The Timepiece Gentleman: Origins of a Ponzi Scheme

anthony farrer luxury watches the timepiece gentleman

Anthony Farrer of the Timepiece Gentleman, the disgraced grey market luxury watch dealer. As you may know, he was arrested by the FBI for wire fraud, for stealing at least 3 million dollars of luxury watches.

I’m going to break down what I think happened and how Anthony Farrer found himself running a consignment watch Ponzi scheme.

More specifically, an accidental Ponzi scheme. Meaning, I don’t think he set out to run a Ponzi scheme.

What often happens is, desperate business owners, do whatever it takes to keep their business afloat, especially when they run into cash flow problems.

Did Anthony Farrer Planned the Ponzi Scheme?

The question I want to answer today is: Did Anthony Farrer set out to rip people off by stealing their watches via a Ponzi scheme?

My short answer is… No. Allow me to explain…

The Rise and Fall of The Timepiece Gentleman

From the beginning of their days in Dallas at The Crescent with Marco Nicolini, these were their humble beginnings.

At the time they had it all. They had business success, sales were good, their reputation was stellar, and their YouTube channel was on fire.

The partnership with Anthony and Marco was a perfect synergy of salesmanship and expertise. I generally don’t like business partners, because it often ends messy. But, with the right people, the business can go much farther than with just, one person.

At the time, they didn’t have a lot of experience running a business - like the one they had at the Crescent.

So naturally, they hired an operations manager by the name of Mike Rudin. He was a great addition to the team, and looking back… after he left… that’s when things started to fall apart for The Timepiece Gentleman.

By hiring and having Mike Rudin, Anthony and Marco were able to fill their knowledge gaps. Perhaps in QuickBooks bookkeeping, financial management, and most importantly setting up and maintaining their infamous “spreadsheet”.

So Why Did Mike Rudin Leave The Timepiece Gentleman?

I guess that he realized that he couldn’t save the business from the owners, Anthony and Marco. Meaning, that the business was probably so mismanaged at the time, it didn’t matter what he did, he probably realized that the business was doomed to fail, and he wanted to get as far away from it, as he could.

He probably pointed out all of the business deficiencies, like:

  • the lack of internal controls (they were sending duplicate wire transfers)
    poor inventory management (watches went missing)
  • lack of security (you all know they got robbed multiple times)
  • maybe neglecting IRS reporting of cash transactions over $10 thousand
  • maybe neglecting money laundering compliance requirements
  • and most likely, a lack of proper sales tax reporting.

I’m sure Mike Rudin made many of these recommendations to Marco and Anthony, but they most likely fell on deaf ears. I mean, when a business is doing well, who’s got time for all that administrative nonsense?

Let me tell you, all that stuff is super important, and if you ignore them. It will eventually bite you in the ass.

Now, I understand, that most business owners focus on sales or top-line growth. That’s where the sums of money at. All that other stuff, let’s call it accounting and administrative, well that’s boring. Right? But it is super important!

Okay, so Mike Rudin leaves, and I don’t think they found anyone to replace him.

One of the key problems for The Timepiece Gentleman is that they had a big-monied secret investor. This investor probably invested a million or more in the original business.

The challenge with this is that outside investor money can often cover up any fundamental financial problems a business may have.

Meaning, I guess that if you took away the investor money, they probably would not have had a wildly successful operation like the one they appeared to have at the Crescent.

Anthony Farrer Ponzi Scheme: When Did it Start?

So, coming back…When do I think the accidental Ponzi scheme started?

I vividly recall from a now-deleted video, that after Anthony and Marco visited with Roman Sharf over at the Luxury Bazaar in Philly… Anthony came back with an epiphany that he shared at the end of one of his videos. His big takeaway was that they needed to focus more on consignments versus actually purchasing watches outright.

It’s kind of obvious, but if you consign a watch versus buying it outright… you instantly improve your finances or cash flows, since you don’t have to commit your capital towards buying the watch. You essentially shift the risk to the consignor, who trusts you with their luxury watch.

Unscrupulous business owners might even think of consignments as an interest-free loan. Think about it.

So, focusing on the consignment model started way back at the Crescent.

And if you recall after Jimmy left Anthony’s LA Timepiece Gentleman operation, he made a video for Grand Calibur addressing the “buyout”. There were unpaid consignments and sales tax issues way back when at the Crescent.

Fast forward, Anthony is now in LA, he tried and failed, at running his business out of the $95 thousand penthouse in downtown LA. Okay, that’s no surprise to anyone.

So, we know that Anthony had a $2 million investment in his LA business vision. He wanted to change the way the West Coast shops for luxury watches. He even trademarked this.

Naturally, when a business struggles, they stop paying their bills. Even though he had a $2 million investment from a private investor, who lost his entire investment.

In my experience, when you don’t earn the money, you’re a lot looser with it. Meaning, that when you run a lean business, you know how difficult it can be to earn a profit. After all, their margins were only 5 to 10%, and with their lavish spending, numerous employees, and fixed costs. There was no way they were profitable.

Anthony Farrer was just pretending to run a successful business in Los Angeles. It was just a matter of time until he ran out of money. It didn’t take a rocket scientist to know that he would eventually fail, especially with a decline in the luxury watch market.

When business is good, problems can be hard to spot. But when the market slows down, these previously hidden issues become more obvious.

So now, Anthony Farrer and the Timepiece Gentleman are running out of money.

What does he do? He seems to double down and lease a red Ferrari with his new business, right-hand man, Zee.

Why did he do this? I think it was to fake it or pretend that business was going great when in actuality, it was failing. And he was desperate.

What else does he do…Oh, he slashes his consignment rates to 5% for most watches.

He needs money desperately, so he tries to get people to consign watches with him, by lowering the consignment fees and also creating, in all likelihood, illegal watch giveaways for anyone who consigned a watch with him.

I mean, in hindsight, it’s quite obvious. He was desperate for money and got creative with getting people to consign their watches with him. All along, faking it to the public that business was doing great.

He admitted on a phone call with Bob on TikTok, that he was $5 million in debt, and he was out of money. He was robbing Peter to pay Paul. His own words

At this point, we know the Ponzi scheme was in full swing, and the rest is history.

What can we learn from this?

Do not consign your expensive luxury watch to a grey market luxury watch dealer. If you must do business with them, sell it outright and don’t release the watch until the wire transfer hits your account.

We’re entering some very tough economic times and businesses are getting nervous. You have Roman over at Luxury Bazaar laying off people left and right.

In times like this, business owners will often do desperate things to keep their businesses afloat. You’ve got CRM Jewelers, who are a seemingly fine operation, now all of a sudden are running luxury watch raffles.

I don’t know if these are legal or not. 

They are most likely subject to gambling laws, which can classify them as a form of lottery. Businesses generally face strict regulations. Additionally, raffles must comply with advertising and disclosure standards, and transparency about the odds, prizes, and terms.

Winners can also face tax implications, and organizers must consider their tax obligations. Given all these intricacies, it's essential for anyone considering hosting a watch raffle to seek proper advice to ensure legal compliance.

I’m not a lawyer and this isn’t legal advice, but you know what I’m saying.

Here’s what the IRS says regarding taxes and raffles:

❝An organization that pays raffle prizes must withhold 25% from the winnings and report this amount to the IRS on Form W-2G. This regular gambling withholding applies to winnings of more than $5,000. If the organization fails to withhold correctly, it is liable for the tax.❞

Just know that what I just read applies to tax-exempt organizations, but I believe it should also apply to others. That's it for today, I hope you found this informative.

Thanks for reading and see you in the next blog post!

About The Author

Noel Lorenzana is an Illinois-licensed, Registered Certified Public Accountant with over 20 plus years of experience.

Through his online educational content, YouTube videos, easy-to-understand courses and 1-on-1 consulting, he gives you the tools to become tax savvy for yourself.Β 

Disclaimer: Any accounting, business or tax advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.