Who is Liz Carmichael?
The Arab oil embargo in the 1970s caused the price of petrol to spike. American motorists then, increasingly concerned about fuel efficiency, had their interest piqued when the previously unknown entrepreneur Liz Carmichael announced in 1973 that she had developed . She claimed the three-wheel car, known as the “Dale,” could do 70 miles to the gallon. Carmichael lived in Los Angeles and variously claimed to have a degree in engineering and an MBA from Miami University and be the widow of an employee of the US space agency Nasa.
What was the scam?
In 1974, Carmichael set up the Twentieth Century Motor Car Corporation in Nevada to produce the Dale. She tried to raise money from investors by selling shares in the new company, rights to dealerships, and even models of the (yet to be built) Dale. The Dale was based on an actual design, licensed by car designer Dale Clift. Still, it proved to be impractical and unsafe, even in prototype form, and Carmichael seems to have given up very quickly on the idea of manufacturing it. Instead, she simply pocketed the money she received from investors.
What happened next?
A burst of publicity helped Carmichael raise funds, but it also alerted the authorities, who discovered that the factories where the Dale was supposedly being made were empty.
Carmichael tried to prolong the scam by moving to Dallas. Still, the authorities quickly shut the firm when it was discovered that Carmichael, a transgender woman -was a fugitive previously known as Jerry Dean Michael, wanted counterfeiting and bail-jumping. She was brought back to LA and convicted of conspiracy, grand theft, and fraud. She absconded again before sentencing.
What lessons are there to be learned?
Carmichael claimed in press interviews to have received $100m in pledges from investors ($537m in today’s money). Later reports suggest actual losses to investors were closer to $2m ($10.7m). Some former employees are convinced the Dale project could have succeeded, but even Carmichael they were surprised by people’s willingness to invest money based on Carmichael’s claims. Doing the proper research before you part with your money is particularly important when investing in firms that claim to have developed “groundbreaking” technology.
Kris Paterson is a writer for WhatJobs.com
Image Credits: LA Times