When a young entrepreneur like David Karp took a $50-a-month contract from a bank, he didn’t know it would turn into a life-changing investment.
The deal, known as the Karp Option, was signed with the help of his father, a former executive at Citigroup, according to court documents.
But it didn’t last long.
Within a few months, David Karsons investment in the option ballooned to $3.3 million.
That investment allowed him to pay off the mortgage on his home and buy a $600,000 house.
He then invested $1.4 million in a retirement account.
Now, he’s trying to make that same investment with his son, who has a $100,000 line of credit.
He’s making a point that the options were never his fault, his attorney, Eric Shoup, told Recode.
The family is a small business and they’re doing very well financially.
David has a high school diploma and is trying to save up to purchase a new car.
But, the Karson family has another big financial hurdle to jump.
They are in bankruptcy, Shoup said.
They’ve been trying to collect from their creditors and the bankruptcy judge has given them until September 1 to pay $1 million.
The Karsones owe about $5.5 million in back taxes and other debts.
The judge has said the family will have to pay another $3 million in order to pay the creditors.
Shoup says David’s wife and two children were living with him during the bankruptcy process, so they’re being treated as collateral damage.
The couple has been in the United States since they were 14, Shoups attorney, Andrew LeBoeuf, said.
That’s the only way they can make payments on the debt, he added.
Karp’s wife, Sarah, was working for the family’s small jewelry store.
She recently became a U.S. citizen and is a U-visa holder.
David said he and his wife will soon be able to work again, he said.