Collecting $35,000 debt from client

[rw1434]

What is the name of your state (only U.S. law)? What is the name of your state (only U.S. law)? Colorado

I would like to know my options on collecting a debt from a client. Im a registered bitcoin trader with Fincen. I have been trading bitcoins for several years. A couple months ago a local client contacted me through an online ad to purchase bitcoins. Upon meeting the client in person at their residence we traded bitcoins for $USD. Over the course of a month this particular client purchased around $45k USD cash up front worth of bitcoins. After dealing with this client for about a month they asked me if I could loan them bitcoins for 7 days at a 25% interest to be repaid in $USD. The client stated they were out of town and couldn't pay up front on this occasion. So I asked for some bank statements and copies of Identification. They showed me bank statements and one account had $150k and another joint account with clients spouse where there was 4million dollars in that account. So considering all of the prior cash up front deals we had done in the past and the bank statements. I took the bait and sent bitcoins with the acknowledgement that it would be repaid in 7 days at 25%. So 7 days later I get a message stating the client changed plans and will be home a few days later than expected. So starting worry there was nothing I could do but wait. So in the end about 12 days after the loan I get a call from the client saying that they have a gambling problem and they were in Vegas and lost everything. So I asked what about the 4million dollar account? The response was that this account was a joint account and would need the spouse approval to withdraw money. So after the client spoke with there spouse I was eventually told to **** off by the client. However I have every single text message from the client. Texts from previous cash up front trades all the way to the loan. I even have a text where the client acknowledges a debt $35,000 and the date it is to be paid back. After all this happened this client had the nerve to reach out to a friend of mine who also trades bitcoins and is asking him about buying coins now. So obviously the client isn't actually broke! I have already hired an attorney who specializes in breach of contract cases and he reviewed the text messages and said he thinks I have a great case. However when looking online it seems unclear wether text messages are actually going to hold up in court or not? Any advice is greatly appreciated! Thanks in advance.

 

[NIV]

If you already have a local litigator, I don't see how asking here is going to help you much. It is interesting you did not bring up a fact that stood out to me on your post at first glance--usury. 25% for 7 days is about 1300% annually. I didn't look up the specifics of your state's statute on usury but believe the circumstances would warrant a look by a person knowledgeable in the facts.

Your concern gets to proof. Because of the nature of bitcoins, you need to get in some evidence to prove you performed your end of the bargain in addition to proving up the contract in the first place. The suit does not go far if you say you paid over the bitcoins and the other party says you did not. Text messages are very difficult to use for this for a couple of reasons. Determining who sent the texts is never going to be easy. Just because one may be able to prove something was sent from a certain phone/computer/electronic device, does not mean the owner sent it. The other would depend on the actual transcript of what was sent in such an abbreviated format and if it rises to the level of a contract.

All of that is going to take time and money to prove. Then you have to get to the purpose of the bitcoins. There can many legitimate reasons for bitcoins in this modern age. The fact hackers require them as payment if they encrypt a person's hard drive and demand ransom shows the mere desire for them is not suspicious. Regular desire for large amounts indicate something else. Either the gambler has decided to go all electronic in wealth transfer/holding or there is some circumvention or disguise going on. If a circumvention of the law was the goal and you knew of it, you might be complicit as well. You don't always get to show just the texts you want. If admissible, they'll all get read.

You have a difficult situation. Litigation is going to be hard and there may be some risks involved. Yet, there is a lot of money involved. Your only chance is to use a litigator with knowledge of all the facts. I think the bitcoin aspect is going to make a difficult situation even harder and you might need a younger attorney who has some experience or training in the newer tech to be successful. Good luck.

 

[rw1434]

Text proof

So I actually have all of the text messages where the client provided their receiving bitcoin address as well as the Blockchain ledger showing that I sent the bit coins that they requested. There was nothing that I was aware of that was being used illegally for the bit coins as far as I knew they were just using them as an investment Or something... so I see no reason that I would be called into question for wrongdoing. And as far as the amount of the interest on the loan that was something the client offered first not me. And there is plenty proof that this phone number is indeed the clients phone number you can do a reverse white pages look up and see that it is registered under the clients name through AT&T iPhone so there shouldn't be any trouble at all proving that it is the person who they say they are. It's a simple case of a gambler went to Vegas lost the money and now doesn't want to pay back the loan which sorry but that isn't my problem and the loan is due. And I just have to hope that a judge will look at all the text messages specifically the one where the client acknowledged the $35,000 debt and make a fair judgment based on that. Thanks for your advice

 

[Zigner]

I'll be a bit more direct about this. There's no way you're going to collect 25% interest after 7 days. Furthermore, you could be in a world of hurt, civilly and criminally. Sure, you're entitled to receive the principal back, but you may end up spending that on fighting to stay out of prison.

 

[NIV]

I'll be a bit more direct about this. There's no way you're going to collect 25% interest after 7 days. Furthermore, you could be in a world of hurt, civilly and criminally. Sure, you're entitled to receive the principal back, but you may end up spending that on fighting to stay out of prison.

Because he did not seem to understand my specific concerns in his reply, we shall see. From his naivete on what he would hope a judge would base his decision upon, it is imperative that he obtain local representation to have any chance of success at even proving up a debt, let alone anything above the amount loaned, without implicating himself in a crime.

Any person who knowingly charges, takes, or receives any money or other property as a loan finance charge where the charge exceeds an annual percentage rate of 45 percent or the equivalent for a longer or shorter period commits a class 6 felony. 18-15-104 (1)

 

[adjusterjack]

It's a simple case of a gambler went to Vegas lost the money and now doesn't want to pay back the loan which sorry but that isn't my problem and the loan is due. And I just have to hope that a judge will look at all the text messages specifically the one where the client acknowledged the $35,000 debt and make a fair judgment based on that. Thanks for your advice

You have a bigger problem than just proving your case.

Getting a judgment is only the first step.

Collecting on it is often problematic.

And, by the way, since you have no written contract with bilateral attorney fees provision, you pay your attorney fees and don't get them back if you win.

 

[rw1434]

You people jump to conclusions way too much on are too easy to jump up and try and call somebody a criminal, I'm a licensed bitcoin trader, I know what I'm doing. Bitcoin ATM machines out here legally charge up to 18% premium just for an upfront transaction so charging a 25% premium for a seven day payback transaction is nothing so get over it, nothing is criminal about it. The coins were sold at 25% premium and that amount was agreed through text message to be paid back in 7 days. Lets hope a smart judge sees this. And if i win a judgment collection will be easy the clients spouse is a rich CEO who has a joint account so in CO a judgment would pull money from the spouses joint account even if client was broke

 

[NIV]

You people jump to conclusions way too much on are too easy to jump up and try and call somebody a criminal, I'm a licensed bitcoin trader, I know what I'm doing. Bitcoin ATM machines out here legally charge up to 18% premium just for an upfront transaction so charging a 25% premium for a seven day payback transaction is nothing so get over it, nothing is criminal about it. The coins were sold at 25% premium and that amount was agreed through text message to be paid back in 7 days. Lets hope a smart judge sees this. And if i win a judgment collection will be easy the clients spouse is a rich CEO who has a joint account so in CO a judgment would pull money from the spouses joint account even if client was broke

If you carefully re-read my posts, you will see I did not accuse you of being a criminal. I pointed out the problem and the potential if things were not handled carefully. An example of things being not handled carefully is the post I quoted above. Basically, you are claiming there is an 18% premium for the bitcoin in general. But, because you wanted to sell and wait a week before collecting, you charged 25%. To me, even taking you for what you've said, that is 7% a week above the ordinary cost. 7% x 52 still brings you into the potential for usury.

Obtain local representation. I've heard of simple things like collections in a normal situation with an actual, physical, promissory note that was notarized go poorly. This has any number of fragile links that must withstand tugging to prove a breach on the part of the other party. You need an advocate who is not emotionally tied up with a large loss to review the facts you have and the facts you need to prove to give you an assessment on the potential in litigation. Simply linking the texts to the gambler's phone will require subpoena(s) and, probably, an expert. Linking the gambler to the phone at the time the text(s) were made may be harder still. I'd link to some papers on the matter but am still feeling my way around here so, out of an abundance of caution, will not. Google something like / authentication text message litigation / to find out what will be needed.

 

[rw1434]

I didnt request 25% at 7 days, the client offered that all on their own and I have all that as proof in texts. My whole point of this thread was just to figure out what weight text messages carry in court? If the judge will allow them as evidence which i will need to win my case. As the client agreed to the $35000 debt via text.

 

[NIV]

I didnt request 25% at 7 days, the client offered that all on their own and I have all that as proof in texts. My whole point of this thread was just to figure out what weight text messages carry in court? If the judge will allow them as evidence which i will need to win my case. As the client agreed to the $35000 debt via text.

Once again, you are not helping yourself with the usury issue. Stop talking about it and review the statute I provided. There you will see the mental state as "knowingly". You keep admitting the amount was known by you. I agree there is an argument it is not "interest". You aren't making it yet and each time you post it seems you doth protest too much, methinks. Just because you might make a successful argument does not mean you should discount the risk.

In the end, you will have to sue the other party if they don't pay and you want your money. There are a number of hurdles in your suit. One practical one will be you will need to instruct the court on what you were doing. Few judges are really aware of bitcoins and block chains and part of the litigation process will be to show them how it works. From the way you are writing, I believe you want to do this yourself. I don't think you will be successful if you do. Even with an attorney, I think the best outcome you could hope for is a return of the value of the bitcoins without your fees and you pay your attorney from that recovery. But that is nothing more than a guess with incomplete facts. I think you will lose thousands from your expected profit on this deal, even if you win any eventual case. Losing principal is also a possibility as are profound issues if you testify as incautiously as you have written here.

 

[rw1434]

My attorney specializes in breach of contract cases and he never once mentioned the 25% premium being a legal issue.... also i had a bank account frozen last year with $50k in it and it was all bitcoin trades i represented myself and got my account unfrozen by the judge so dont be so quick to think that im not good at making my case known in front of a judge.

 

[NIV]

My attorney specializes in breach of contract cases and he never once mentioned the 25% premium being a legal issue.... also i had a bank account frozen last year with $50k in it and it was all bitcoin trades i represented myself and got my account unfrozen by the judge so dont be so quick to think that im not good at making my case known in front of a judge.

An attorney who specializes in breach of contract cases who does not know how to introduce electronic evidence? Do tell.

editediteditedit
At least you are now calling it a 25% premium now rather than relating the higher compensation to the time to be paid. That's a good first step to making your argument it is not usury.

 

[Zigner]

An attorney who specializes in breach of contract cases who does not know how to introduce electronic evidence? Do tell.

editediteditedit
At least you are now calling it a 25% premium now rather than relating the higher compensation to the time to be paid. That's a good first step to making your argument it is not usury.

Except that, here in CA, if it walks like a duck and quacks like a duck, the courts are going to call it a duck.

 

[NIV]

Except that, here in CA, if it walks like a duck and quacks like a duck, the courts are going to call it a duck.

Unlike ducks, if something is interest or not can be complex to determine both in CA and in rw1434's state.

Theodore Roosevelt Ag. v. General Motors Acc. Corp., 398 P. 2d 965 (1965)

An examination of both the 1913 Loan Law and the subsequent installment financing statute leads us to the conclusion that the ruling of the trial court was correct. The "time price differential" in the installment statute allows the payment of sums of money in excess of the cash price of the commodity sold. Such a difference between a cash and a credit price has been held not to be interest in this type of contract and is not within the terms of the usury laws. E. g. Daniels v. Fenton, 97 Colo. 409, 50 P.2d 62 (1935) ; Bell v. Idaho Finance Co. et al., 73 Idaho 560, 255 P.2d 715 (1953); Richardson v. C. I. T. Corporation, 60 Ga.App. 780, 5 S.E.2d 250 (1939); 91 C.J.S. Usury § 16.

Since the quote has to do with the interaction between some laws not implicated on rw1434's facts, I don't claim it is directly applicable to his problem. But, "time" (quack) "price" (waddle) differential while seemingly "interest" (duck) isn't.

 

[Zigner]

Unlike ducks, if something is interest or not can be complex to determine both in CA and in rw1434's state.

Theodore Roosevelt Ag. v. General Motors Acc. Corp., 398 P. 2d 965 (1965)


Since the quote has to do with the interaction between some laws not implicated on rw1434's facts, I don't claim it is directly applicable to his problem. But, "time" (quack) "price" (waddle) differential while seemingly "interest" (duck) isn't.

Absolutely irrelevant...

The OP was offered 25% interest over a 7 day period and accepted 25% interest over a 7 day period. Per CA law, that is usurious. Period.