Troy Allen Melquist works by gaining your confidence and getting you to invest money, directly or indirectly, in a business.
If you are working with him at a company, he might convince you to leave and start up a new venture with him. He will tell you that he has expertise and experience in an area and connections to people who have resources. At the beginning his ideas will seem legitimate, but a basic background check should raise suspicions. The fact that most people are not suspicious by nature and don’t check him out allows his scams to fly under the radar long enough for you to get hooked in. In the beginning phases, he’ll contribute small amounts of money and legitimate help in an effort to bolster your confidence in him.
However, at some point in the new venture things will start to go wrong. Of course, most start ups experience many typical problems related to (for example) technical projects getting out of control, or just basic cash flow issues. It may be difficult to determine if the problems you are facing are the typical types of problems, or stories that he will spin as a part of a deliberate scam to siphon funds out of your business. Melquist will position himself in your new venture to (a) have access to some technical project you don’t understand completely, and (b) have access to the money coming into that project (from you or from your clients).
As you get suspicious of his activities, he will first blame the problems on technical issues or the other ordinary things that go wrong with businesses. Then he’ll start to blame other people, often investors who promised money but haven’t delivered yet, as he did with “Butch” in the Purple Valley episode. Or he’ll route information through previously unheard of third parties, as he did with the accountant “Natalia” in the RedcellX scam. These investors and associates will as likely as not be completely fictional people. He’ll go to great lengths to string people along at this stage. Analyzing Melquist’s outbox showed that he attempted to carry on dialogs between his “Natalia” persona and several RedcellX employees for a few weeks. This is an effort to buy time.
If those runarounds don’t work, he’ll get emotional and tell you a story to gain your sympathy or just to throw you off guard. These storied may be true or false. I don’t know if he has prostate cancer (a claim he made in the Purple Valley scam). But I have confirmed that his daughter does have a serious medical condition.
Once he sees that you’ve seen through him, he’ll start to play hardball by threatening legal action. His fake “lawyer” (actually himself) will send you a phony cease and desist letter. He may threaten to sue people or organizations around you. He may make threats of violence against people you know and care about. (So far he has not carried through on any of these actions.) He is simply trying to frighten you into backing down — and also to get you to start weighing the costs of prosecuting him in the hopes that you’d rather cut your losses and give up.
He doesn’t like publicity of any of this, because his methods require that people trust him, which in turn means that his past needs to remain hidden from his future victims. When we published the RedcellX story on our website and got the local weekly to name him as rogue of the week, these activities were what effectively put an end to that scam.