From KGAB in Cheyenne, WY.

Wells Fargo Bank has sued the Cody-based custom-rifle maker Gunwerks, LLC, for $2.8 million for unpaid loans and wants the company's equipment, according to federal court records filed Wednesday.

Gunwerks, which expanded its facility with a Wyoming Business Council-recommended loan package, also owes $1 million to creditors and and for unpaid sales taxes, according to the complaint by the bank and Wells Fargo Equipment Finance, Inc., through its attorneys at the Casper office of Crowley, Fleck, PLLP.

"These circumstances require the immediate appointment of a receiver to recover, salvage and retain the value of the Collateral," according to a separate motion for a court-appointed receiver.

The collateral includes Gunwerks' equipment, inventory and intellectual property. Gunwerks has signed off on the request, according to the motion for a receiver. "For the reasons specified in the Complaint and summarized in this Motion, the appointment of the Receiver is in the best interest of Wells Fargo, has been agreed upon by the Borrower, and is necessary to preserve the value of the Collateral.

Wells Fargo recommended as receiver Focus Management Group, which has worked with firearms companies.

Besides what the company owes to Wells Fargo, the complaint said Gunwerks financial report in February told the bank that it owes more than $622,000 in past due bills, according to the complaint.

Likewise, the financial officer told the bank that Gunwerks stopped paying sales tax in the third quarter of 2018 and the amount due was $365,000, according to the complaint.

What all this means for the company's future and its employees is unknown.

A Gunwerks' spokesman did not return calls seeking comment.

Gunwerks manufactures custom-made rifles that can, with a few adjustments, shoot accurately 1,000 yards out of the box, CEO Aaron Davidson said in a YouTube promotional video from the Wyoming Business Council. The company also makes optics, ammo and gear.

However, the Wells Fargo filings did not discuss the company's current relationship with the Business Council, which in September 2018 recommended Gunwerks' request for a $3 million grant and a $3 million loan package to expand its manufacturing facility.

In October 2018, the State Loan and Investment Board -- comprised of the state's top five elected officials -- approved the request. The new facility would be owned by Cody economic development organization Forward Cody and leased to the company.

As a result of the anticipated expansion, the company said it would add 52 jobs, according to a report by the Business Council.

In March 2019, the company along with government and business officials broke ground for the new facility, which was expected to be completed by December.

Gunwerks' expansion garned widespread publicity in regional media outlets and national publications including the NRA's American Rifleman and The Gunmag.

Neither Wyoming Business Council CEO Josh Dorrell nor Forward Cody CEO James Klessens returned calls seeking comment.

For its part, Wells Fargo Bank and Wells Fargo Equipment Finance outlined in its complaint the loans they made to Gunwerks, and the SM Group, LLC, whose sole member is Davidson.

The defaulted loans as of Monday total $2,783,757.82, with interest accumulating at more than $20,000 a month plus costs and legal fees, according to the motion for a receiver. Of that total, Gunwerks owes $2,437,524.39 for the operating loan.

After Gunwerks defaulted on the operating loan, the bank asked Gunwerks to provide a list of accounts owed to it plus invoices, but it refused, according to the complaint.

Likewise, Gunwerks refused to transfer back to Wells Fargo money the company transferred to another bank despite its agreement to maintain its deposits at Wells Fargo. Wells Fargo believes those funds were from the sale of its collateral, according to the complaint.

"The Borrower has taken control of Wells Fargo's collateral, refuses to disclose the names and addresses of account obligors for accounts that constitute collateral for Wells Fargo and has removed and refused to remit proceeds of Wells Fargo's collateral to prevent such collateral from being applied to the Borrower's loans," according to the complaint.

Bankers and lawyers.......

X2, I have been on the owed end of a few bankruptcies + if one thinks they will ever get the money owed they probably believe in the tooth fairy too. But yeah you're right, the bankers + lawyers will get paid.

Same with me as with Randy. By the way, it never ceases to amaze me how many business owners, when they strike business and financial success, they start to rob the business of funds and capital for their own selfish whims and desires. They figure that there's always more money flowing in just around the bend in the road to take care of their obligations. As a result, they royally screw their creditors, their customers, governmental taxing/business entities, and they eventually end up going broke and filing bankruptcy or going into receivership. To be a good small business owner you must be well disciplined and not rob and or sink the business for your own personal gain.

quote:

Originally posted by NormanConquest:
X2, I have been on the owed end of a few bankruptcies + if one thinks they will ever get the money owed they probably believe in the tooth fairy too. But yeah you're right, the bankers + lawyers will get paid.

So have I; it is why I find Boddington's BK revolting.

I have absolute no sympathy, or respect, for anyone who borrows money and does not pay it back!

Seems like we have a dialogue on this issue running under two different posts-one here and one under American Big Game Hunting.

Saeed, Agree completely. "You borrowed the money for your education. You got the education. Pay back the money"!!

https://www.gunwerks.com/blog/...fargo-litigation-225

Settled?

quote:

Saeed, Agree completely. "You borrowed the money for your education. You got the education. Pay back the money"!!

Same with any money you borrow for any reason. It wasn't yours in the first place.

I totally agree. If you borrow ANYTHING, give it back, thus the term borrows rather than give. I think most folks understand this but those that deviate from that norm are doing it with preconceived intentions + Heaven knows I have had several done to me. I know that sometimes stuff happens + the customer can't pay through no fault of their own + that I can + have tolerated, but those that intentionally do that knowing upfront that they are screwing you is intolerable. I remember one quite clearly from 1989 that damn near gave me a heart attack until I forced myself to calm down but I wouldn't go to Granger, Tx. for 2 years because I knew if I saw the SOB, I'd shoot him.

What a con! Set up a company with a $3mm grant and $3mm loan based on tangible collateral. Transfer the collateral to another bank. Don't pay sales taxes, default the loan, and screw the people of Cody for $3mm. I'll bet that crooked CEO paid himself well and will skip to another victim. This doesn't read like a businessman who let success go to his head. It sounds like willful, premeditated criminal intent. I.E. - a con job.

From what I have read, WF would be the last bank I would like to deal with!

Were they not the ones who have created thousands of fake accounts a while back??

Yes. A competition was set up to reward employees that sold the most ancillary services and new/expanded accounts. Predictably it got out of hand to the point employees were setting up these accounts without the customer's consent. I believe they were sanctioned quite heavily for it.

quote:

Originally posted by Saeed:
From what I have read, WF would be the last bank I would like to deal with!

Were they not the ones who have created thousands of fake accounts a while back??

quote:

Originally posted by Saeed:
From what I have read, WF would be the last bank I would like to deal with!

Were they not the ones who have created thousands of fake accounts a while back??

I would tend to agree. WF has been horrible to deal with for several of my clients. Too many good banks out there.
As for Gunwerks though, that’s the funny thing about borrowed, you have to give it back. And above all else, pay your taxes, at the end of day, those are the real gangsters, they don’t play.