Sales Rep's caught in an illegal scheme 👀

The Legend Ventures Sales Scheme

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Happy National Nonprofit Day! Shoutout to all of the nonprofit sales reps out there. Ya’ll are the real heroes. 🫡 

In today’s Follow Up:

  • The 2023 Stratton Oakmont 👑 

  • Your personal SDR on steroids 💉 

  • Sales in the news 🗞️

  • Sales acquisitions 💰️ 

  • Sales weapon of the day 🛠️

Sales Fact of The Day

51% of sales leaders say their sales or is having difficulty keeping pace with the changing demands and expectations of buyers.

Source: Harvard Business Review

Boiler Room Sales Reps & $13M in Commissions

Last week we covered the actual Stratton Oakmont and this week we’re covering the 2023 version.

That’s right, we found the modern-day Stratton Oakmont.

This story involves all the good stuff: 🧂 

  • Wall Street

  • Sales boiler room

  • Selling fraudulent securities

  • Charges from the SEC

It starts with an unregistered broker-dealer called, Legend Ventures (yes, the script writes itself).

According to SEC filings, the firm created a classic Wall Street boiler room by recruiting a network of unlicensed sales reps. From February 2022 to October 2022 these sales reps cold-called clients and sold them on “private equity” investment opportunities.

web archive - legend venture’s old website

Here’s how the scheme worked:

The firm’s sales reps sold investors shares in the “Legend Ventures” fund.

Legend Ventures then used that money to invest in pre-IPO shares that normal investors don’t have access to.

For example, if an employee at a private company wants to sell their shares, they’d normally need to wait until an IPO to cash out. But instead of waiting, a private investor like Legend Ventures can purchase the employee’s shares in an off-market deal.

The employee gets cash upfront and Legend Ventures gets their pre-IPO shares.

And the best part of all? Legend Venture sales reps “didn’t make any commission” when they sold these shares. They only made money when the investors made money.

Or at least that’s what they told investors…..

According to SEC documents, the share prices were marked up by 60% to 105% to investors, and sales reps received a heavy commission on that.

Over the course of 9 months, sales reps raised over $35M from 300 investors, resulting in $12.8M in commissions. 😳 

Almost half of what they raised went directly into the pockets of the sales reps.

But unfortunately for these sales reps, the party had to end sometime…

In June of this year, the SEC filed a complaint against the firm and they seized operations.

But that’s not where this story ends…

When you dig a bit deeper, this story gets even juicier because it turns out that this isn’t the first time for these guys.

A firm by the name of StraightPath Venture Partners LLC was shut down the year before, and most of the management team and sales reps were the same!

And StraightPath’s numbers made Legend look like a rookie.

StraightPath raised over $410M from 2,200 investors and paid their execs over $75M in bonuses and their sales reps over $48M in commissions.

To make this whole story even better, Legend Ventures listed the amount of happy and satisfied customers on their website:

What can we learn from this story?

Even though the founders of Legend could go to jail, it was a bold move to say the least, and some may even say a legendary one… (pun intended).

This also shows that great sales reps could sell ice to an Eskimo.

But that was the problem.

These salespeople were allegedly selling pre-IPO shares at a 105% markup. Someone must have known something was wrong.

Which, brings us to Rule #23 of The Follow Up: If something feels wrong, it probably is.

Have you ever sold something that felt like a scam?

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Your Personal SDR on Steroids 💉 

The guys at Sales.co have mastered the art of cold email.

And their scraping skills give them access to leads you can't find in Apollo or Zoominfo.

Don’t believe me? Check out this response they got yesterday…

With the power of scraping and cold email, the guys at Sales.co have figured out how to generate more monthly meetings than a $150K sales rep.

They’re taking on a few new clients this month, and offering custom videos to The Follow Up readers.

See exactly how they can generate meetings for you on autopilot.

👇️ 

Sales Tip of The Day

When a prospect asks if your product can do something (and it can’t), try leading with honesty.

❌ Instead of saying: “Well…. we can do something very similar by doing xyz, but it’s not exactly the same.”

✅ Try saying: “No we can’t. But we can do XYZ, which most of our customers actually prefer.”

Leading with honesty helps build trust with your prospect, and allows you to offer up alternatives (in a less salesy way).

Sales in the News 🗞️ 

  • A construction supply sales rep stole >$250K from his company by faking returns and crediting the refund to his personal credit cards.

  • This UK Sales Director came from humble beginnings and now makes >$200K/year thanks to the sales training he got in his 20s.

  • Customer experience needs to be a priority in B2B sales. Clean CRMs and access to consistent data can help sales reps provide a better buying experience.

  • Why is it that every sales rep that’s gotten laid off, fired, or passed on for a promotion, always claims that they also had the best numbers?

Sales Acquisitions 💰️ 

  • Clari acquires Groove sales platform: Clari plans to integrate Groove’s core product into their platform, to create a comprehensive revenue platform powered by AI.

  • Apex Revenue acquires Phone Ready Leads: Apex Revenue provides outsourced sales team solutions and plans to integrate PRL’s sales intelligence product into their outbound services.

Sales Weapon of The Day

Warmy: Email warming and deliverability tracking to make sure your emails reach your prospects and don’t end up in spam.

Checking in on LinkedIn ✍️ 

The oldest trick in the book 😂 

Sales Meme of the Day

And that’s a wrap!

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