Wells Fargo sues Gunwerks in Federal Court

[John Burns]

Local story but has National implications.

Anyone have an additional info?

Wells Fargo Sues Cody's Gunwerks, Claims Firm Owes $2.8 Million

In March 2019, Gunwerks along with government and business officials broke ground for its expanded manufacturing facility.

k2radio.com

 

[LawnMM]

More anti gun games afoot.

 

[Bitchtitsbob]

No additional info, but holy shit. Expanded too fast? Mismanaged? Relied too much on grants and government incentives?

And how do they owe so much in sales tax? Did they charge their customers sales tax and just pocket the money?

 

[dirthead1]

Damn

 

[craigos]

Kinda always wondered how they went from this dinky little company to what they offer without a large investment - and their guns were way overpriced to get a broad customer base.

 

[m1match]

Maybe not anti gun games- it says that Gunwerks applied for and looks like they got a $3M grant and a $3M loan to expand their facilities that's a lot of money. The article says they defaulted on a Wells Fargo loan and that they stopped paying sales tax, which if true would be pretty convincing evidence that they are financially insolvent which wouldn't have anything to do with anti gun politics.

I hope they make it, besides that I hate to see it when good gun companies go under, Phil Velayo and Caylen Wojcik both worked for them and they're as good guys as they get.

 

[TxWelder35]

More anti gun games afoot.

Doesn’t sound like it.

looks more like a failed business

 

[Ravenworks]

More anti gun games afoot.

If you are in business, you need to pay your creditors and taxes.

 

[Gledeasy]

Hmmmmm, guess I should have ordered the Clymr stock for a build before now?

 

[LawnMM]

Lotta people taking the side of a corrupt bank that's been fined millions for ripping off customers over a gun industry company.

Maybe more to the story

 

[jbuck88]

No idea. Sure looks bad though.

 

[m1match]

I'm not taking Wells Fargo's side- I agree they're a bad bank and I think nobody else who's posted in this thread is taking the banks side. I just think that none of us know what the real story is, but everyone knows nobody gets away with not paying their taxes so if they stopped paying sales taxes to Wyoming, they had real serious problems beyond whatever their situation with Wells Fargo was.

 

[Jabot]

Seemed like nice guys ,I watched quite a a few of there tv episodes. But there gun systems was way over priced. Seems like they where trying for upper end clients, but There's only so many of those .hope they make, might be pretty tough in this economy right now

 

[SD Carpenter]

i know Phil just bought a house there, hope this isn't what is on the surface....

 

[Yoteski]

This news should come as a surprise but really doesn't. When you think about all the R&D that had to go into developing the Revic scope, Kestrel killer, rangefinders, etc., it all had to add up. I haven't ever seen any of their equipment being used at matches. It seems like they have a bunch of great innovation, but that doesn't mean squat if it doesn't sell. I'm definitely not taking Wells Fargo side because of their own shady business practices, but this doesn't look good. It's really unfortunate if this is the end for Gunwerks. They definitely had great vision and innovative products, and it will be unfortunate to lose that ingenuity.
Hopefully Phil's ties weren't too deep with Gunwerks and he will be able to weather this storm. Of all the things Gunwerks might have screwed up, hiring Phil as a trainer and representative wasn't one of them. Either way, he should be able to find gainful employment with other companies who could use his service; just sucks he just bought a house.

 

[kriller134]

There are only so many hunters you can sell 10k hunting rifles to. Just seems like too niche of a market to go after.

 

[BadAccountant]

Doesn't seem to be an anti-gun anything nor are there any national implications for this case. This is pretty run-of-the-mill stuff with little in terms of expectation of new case law resultant from any judicial ruling.

Federal court is the appropriate venue because diversity of citizenship exists (parties of the suit are from different states and the amount in controversy exceeds $75,000 USD).

This looks like a case in which a bank wants to recover money they loaned to a borrower and it appears that Gunwerks borrowed too heavily and then violated their agreements and debt covenants with Wells Fargo. They fell too far behind on their loans and ended up owing too much money to other creditors, including the government. Furthermore, if WF is to be believed, they removed their deposits from Wells Fargo in violation of the agreements to keep their accounts with WF.

I really don't see anything alarming here except that Gunwerks is likely going to be under different ownership soon.

 

[jcmullis2]

Maybe not anti gun games- it says that Gunwerks applied for and looks like they got a $3M grant and a $3M loan to expand their facilities that's a lot of money. The article says they defaulted on a Wells Fargo loan and that they stopped paying sales tax, which if true would be pretty convincing evidence that they are financially insolvent which wouldn't have anything to do with anti gun politics.

I hope they make it, besides that I hate to see it when good gun companies go under, Phil Velayo and Caylen Wojcik both worked for them and they're as good guys as they get.

The owners will blame the patsy cfo and walk away clean. 6 million in loans and grants and a bunch of tax money received through sales sounds like a damn good score to me. You gotta sell a shit load of gun stuff to earn 6 million plus in profit. The owner realized that and decided to take the money instead of working the rest of his life to repay the loans. The owner can now retire comfortably with the money he stole and enjoy life. They should jail his ass until he repays every dime he owes Uncle Sam including the grant money. Otherwise us taxpayers just took it up the ass again. Smdh

 

[jcmullis2]

Doesn't seem to be an anti-gun anything nor are there any national implications for this case. This is pretty run-of-the-mill stuff with little in terms of expectation of new case law resultant from any judicial ruling.

Federal court is the appropriate venue because diversity of citizenship exists (parties of the suit are from different states and the amount in controversy exceeds $75,000 USD).

This looks like a case in which a bank wants to recover money they loaned to a borrower and it appears that Gunwerks borrowed too heavily and then violated their agreements and debt covenants with Wells Fargo. They fell too far behind on their loans and ended up owing too much money to other creditors, including the government. Furthermore, if WF is to be believed, they removed their deposits from Wells Fargo in violation of the agreements to keep their accounts with WF.

I really don't see anything alarming here except that Gunwerks is likely going to be under different ownership soon.

I agree but it should be in federal criminal not civil.

 

[Steel+Killer]

What $10K hunting rifles aren't flying off the shelves.......Let find my surprised face.....

 

[physguy88]

I wonder how much the coronavirus played into this. Seems like they might have made an ill timed expansion push.

Given the nature of their customer base - well heeled hunters with more money than time, no hunt this season = no purchase.

 

[Steel+Killer]

I wonder how much the coronavirus played into this. Seems like they might have made an ill timed expansion push.

Given the nature of their customer base - well heeled hunters with more money than time, no hunt this season = no purchase.

My guess would be none. I don't think their financial problems happened within the last three months that train left the station way before anyone ever heard of coronavirus....IMO

 

[jcmullis2]

I hate banks. They don’t build those huge edifices with their own money. The money comes from their customers/victims. However Gunwerks aren’t innocent victims of predatory lenders. They screwed everyone they possibly could as long, hard, and often as they could. They took 3mil from WF, another 3mil from the Government, another stack from collecting taxes they never paid. They have employees that won’t get paid for their labor and customers that paid for products they’ll never receive. You can believe the owner isn’t gonna loose his home or car like the employees. No way, he’s hiding out sipping on drinks with little umbrellas in them counting that money. So don’t cry to much for that POS. Save them tears for the employees living from paycheck to paycheck and the customers who are waiting on stuff they paid for that’ll never come. Just saying

 

[Va_Gentleman]

Businesses grow faster than their cash grows all the time.

 

[MadDuner]

$365k in sales taxes due?

That would take $4M in local direct to consumer sales?

 

[sandwarrior]

Doesn't seem to be an anti-gun anything nor are there any national implications for this case. This is pretty run-of-the-mill stuff with little in terms of expectation of new case law resultant from any judicial ruling.

Federal court is the appropriate venue because diversity of citizenship exists (parties of the suit are from different states and the amount in controversy exceeds $75,000 USD).

This looks like a case in which a bank wants to recover money they loaned to a borrower and it appears that Gunwerks borrowed too heavily and then violated their agreements and debt covenants with Wells Fargo. They fell too far behind on their loans and ended up owing too much money to other creditors, including the government. Furthermore, if WF is to be believed, they removed their deposits from Wells Fargo in violation of the agreements to keep their accounts with WF.

I really don't see anything alarming here except that Gunwerks is likely going to be under different ownership soon.

Clearly, you have a blind eye to Wells Fargo business practices. They were the third highest foreclosing bank in the housing crisis that started in 2008. They got shitloads of money to help restructure a lot of those loans and all they did was pocket it.

The City should bear some responsibility here too. A $3M grant? With no due diligence about how this was going to benefit them, they just want more businesses to come in so they handed off $3M in a grant of taxpayer money? In conjunction with this, neither did the bank do any research on how this could work.

Lastly yes, Gunwerks is ultimately responsible. Did they take advantage of any business consultants? Financial consultants? Engineering/Technical consultants? Before Wells Fargo jumps in and tries to take everything, there needs to be some serious sit-down negotiation as to where this should be going. Not like Wells Fargo to give a shit about customers. If they do take anything, they also need to split it with the City, as they put out $3m as well. Or wherever the grant money came from. This had to be a situation where Gunwerks at some point quit working with the city or state and Wells Fargo. Or maybe Wells Fargo just wants it all.

FWIW, hell yeah I've got an axe to grind with Wells Fargo. I got a VA loan through them and two months later I'm told it won't work out and if I don't refinance with a FannyMae they'll jack me out of my house. They knowingly wrote up the VA loan with the house undervalued. After they told me they had that issue straightened out.

Because at the time I didn't have a quick option, I had to do that. I then spent the next six months trying to get my VA funding fee back. So, fuck Wells Fargo. With a big stick. With little busted off branches on it. Repeatedly.

 

[THEIS]

Hi,

So according to ATF Manufacturing Records:

2018: 983 Rifles
2017: 782 Rifles
2016: 702 Rifles

Guys, just based off those numbers and the average price of their rifles there is just no way the banks and sales tax should not have been paid and paid in timely manner.

Are banks HORRIBLE? YES.....
Do banks close on unpaid loans everyday from damn near every industry sector? YES...
Do banks "entice" companies to take out more loans than they could payback per the finance reports? YES...
Do banks "REQUIRE" you to take those loan amounts? NO...
Do banks have the right to recover their assets? Yes
Do business OWNERS (not an employee) have the obligation to pay their business loans? ABSOLUTELY...

Sincerely,
Theis

 

[RTH1800]

I see a few here have grown businesses from ground up. Debt is a tool that is used to do so when you start with limited assets. Like any tool, it can be misused.

Too bad for GW.

I am not seeing any anti gun bias here. Anti gun bias would have been refusing to make the loans.

 

[dieseltech82]

Not sure how many read the article. It mentions sales tax quit being paid late 2018. Every state is different, so I can only speak from mine but when you exceed X amount of sales tax revenue, you have to pay it monthly. Also sounds like the 3m grant was for the facility, which the tax payers still own technically. Gunwerks was only renting it. Did you catch the accruing monthly interest payment of 20k? Wholly crap, that’s a lot of interest. The article also reads they sold off equipment that was being used as collateral, along with moving cash. Not mention other creditors they refused to disclose. What a mess.

 

[candyx]

He out smarted the bank not an easy thing to do, he took millions and didn't even have to use a gun which is his business. It's called cashing out.

 

[BLKWLFK9]

I dont really care about gunwerks, but i do care about Phil and his employment given the fact he just bought his first house. If something wonky happens with phil, we should start a go fund me.

 

[jcmullis2]

Gunwerks did something most of us could only dream of. They took a well written business plan and robbed a bank, the government and the tax man. Nobody involved will see the inside of a jail either. They’ll stand there with their bare face hanging out and swear they don’t know what happened to all that money. Hell, they might even cry for the cameras and talk of having lost everything. Then get into a luxury car and go back to a plush home. They won’t sell their stuff to pay their employees for work performed or refund customers money for products they paid for and will never receive. Like someone else said this didn’t happen over night or over a few months, no sir. Gunwerks bled that money off slowly so not to draw attention to the scam and to give them a little deniability when the shit hit the fan. You can bet that money is safely hidden away until this mess is over. The government needs to squeeze the bastards like they do dead beat dads. Lock that ass up in the booty farm until the government and customers money magically reappears. Let Wells Fargo learn their lesson the hard way just like they do to their customers. That should leave the owner at least a million bucks, but possibly more. I guarantee you the owner would be more than happy to come up with the money to forego being passed around like a bag of chips at a pot party. Treat him like the criminal he is.

 

[sea2summit]

I wonder how much the coronavirus played into this. Seems like they might have made an ill timed expansion push.

Given the nature of their customer base - well heeled hunters with more money than time, no hunt this season = no purchase.

Well since they stopped paying sales tax in 2018....I don't think beer was a factor.

 

[Secant]

Hi,

So according to ATF Manufacturing Records:

2018: 983 Rifles
2017: 782 Rifles
2016: 702 Rifles

Guys, just based off those numbers and the average price of their rifles there is just no way the banks and sales tax should not have been paid and paid in timely manner.

Are banks HORRIBLE? YES.....
Do banks close on unpaid loans everyday from damn near every industry sector? YES...
Do banks "entice" companies to take out more loans than they could payback per the finance reports? YES...
Do banks "REQUIRE" you to take those loan amounts? NO...
Do banks have the right to recover their assets? Yes
Do business OWNERS (not an employee) have the obligation to pay their business loans? ABSOLUTELY...

Sincerely,
Theis

Would those manufacturing numbers include their $800 GRB action?

 

[candyx]

If he gets away with it good for him he should share his tricks with others. Bust your ass and take huge risks and then you have to give the government 35% off the top so Pelosi can give it to some illegal alien so he can stay home and fuck his wife all day while you sweat to keep up.

 

[THEIS]

Would those manufacturing numbers include their $800 GRB action?

Hi,

I am going to have to say no.
Based on 2018 ATF MFG records Defiance manufactured 7 rifles, lol and the AFMER does not have a section for "Receivers".

https://www.atf.gov/firearms/docs/form/annual-firearms-manufacturing-and-exportation-report-afmer-atf-form-530011/download

Sincerely,
Theis

 

[Dthomas3523]

If he gets away with it good for him he should share his tricks with others. Bust your ass and take huge risks and then you have to give the government 35% off the top so Pelosi can give it to some illegal alien so he can stay home and fuck his wife all day while you sweat to keep up.

Except the employees you fuck over......

 

[THEIS]

Except the employees you fuck over......

Hi,

AND Customers!!!!
Yet the end users of products in this industry somehow look at long lead times as a sign of quality and praise...yet this exact situation is why such crazy lead times should be looked down upon.

Sincerely,
Theis

 

[RTH1800]

I doubt his initial intent was to defraud anyone. He likely made poor decisions, poorly timed.

I also would not jump to concluding criminal intent, fraud or that owner is prospering. It could be the case but might not.

Those who make unfounded accusations are actually sharing insight into their character and motivations.

 

[BurnOut]

The City should bear some responsibility here too. A $3M grant? With no due diligence about how this was going to benefit them, they just want more businesses to come in so they handed off $3M in a grant of taxpayer money?

Something to note here; local/city grants are VERY rarely made in cash... they're almost always in the form of taxes (usually property) that won't be owed. I can't speak to this particular situation, but that's what I saw when my then-girlfriend worked for a small-ish city in Texas.

 

[jcmullis2]

If he gets away with it good for him he should share his tricks with others. Bust your ass and take huge risks and then you have to give the government 35% off the top so Pelosi can give it to some illegal alien so he can stay home and fuck his wife all day while you sweat to keep up.

No real secret in that. Any attorney could do help and keep you out of jail.

 

[JMGlasgow]

1. You took out a Loan

2. Pay it back.

 

[NY700]

The owners will blame the patsy cfo and walk away clean. 6 million in loans and grants and a bunch of tax money received through sales sounds like a damn good score to me. You gotta sell a shit load of gun stuff to earn 6 million plus in profit. The owner realized that and decided to take the money instead of working the rest of his life to repay the loans. The owner can now retire comfortably with the money he stole and enjoy life. They should jail his ass until he repays every dime he owes Uncle Sam including the grant money. Otherwise us taxpayers just took it up the ass again. Smdh

this is really an overly simplified view on business.
Now I agree if a company/ceo/owner takes the loans the grants the investments and funnels it into their personal accounts and skips town. Absolutely lock them up. That is fraud.

that doesn’t appear to be the case here be cause the R&D was done the product line was created the marketing was done and they were actively selling their products and best I know keep up with their sales.

this “simply” looks like a case where business leadership over estimated the availability in the market place and sold a bank on the same vision.

companies fail. In this case the product seems generally sound and depending on the internal structure and condition which none of us know, a company will come in scoop it up for pennies on the dollar and move forward without the burden of the original R&D

 

[sandwarrior]

Something to note here; local/city grants are VERY rarely made in cash... they're almost always in the form of taxes (usually property) that won't be owed. I can't speak to this particular situation, but that's what I saw when my then-girlfriend worked for a small-ish city in Texas.

Normally, that's true. This was a grant, per the article, and that is cash. Often funneled all the way from the Federal Gov't.

I gotta ask too, how do you get someone's business records? Isn't that just like business tax return? I did not know the public has access to that.

 

[NY700]

Most of the times the grants are tax based. There are certainly start up grants that are cash they are typically much smaller and not in the millions.

 

[DJL2]

Regardless of the personalities and reputations of the players involved, my own take on stuff like this is pretty straight forward. If you take the loan out, you owe it back. Business, student, mortgage...if you owe, you owe. The choice to take someone else's money comes with some significant strings attached, but it is a choice with all the responsibility it entails.

 

[Cascade Hemi]

It is worth pointing out that article was written using information from Wells Fargo. They have a vested interest in making it sound as bad as possible. Maybe Gunwerks really did do all of those things...and maybe they didn't. I'm going to wait until more information becomes available until I pass judgement.

 

[THEIS]

Hi,

Here is another article on the grant and loan details...

Gunwerks facility on target

Construction of the new Gunwerks building at 201 Blackburn on 5 acres overlooking the Shoshone River is progressing and on track for March 1 completion.

www.codyenterprise.com

Sincerely,
Theis

 

[NY700]

Regardless of the personalities and reputations of the players involved, my own take on stuff like this is pretty straight forward. If you take the loan out, you owe it back. Business, student, mortgage...if you owe, you owe. The choice to take someone else's money comes with some significant strings attached, but it is a choice with all the responsibility it entails.

This is certainly true. But remember when you go to an institution like a bank for a business loan it is different than say a subsidized student loan.

that student loan comes with very minimal barriers to obtain it. Basically just proof that you couldn’t pay for the tuition on your own. (Over simplified yes) and the rates on return of the subsidized loan are low typically under market value. So you owe what you owe

the bank is effectively partnering with you. They can say no for any reason they can evaluate the risk and set the rate and terms accordingly. So no that doesn’t give people the right to stiff them, but is a business fails that bank had the opportunity to vet the idea, the people the market And sometimes the banks get it wrong and they will gut stuck eating it.

our economy thrives off upstart small business. It is important that we continue to allow the flow of finance for that to happen. Overall the banks aren’t hurting or going under as a result of their bad guesses. He’ll go back to the 90s and you have Chase bank restructuring all of their loans to President Trump because they over leveraged themselves and he was defaulting. They couldn’t take that big of a hit so they restructured and it kept both parties afloat.


we don’t have a full story but that very well may have already happened hear and they still couldn’t make good on it or Wells Fargo didn’t feel it was worth their time, or flat out the bank realized they own something of value and if the owners defaulted guess what they could suck it up and flip it for more.
again when you get a loan especially if that size you are effectively taking on a new business partner...the bank. And that business partner has more power and resources than you do. And if you allow them to have the leverage they may just push you out.

 

[wompa]

Seems a lot of people have this notion banks are out to screw people. Banks lose $$ when any kind of recourse is taken, most likely assets are written down and loan loss reserve is charged. The most desirable outcome is for loans to be paid as agreed.