quick cash investment - legal?

[CFT]

My husband and I live in Michigan. We know someone in Georgia who bought a small business in the last year or two who is having difficulty getting a bank to loan him the seed money to purchase his product to resell and install in customer's homes. He wants us to loan him $5000 (acting as his bank) that he promises will turn around a 10% return on investment in 6 months. This sounds too easy and too good to be true. Is it legal? We know this guy's mother quite well, and she has considerable investments from which she could draw, but he wants this to be kept quiet from her. Please advise - does this sound like a good investment?

 

[ALawyer]

This is a request for investment advice, not legal information.

How can anyone say if it is a good investment. A 20% rate of interest on a risky business (10% for 6 months) is not very generous, believe it or not, as there is no big payoff possible for you. And the money is at risk. As a lawyer I would be concerned about the possibility that the rate may exceed the applicable state's urusy laws, in which case you would not be entitled to anything back.

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[JETX]

If you are ABSOLUTELY GUARANTEED to be repaid $5500 in six months, it could be a good deal. What security is he willing to post, a $20k car w/o lien, a house, a $50k boat??? If he is not offering a 'put your hands on it and touch it' security for the loan or is just a 'handshake' deal, run away as fast as you can. Oh, and if he gives you title to the car or boat, make sure that he signs it!

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Steve Halket
Judgment Recovery of Houston
[email protected]
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This is my PERSONAL OPINION and is not legal advice! Consult your local attorney for your specific situation and laws!