Wells Fargo sues Gunwerks in Federal Court

[CMP70306]

So currently we only have Wells Fargo’s side of the story where of course they are going to paint the company in the worst possible light in order to bolster their case. I’ll be interested to see what Gunwerks side of the story is though it is curious why Wells chose now to go after them? Maybe with all the lawyers getting laid off due to the virus they needed something to do to justify their place on the payroll.

Seems a lot of people have this notion banks are out to screw people.

You mean like fraudulently opening accounts for millions of their customers to meet quotas?

Wells Fargo to pay $3 billion over fake account scandal

Since the fraud became public in 2016, the bank has faced a torrent of lawsuits.

www.nbcnews.com

 

[BLKWLFK9]

 

[candyx]

He can reopen again with his proceeds he took under a different name "Gunwarts" and apply for more grant money.

 

[Ankeny]

Lots of speculation going on here. FWIW, the Wyoming Business Council and the City of Cody have done everything possible to support the company. The real losers here are the taxpayers and the employees. No surprise to see who made the OP.

 

[wompa]

So currently we only have Wells Fargo’s side of the story where of course they are going to paint the company in the worst possible light in order to bolster their case. I’ll be interested to see what Gunwerks side of the story is though it is curious why Wells chose now to go after them? Maybe with all the lawyers getting laid off due to the virus they needed something to do to justify their place on the payroll.




You mean like fraudulently opening accounts for millions of their customers to meet quotas?

Wells Fargo to pay $3 billion over fake account scandal

Since the fraud became public in 2016, the bank has faced a torrent of lawsuits.

www.nbcnews.com

Apples and oranges. There, employees were gaming their own bonus system. I would highly doubt a bank is willing to have assets impaired, pay legal fees for shits & giggles. Gunwerks stopped paying, easy enough.

 

[RTH1800]

What is troubling is the statement that collateralized equipment was pulled out and sold. IF TRUE, that would constitute fraud. That is far worse than simply a failed business model and tends to get you a stay at club fed.

 

[brianf]

I’m confused how this has become a WF hate fest.

Company borrows
Company can’t pay
Company stops payment to suppliers
Company doesn’t pay sales tax

How is it a banks fault you:
Had a bad business plan
Poorly executed the business plan
Or it was a poor plan to begin with

How is WF causing the taxpayer to eat the sales tax causing more debt in their state. Now WF raises ATM fees or overdraft fees because of lost revenue (yes WF can absorb this little dollar amount, but this line of thinking expanded exponentially...)

WF gets more hate mail because of increased fees etc.

Companies go out of business all the time, this one happens to be in the rifle industry.

For his sake I’m hoping there are no personal guaranteed on the line of credit (then your house is gone), but from a civilian stand point...take everything he owns.

My property taxes aren’t going up because your a poor businessman.

 

[acudaowner]

surprise , surprise when you borrow money from a bank they want it back ...neither a lender nor a borrower be . or two in a bush and a foot in the ass they want their 2 dollars ...

 

[RTH1800]

Most start ups take on debt. People that don’t like that simply don’t understand debt.

I’m sure Bill Gates and Jeff Bezos both borrowed for their businesses at times. It’s all about the plan.

 

[THEIS]

What is troubling is the statement that collateralized equipment was pulled out and sold. IF TRUE, that would constitute fraud. That is far worse than simply a failed business model and tends to get you a stay at club fed.

Hi,

Add to that IF true too....The money wasn't accidentally removed from the WF account!!!

That in itself is like a big fat purpose based F you to the bank (and violation of the loan agreement), lolol.

Sincerely,
Theis

 

[candyx]

Trump use to fuck with the banks all the time back in the day, you take huge amount of debt on and if things get bad you make the bank restructure the loans and if they don't you claim bankruptcy . Banks in most cases had to restructure the loans.

 

[zog]

Lots of speculation going on here. FWIW, the Wyoming Business Council and the City of Cody have done everything possible to support the company. The real losers here are the taxpayers and the employees. No surprise to see who made the OP.

The taxpayers already lost when the government robbed them in the first place.

The employees were looking for work when GW hired them and now they make a decent wage working in a fun luxury competitive industry in a great place to live. Lucky people.

It's just a lawsuit. Lawsuits are just another part of doing business, especially with risky ventures. Lawyers on both sides cash in.

 

[MCHOG]

Rather than reading articles about the Complaint, here is the Complaint. I am omitting all of the exhibits.

 

[THEIS]

Rather than reading articles about the Complaint, here is the Complaint. I am omitting all of the exhibits.

Hi,

And there you go.....Now it is nothing but time and legal beagles.

Sincerely,
Theis

 

[jcmullis2]

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.

We’re all free to think whatever we choose to, but don’t over think this. Keep in mind this company collected taxes and didn’t pass that money on to the government. At a minimum they knew since 2018 they had serious financial problems and probably knew for many months before then. To spend money collected for taxes on r&d hoping to solve financial problems is equivalent to a person on food stamps using those food stamps to buy lottery tickets. It doesn’t just demonstrate poor management it shows that they steal through fraud. What’s to keep a person who has stolen tax monies for years from stealing money from everyone else. Nothing! The guys a thief the only question is how much and who else he stole from. I hope I’m not over simplifying things again.

 

[19Scout77]

Wyoming sales tax penalties and interest 1% per month and 10% penalty for intent. $365k is NOTHING.

 

[Josh1978]

Yea the fastest way to sink a business is not paying sales tax at the first of every quarter.

 

[THEIS]

Yea the fastest way to sink a business is not paying sales tax at the first of every quarter.

Hi,

Well taxes were definitely not their strongest set of skills...

Sincerely,
Theis

 

[Josh1978]

Hi,

Well taxes were definitely not their strongest set of skills...

Sincerely,
Theis

View attachment 7332174

Theis,
Wow! You weren’t kidding were you. Lol

 

[JohnnyUno]

I have owned several businesses, and I have no use for the big banks. "The buyer is slave to the lender" has never been more true when dealing with them. I would be 99% certain that the borrowers had to sign personal guaranties for these loans, as no big bank anymore will proceed without one. This , along with not paying taxes that you already took from customers, will land your happy asss in deep doodoo, and that's where these guys are. I'm not sure how the grant thing worked for GW, but the loans and tax issues are a big, big deal, and won't go away even if you take personal bankruptcy. Personal guaranties will be with you until the day you die or until you pay for them. The first creditors in line to recieve any proceeds will the the gov't, then the bank, then everyone else. I say the Davidson boys are history with this endeavor, and could face jail time if fraud is proven, but that's just speculation at this point.

 

[Dthomas3523]

I have owned several businesses, and I have no use for the big banks. "The buyer is slave to the lender" has never been more true when dealing with them. I would be 99% certain that the borrowers had to sign personal guaranties for these loans, as no big bank anymore will proceed without one. This , along with not paying taxes that you already took from customers, will land your happy asss in deep doodoo, and that's where these guys are. I'm not sure how the grant thing worked for GW, but the loans and tax issues are a big, big deal, and won't go away even if you take personal bankruptcy. Personal guaranties will be with you until the day you die or until you pay for them. The first creditors in line to recieve any proceeds will the the gov't, then the bank, then everyone else. I say the Davidson boys are history with this endeavor, and could face jail time if fraud is proven, but that's just speculation at this point.

Personal guarantees can’t be wiped out with a business filing bankruptcy. They can however be wiped clean with a personal bankruptcy.

Situationally dependent.

 

[Yoteski]

Hi,

Well taxes were definitely not their strongest set of skills...

Sincerely,
Theis

View attachment 7332174

 

[JohnnyUno]

Thanks for the clarification on personal vs business bankruptcy. I stand corrected.

 

[Josh1978]

I have owned several businesses, and I have no use for the big banks. "The buyer is slave to the lender" has never been more true when dealing with them. I would be 99% certain that the borrowers had to sign personal guaranties for these loans, as no big bank anymore will proceed without one. This , along with not paying taxes that you already took from customers, will land your happy asss in deep doodoo, and that's where these guys are. I'm not sure how the grant thing worked for GW, but the loans and tax issues are a big, big deal, and won't go away even if you take personal bankruptcy. Personal guaranties will be with you until the day you die or until you pay for them. The first creditors in line to recieve any proceeds will the the gov't, then the bank, then everyone else. I say the Davidson boys are history with this endeavor, and could face jail time if fraud is proven, but that's just speculation at this point.

You are absolutely right. I bet by the time this is all over the current owner/owners will have lost everything. (Homes, cars....anything that has any value at all.)

 

[Dthomas3523]

You are absolutely right. I bet by the time this is all over the current owner/owners will have lost everything. (Homes, cars....anything that has any value at all.)

Likely not.

 

[264win]

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

That would gross nearly $25,000,000.00 for three years, plus all the optics and other swag they sold. That is a lot of $$ that went somewhere.

 

[ZiaHunter]

I have been involved with commercial construction and development financing for over thirty years and have dealt with many different financial institutions including Wells Fargo. I lived through the S&L crises in 86 and had the enlightening experience of negotiating workouts on defaulted loans. Banks are generally reticent to foreclose and left as a last resort due to negative impacts on balance sheets. Since the financial crises of '86 and subsequent crises federal regulators have made it far more difficult to for banks to work out defaults with borrowers. Where in the past you were dealing with a banker you are now dealing with compliance departments who fear the regulators and are only interested in covering their asses. I have worked with WF on several large projects recently and as long as you follow the rules laid out in the loan documents you have no issues but default on any of the covenants you have an issue. In this case, the loan was most likely secured by the manufacturing equipment and WF was put into a position to protect their collateral. Being personal property v. real property there is a higher risk of diminishment.

 

[kriller134]

You are absolutely right. I bet by the time this is all over the current owner/owners will have lost everything. (Homes, cars....anything that has any value at all.)

Yeah I'd imagine messing with the tax man is a losing proposition. Can the .gov go after you personally for unpaid business taxes?

 

[JohnnyUno]

Yeah I'd imagine messing with the tax man is a losing proposition. Can the .gov go after you personally for unpaid business taxes?

I believe the gov't can be in the "garnishing" business if it goes that far. Keep in mind that sales taxes are obviously $$$ the business already collected from customers, but didn't pass it on to the gov't. The money went somewhere, and big brother will find out. So will the bank.

 

[sea2summit]

That would gross nearly $25,000,000.00 for three years, plus all the optics and other swag they sold. That is a lot of $$ that went somewhere.

???? What number are you using to do that? Any rifles I’ve seen second hand from GW were in the 5-6k price range new. Maybe one from the 10k range.

 

[LawnMM]

Seems a lot of people have this notion banks are out to screw people.

It's not a notion, it's a fact.

Banks caused the housing market crash. Banks store your money, that they don't guarantee but the government does, and give you 0.00125% APR while they use your money to write shitty loans that turn into foreclosures which they turn around and rent or sell.

Wells Fargo got fined like a hundred million for illegal fees and enrolling customers in bullshit programs without their knowledge or consent.

They're in the business of making money, at YOUR expense, they're not your friend. I've paid back every cent I've ever borrowed.

But if a bank writes shit loans and teeters on failure, they get bailed out.

How's that not screwing the consumer?

Let's not even get started on the 'Federal' Reserve.

 

[RTH1800]

???? What number are you using to do that? Any rifles I’ve seen second hand from GW were in the 5-6k price range new. Maybe one from the 10k range.

Added years to production numbers.

 

[JohnnyUno]

It's not a notion, it's a fact.

Banks caused the housing market crash. Banks store your money, that they don't guarantee but the government does, and give you 0.00125% APR while they use your money to write shitty loans that turn into foreclosures which they turn around and rent or sell.

Wells Fargo got fined like a hundred million for illegal fees and enrolling customers in bushit programs without their knowledge or consent.

They're in the business of making money, at YOUR expense, they're not your friend. I've paid back every cent I've ever borrowed.

But if a bank writes shit loans and teeters on failure, they get bailed out.

How's that not screwing the consumer?

Let's not even get started on the 'Federal' Reserve.

That's all well and good, but when a guy with half a brain cell goes into a bank to borrow money, they know they have to pay it back.. It's a very simple arrangement when you get down to it. As you said, and I agree, big banks suck.

 

[physguy88]

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

Possibly, possibly not. The loan came to term in dec 2019. Outstanding balance was for the $2.5 mil plus interest on one loan and about half of another $750k loan.

That was right around the time their facilities completed and they were putting out the YouTube series, etc.

Collateral was probably equipment from their old facility which they sold during the switch to the new facility.

So let's say they overcommitted themselves and got into a cash crunch end of year 2019. The collateral had to be sold to allow efficient start of business operations at the new facility. Now the loan comes due and they don't have the money. They try to work it out with Wells figuring q1 sales will provide extra cash to pay off the loan.

q1 2020 happens, sales are nil because of the virus, now things are stretching into may with no resolution, Wells sues.

Taxes are a separate issue. From Theis post apparently theyve always played fast and loose with taxes.

In fact it sounds like fast loose and aggressive is how they they handle their cash in general.

 

[264win]

???? What number are you using to do that? Any rifles I’ve seen second hand from GW were in the 5-6k price range new. Maybe one from the 10k range.

Using new cost Of 10k each for rifle packages for the 3 years listed. I’m sure they sold some for less, but there were many that cost more than that as well. Plus all their high priced optics and other swag. They likely grossed 9-10 Million per year.

 

[Dthomas3523]

Possibly, possibly not. The loan came to term in dec 2019. Outstanding balance was for the $2.5 mil plus interest on one loan and about half of another $750k loan.

That was right around the time their facilities completed and they were putting out the YouTube series, etc.

Collateral was probably equipment from their old facility which they sold during the switch to the new facility.

So let's say they overcommitted themselves and got into a cash crunch end of year 2019. The collateral had to be sold to allow efficient start of business operations at the new facility. Now the loan comes due and they don't have the money. They try to work it out with Wells figuring q1 sales will provide extra cash to pay off the loan.

q1 2020 happens, sales are nil because of the virus, now things are stretching into may with no resolution, Wells sues.

Taxes are a separate issue. From Theis post apparently theyve always played fast and loose with taxes.

In fact it sounds like fast loose and aggressive is how they they handle their cash in general.

If all this is the case, Corona was just the inevitable. Eventually something triggers this if the cash isn’t being spent wisely.

 

[RTH1800]

I remember even as a teenager business people would say, the first sign of business failure is delinquent taxes.
They would explain that once taxes are missed, it’s just a matter of time.

 

[BuLLet]

I was just checking out the Revic scope, now probably best to hold off on that.

 

[Josh1978]

Yeah I'd imagine messing with the tax man is a losing proposition. Can the .gov go after you personally for unpaid business taxes?

If it is sales tax the state will come in and start auctioning stuff off until the debt is satisfied.

 

[candyx]

The amount of time he can hold off the tax collectors is relative to the amount of ammo he has.

 

[R_Swanson]

It's not a notion, it's a fact.

Banks caused the housing market crash. Banks store your money, that they don't guarantee but the government does, and give you 0.00125% APR while they use your money to write shitty loans that turn into foreclosures which they turn around and rent or sell.

This view, although popular, is rife with inaccuracies. Would take way too long to go into all, especially since this thread isnt about this topic. But I thought I should note it.

 

[fdkay]

 

[BadAccountant]

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.

I haven't turned a blind eye to anything and I sympathize with people who have been screwed by WF or any other large bank. That being the case, I think you're making the mistake of mixing what ought to be with what actually is.

It ought to be that WF would work more with people who have fallen behind to make sure they don't lose everything, but that isn't what actually is.

Gunwerks made a deal with the devil.

If Gunwerks is going make a deal with the devil, they had better toe the line to the letter.

This looks like is a badly mismanaged and possibly corrupt business breaking financial (and legally enforceable) promises to a notoriously shitty bank that is ready to pounce at any opportunity.

 

[isofahunter]

IRS probably inbound next, sure looks on the surface like someone was "too smart" for their own good.

 

[Potsy]

I've watched a few folks shit can their own businesses or livelihoods for plenty of reasons. Addiction, women, wanting to play "big wheel", or just flat out greed. Most of the time, it seems as though it would be obvious to people that they're not going to get by with it, especially when dealing with the taxman and the banks, but they continue on with it.

While I don't know much about them and don't own any of their stuff (likely never will), it seems like most of time, when businesses are in trouble, you usually start hearing about Q.C. issues, lack of communication, putting folks off, failing to deliver altogether, stuff like that. Basically screwing their customers (it's not just gun businesses that do that, btw). It's usually the first thing you hear about and that doesn't seem to be the case here, at least not from what little I know of them, which I find odd.

 

[R_Swanson]

It ought to be that WF would work more with people who have fallen behind to make sure they don't lose everything, but that isn't what actually is.

Gunwerks made a deal with the devil.

If Gunwerks is going make a deal with the devil, they had better toe the line to the letter.

This looks like is a badly mismanaged and possibly corrupt business breaking financial (and legally enforceable) promises to a notoriously shitty bank that is ready to pounce at any opportunity.

It doesnt work like that. This is C&I loan - it doesnt work like your mortgage. The terms werent posted above, but from what I gather this loan was a bullet and interest only. That means no principal is due until maturity, and it was probably 1-3 yrs in duration, max.

99% of the time these loans are rolled over. Usually with the existing lender, as its a way easier process. They arent designed for the borrower to actually have 2.5mm (in this case) of excess liquidity in 1-3 yrs. The term is an indication of the riskiness of the loan, both from a credit and interest rate standpoint. There is pretty much a zero percent change WF didnt "try to work with them". Thats exactly what they wanted to do when they first wrote the loan. Lend them this at X term, and re-up in that amount of time. What all the info so far suggests is that Gunwerks had a horrible debt to coverage ratio (noted in the docs above... aka their operating income couldnt cover their debt costs) which means Gunwerks could not manage their balance sheet effectively and didnt have the income to support their loans.

TBH - the grant they got an incredibly sweet deal. 1.5% fixed for 30 yrs? There is zero doubt that the state of Wyoming was paying more than that to service their own debt. It seems like the real loser here are the residents of WY.

 

[BadAccountant]

It doesnt work like that. This is C&I loan - it doesnt work like your mortgage. The terms werent posted above, but from what I gather this loan was a bullet and interest only. That means no principal is due until maturity, and it was probably 1-3 yrs in duration, max.

99% of the time these loans are rolled over. Usually with the existing lender, as its a way easier process. They arent designed for the borrower to actually have 2.5mm (in this case) of excess liquidity in 1-3 yrs. The term is an indication of the riskiness of the loan, both from a credit and interest rate standpoint. There is pretty much a zero percent change WF didnt "try to work with them". Thats exactly what they wanted to do when they first wrote the loan. Lend them this at X term, and re-up in that amount of time. What all the info so far suggests is that Gunwerks had a horrible debt to coverage ratio (noted in the docs above... aka their operating income couldnt cover their debt costs) which means Gunwerks could not manage their balance sheet effectively and didnt have the income to support their loans.

TBH - the grant they got an incredibly sweet deal. 1.5% fixed for 30 yrs? There is zero doubt that the state of Wyoming was paying more than that to service their own debt. It seems like the real loser here are the residents of WY.

My reference to WF working with people was in response not to the GW case, but to those who previously defaulted on their mortgages and WF's reputation as a shitty bank.

Yes, typically banks do try and work with businesses to recover loans - provided that operating income is still being generated. Sometimes this can even extend to banks sending in business consultants to try and turn things around if a company is generating revenues and posting operating income. If a business is at least doing that, then often consultants can work to ensure that those revenues work their way down to the net income line because so often it's a spending problem. That said, typically those good-faith moves only happen when both parties are engaged in good faith.

What I see here is likely GW was over-leveraged and probably violated a debt covenant with WF. Failing to service debts - especially taxes - would be a big red flag to me for the simple fact that governments have more power to collect on debts than a private lender like a bank.

So when I see GW falling behind on taxes (only local taxes insofar as we know at the moment) and then removing their deposits from their place of proper custody with WF, I sense bad faith in one of the parties, and that more fully explains WF move to put the company into receivership. That they fell behind on what is essentially free money from WY is icing on the cake.

 

[JeffLebowski]

Prediction: this is the tip of the iceberg.

 

[264win]

It looks like they are still taking orders and $$. I am very interested to how this pans out.

 

[landonm]

I work for Gunwerks. There's a lot of speculation and false information floating around here, guys. The truth will come out soon. We've struck a deal with Wells Fargo and this should all be finalized and squared away tomorrow with more details coming to the surface. We're not going out of business, in fact we're seeing our best year to date by far!