a chance of recovery. And we'll talk about that recovery. But let's just talk about the difference between the three of us. There was one person that invested in it, one of my friends who had already been retired. So he was doing his thing and he put money in. He was the last one to get in, lost the money. So he was bitter, he was upset, but he just changed his lifestyle and then kept on living. The one that got both of us into it. He started to spiral into resentment. He started to get angry. He destroyed his business, he destroyed his marriage, and he went along to destroy his Liver. Because he started drinking. Now, good news is that he's come out of it. He's in a great place now and everything, but it took a decade to recover. And then there was me. And, yes, I spiraled, too. I went into resentment. I started to question my existence. I started to question my. My expertise. I kind of said, I'm a cpa. I do this for a living. I'm such a loser. How could I. How could I do this? How could I squander my family's, my son's money, and lose one third of everything? I mean, well into the seven figures. Well into the seven figures, okay, Completely gone, not recoverable. And so I was angry, I was bitter.

But I had to recover. I had to find a way. And the reason. And we. And I've talked about this before. It's not the money that matters. It's the why behind the money that matters. And my. Why was my son. Because I knew he was watching. I knew that he was watching me in this time of adversity. He didn't understand it because I didn't explain it to him at first. He just knew I was in a bad way. He knew that dad was upset. He knew that I was short. He knew that I was emotional. He knew that I was scared, but he didn't know why. And so I had to do some soul searching. And I said, if I'm going to recover from this, the first thing I got to do is make sure that he's right, that he's okay. And so. Because otherwise, I'm teaching him that when things hit, you curl up in the corner and hope the storm passes. I don't want him to do that in adversity. I didn't want him to do that. So I had to find the strength in myself. Not even for me, but for him to recover, to find a path back. And so I sat him down and I said, here's what happened. I didn't give him all the details, but he understood what happened. And I said, it's going to hurt. It's going to hurt for a while. It's not going to destroy us. I won't let it. It's going to change our life a bit, but we'll recover. So I took this burden of him off my back.

And now I had to start examining the stories that were going on in my head. Because the first place when you lose money, the first place when you think you're broke, the first place you go is to personalize it and talk about your lack of worth. To talk about your lack of self esteem, lack of confidence, to really start to dig into yourself. I mean, heck, if you just lost the money, the last thing you need to do is start taking the knife and stick it in your heart over and over again. And that's what I started to do. I mean, I'm human.

But I don't need you to do that. And I had to stop doing it. And the way we stopped doing it, the way I stopped doing it, was to get really real about what actually happened.

Versus my interpretation of what happened. The interpretation was all the things like, I'm a loser, I'm an idiot, I shouldn't do this. But the facts were, gave a guy some money, he was a con artist, he was a thief, he stole it, I lost it. Simple as that. That's it. That gave me the ability to find the foundation to recover from. And not only did we recover from it, within 18 months, I was able to get it all back. Not from him. I rebuilt it. Within 18 months, not only did I rebuilt it, I tripled it. So we, we made back three times.

What we lost. Now, let me, let me explain what happened. So why did. Let's just talk about why I got into this first. How did I get into it? And then we'll talk about how I recovered and what came out of it. And you can get lessons from, from both of it. I. How did I get caught up? Well, I'm looking at this guy who looks like a family man. I'm relying on, on my friend who says he's been doing this with me for, for a year and a half, two years, and it's been good. I looked at his background. He was a hedge. He was a hedge fund trader. So he had this education. He had this. So he had this credibility. He, he was talking about, I only bring in investors. That there was limited, there was exclusivity. So the only reason that he was going to put me in it was because of my friend. Okay? We had a common interest in the martial arts. There was all these things that came about that, that made this happen. But in the end, what ended up happening is that he got me to drop down my guard. He got me to ignore my rules, the rules that I use today, the rules that I used before, but they're modified now. He had got me to ignore my normal due diligence, the, the examining of an investment the way I should. He got me to not talk to the investment sources. So when I make investments that are outside things like index funds and ETFs I want to talk to. I want to go to the. Well, I want to talk to the top person. I want to have the conversations with a couple of people before I'm willing to invest. And if they're not willing to do that for me, they don't get my money anymore. But I didn't do that here. I. I didn't listen to the voice in my head. The voice in my head that said, hey, 15 every eight weeks sounds good, but it sounds too good to be true. Knowing that.

Are you ignoring things like that. I was influenced by a friend.

So I dropped my guard. Now it's not his for his. His fault. That's. That's on me.

And I was blurred by the promise. I started to do the math. I started to think, oh, my God, what does this mean? If I got, if I got 15, 20% every weeks, oh, my God, the compound effect of that, I am styling. I'm going to be getting jets and yachts and all that stuff. Clearly it didn't end up that. And so those lessons, how I got into it, why I allowed my guard down, they didn't come to me until I was able to separate the facts from the story. Until I was able to realize that the important thing was to make sure that Jeremy, my son, was taken care of and felt safe. I don't know about you, but if you are in a struggle right now, where's the why first? What's the thing that drives you? And the why isn't in the bank account. The why is something bigger. The why is something that actually pulls you instead of pushes you. Now we can look at it and say, okay, let's dig down and start to ask ourselves how I got into it and what to do differently. Here's how I got into it. And, and I'll. I'm going to jump to the iPad because I want to list some of these things out because there's actual psychological triggers that this guy used, that, that brought, brought this home to me. This is what allowed me. And the, the first one, the first one was, was the reality was, was that he had some authority. He was a hedge fund trader. And so if you look at this, a lot of times, people will come to you with authority. I'm telling you this so it keeps you safe. And then I'll tell you the other things that are the rules and the things that I did to, to recover. Okay, he had authority. And so that authority brought my guard down a little bit. He also, he also created something that's you know, it's called reciprocity. Okay. But the reality is what I call forced indebtedness because at the time I had a martial arts studio. He brought all his kids to train and there was this.

There was this reciprocity, this relationship that started to create. So he created this force, indebtedness that got me to, to let my guard down even more. Okay. And this is a, this is something that a lot of folks that do this kind of stuff will do. Then he used, he used this other one, which I'm going to say FOMO Polo. Okay? Fear of missing out or fear of the lost opportunity, because he, he was able to trigger that, to just say, hey.

You know, I don't let a lot of people in, but I'll let you in because of your friend. And if you don't want to do it, I've got other people that are going to go in, man triggered me. Okay? These first three are the first three things that I, when I started to look at the psychological triggers that I knew he got me on. Now there's other ones that, that come into play that, that he didn't hit me on, but I think that there's some things to, to think about now. There's a couple of other ones to think about. And, and this is, you know, when they put in their urgency or scarcity. I'm only letting five people in and I've already got.

Scarcity. It closes this Friday. That kind of thing is it. Look, if it's not in your time frame, then you walk away from the deal. That's just, that's the thing that I, I, I, I learned, which leads to this other one of exclusivity. You want, we want to belong to this exclusive group. We want to be part of the in crowd. That's what I wanted.

That's what I wanted to be. I wanted part of this inside group that was making the money, doing the thing. And he caught me on, you've probably heard this one before. Social proof. Social proof was my friend who was making money from him until he wasn't. And so these are some of the things that he used to get to me. And if you start to see this happening, it's important for you to start to look at it and say, let me step back. When you're not going at. What I realized is when I'm not going at my pace, if I'm not running my race, if I'm not following my rules, I get hurt. So the positive to all of it is that.

And I'll tell you how I recovered. But. But let's just talk about what came out of it, okay? Is that it allowed me to reset my rules. It allowed me to become dogmatic about my due diligence. It allowed me to start looking at things and saying, this is the only way I invest. And If I leave $1 billion deal on the table because it doesn't satisfy the criteria, I'm okay with it. Because I don't want to lose, and I certainly don't want to lose to the. At the hands of a con man. And so, so when you start to look at it from that perspective, we can. We can then ask ourselves, well, what are the things to do? First off, and this is one of the things that I do with the affluence blueprint of my clients, is you got to set your rules up front, and you don't. When it comes to your money, when it comes to your wealth, when it comes to your finances, when it comes to. To your generations, your children and your legacy, you do not stray from the rules. You don't bend the rules. We have investing rules. I have my eight rules of investing. It's all I do. And if it violates one of those rules, it's out.

Second, do the due diligence. Don't rely on someone else. Have a process that you're going to look at the investment and say, I'm going to look at these things. Now, you may not be this crazy, sophisticated analyst, but at least check the pulse on the patient. If I had done just a little bit more investigating, a little bit more questioning, talking to people, I'd have figured this thing out. I would have figured this thing out.

The third thing to do is to make sure that any investment you're in, you actually get the direct statements.

These statements were Excel spreadsheets of this deal.

Bernie Madoff, one of the biggest scammers and con artists of our time.

The statements from for his investors were created from him and came from his house, not from the direct investments. All of my investments. All of my investments, I get direct statements from the investment group, not my. Not my advisors. My advisors can send me what they want, but I get it directly from Fidelity, from Schwab, from the real estate investment trust, from directly from the source. Because then it can't be messed with. It can't be messed with. I also think you should have firsthand chats.

Talk to the investment president, vice president, not the salespeople, but the people that run the investment. Get their strategy, get their thought process. Ask them the hard questions. What happens, what happens? What happens? If I remember having a conversation with, with one where I said it was a money management firm and I said, how do you make me money in the down market? And their response to me was they started to go down. This marketing speak of, well, since 1926, the stock market and I go, first off, we're not in 1920s. Second, at this time when I did this, it was about, I was about 57, I'm 57, approaching 60, so don't give me a 50 year window. I'm asking you what you're going to do this year, next year, if the market turns against me. So then he turns around and he says, well, we have you in more conservative investments. So if the market goes down 15%, you might only lose 7%. I said, all right, you might not have listened to my question. Let me rephrase the question because I'm actually not asking how you can make sure I lose less than everyone else. I'm asking you how you're going to make money for me during the, during the uncertain times. Because your job isn't to lose less. Your job is to make me money.

Couldn't answer it. Guess what? He didn't get it done. And no one can guarantee an outcome. I get that. But if they're not even thinking it through and they're just bringing to you marketing speak, I'm done. I'm done. The other thing to do is ignore social media. Do not get your investment advice from TikTok and all that stuff. If they're turning around telling you, hey, invest in Lambos. And I saw it that a Lambo is the best investment.

Don't look at, look at the source of the advice. Okay? The number seven, I think on this is to delay the decision. Remember the urgency and scarcity. Delay the decision. Give yourself a cool off period.

On anything like this and say, I'm just gonna let it, I'm just gonna let it percolate for a little while. Percolate for a little while. Then ask yourself, are my emotions involved? My emotions were involved in the Ponzi's because he triggered them. He got me looking at the promise of, hey, if you get 15% every eight weeks, do you know what that's going to turn into in 12 months? It's going to be astronomical. You're going to be in great shape. Oh my God, you are going to be, you're going to have so much wealth you won't know what to do with it. And he triggered the Emotions. And as soon as your emotions get involved, your financial intellect goes down. And that's what happened to me. I went straight from. From smart to stupid.

Because my own instance got involved. So.

That'S how to prevent it. How did I recover from it? And how can you recover from a downtown. Here's the thing that he didn't take.

He took my esteem for a moment. He took my confidence for a moment. He even took my courage for a moment. But he didn't take my skills. I had to look back and say, how did I get here? How did I build it? At first, what are my core strengths? What are my core skills? What are the things that actually mattered and moved the needle? And from that, I started with, just like I do with all my clients, with the vision. And the vision was within two years to recover. And from that vision, it was, what's the plan? What kind of investments? What kind of earnings? What am I going to do in my business? What are my core skills? How can I monetize those skills? Because I knew in order for me to build the wealth back, or in your case, maybe just to build the wealth, at first I needed a big shovel. I needed something that was going to put enough cash flow in there. So I had to get back to business, and I had to start earning again. Remember, I've talked about this before. You need an earnings machine and a money machine, but the earnings machine feeds the money machine. So I needed to jack up my earnings machine. And the way to do it was I relied on my skills, my strengths, and the work that I did in the past. And I went back to work. Honestly, I didn't start doing the heavy lifting again and really, really worked it. So I had a plan, I had a strategy. And then I went back in and said, all right, now we're going to start investing again. And at first, I invested slowly because I needed to rebuild my confidence. I needed to build my esteem. I needed to rebuild what I was, what I was thinking, what I was doing. I also wanted to test out my new rules. I wanted to test out the way I was doing it. I wanted to get used to the new habits, the new solutions, the new things. Remember wealth creation?

It's. It's a behavior versus money. And so I had to modify my behaviors. I had to take on new habits. I had to make different decisions. And I had to know that those were cemented within me to make that happen. Okay? And so the one thing that I knew is I could earn money. So I went and earned money. Then I had to get the confidence to build this. So now I started to look at investments that fit those criteria. I followed a set of rules. I don't know what your rules are. If you, if you go through my stuff, then you can use my rules. But you got us to have a set of rules that are consistently applied. Not one set of rules for this and one set of rules. I have consistent rules. Our investments and my clients investments are only invested when it comes to hits all the pegs. And if it doesn't hit all the pegs, it's out. I do the due diligence. I understand. I now take the time, and no one's going to pressure me in time, say, hey, this is closing. This is closing. Well, then it's not for me. I need the time to do it. I will take the time to do the work. I'm going to have the conversations. If they don't want to introduce me, they don't get my money.

So I had a plan. We started looking at investments, and I decided to look at investments that I knew this was something that I didn't understand as well. Okay. So I just simply said, what do I understand? What do I want to understand? I'm going to research the heck out of it, stock market and all that stuff. And I'm going to go deep into that. And I will only invest into what. Into the things that I understand. If I don't understand it, I will invest my time until I do. Because until I understand it, I won't invest my money. It's the same thing for you. It's the same thing for you. So wherever you're at, the first place to look is to sit back and say, how can I earn more? Are there skills? Are there strengths? Are there things that I can do to get a bigger shovel? Are there things that I can do to cut my expenses to allow me to get more to put at it? Then where do I want to focus? Where do I want to focus? Am I going to be a stock investor? Am I going to be a real estate investor? I have my opinions on that. And now invest your time to learn. Spend the time with some of my stuff, some of my programs. There's plenty of books out there. I've got an episode on the books that I've read and the key takeaways. So when my book comes out, I expect you all to get it. All right? It's called building your money machine. Let's really nail it. But now you have to invest your time to build the knowledge, get Mentors around you, get coaches around you, get advisors around you that you can go to to, to help you out, set the rules in place. I will only invest if it gives me this kind of return and it has these types of characteristics and don't stray and then just stay in the game and be patient. I got impatient. I allowed him to stroke my emotions. I allowed the thought of me being able to get there faster.

Take me away. And what it did is it took my wealth away. But by getting back to work and building the shovel, by being deliberate with my investing, being specific and narrow on the investing, on the things that I knew and was core with.

By following the rules, by setting it up, by researching it, I was able to not only recover the money that was lost, but triple it. And since that time, it's more than tripled. It is tripled on tripled on tripled, and it works.

So the value was. It cost me over a million bucks to get the education.

To carry me the next. The next step of my. In my financial journey. It doesn't need to cost you a million bucks, over a million bucks to cost me. Learn from my education.

So you don't have to pay for it. All right. I just. I wanted to talk about this. I wanted to bring it up because I know that there's uncertainty and some people have. Have gone into investments and lost investments. I did the same. I'm no different. I'm just a guy.

That makes some good decisions, some bad decisions. Hopefully, the good outweigh the bad. This one was a doozy. This one hurt.

I questioned my existence. I questioned whether I could build back up. I questioned my expertise. I questioned my identity. I questioned everything.

But in the end, it strengthens. And wherever you're at, whatever's going on in your life, whatever your age, stage, or situation, don't let go. Find the lessons in it. Find the growth in it. Find the support on the journey. Find principles that work.

Find a process that works, and then work the process. And on the other side of it, you will not only recover, but you'll thrive. I promise. It takes a bit. It may not be easy. Wasn't easy for me, but it's worth it, right? I hope that this episode helped you. I hope that you found this valuable, this journey. I'm an open book if you want to know a little more about the things that I had to deal with. Man, reach out to me. Let me know if you have other money issues or money questions that you have. Man, reach out to me. I'm here for you. Here's the deal. Financial freedom is your birthright. Let's just go claim. And you don't have to do it alone. Don't have to do it silent. And you don't have to do it isolated. That's why we're here. All right? Till we get a chance to see each other on another, another episode, another video, or on the road, always say always. Always strive. Live a life.

Thank you for listening to the Affluent Entrepreneur show, your host, Mel Abrahamic. If you want to achieve financial liberation to create an affluent lifestyle, join me in the Affluent Entrepreneur Facebook group now by going to melabraham.com group and I'll see you there.

And that's it for this episode of Building youg Money Machine, where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple Podcast, or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people. Because I truly believe that financial freedom is your birthright, and I want to help each and every one of you claim it. Thanks so much.