An entrepreneur who appeared as a contestant on the hit ABC television network reality show Shark Tank is one of the suspects arrested for allegedly being part of a New Jersey cocaine-distribution ring. Prosecutors in Monmouth County charged John DePaola with one count of third-degree conspiracy to distribute cocaine, one of nine defendants targeted in the investigation.
Along with his two partners in their company known as “Likwid Concepts,” DePaola pitched a plastic paint brush cover in an episode of Shark Tank about three years ago that he claimed would “revolutionize” the painting industry. The entrepreneurs came in with a request for $50,000 in exchange for a 10 percent equity stake, i.e., ownership interest, in their company.
Several sharks were interested, including Kevin “Mr. Wonderful” O’Leary, who is very picky about what he invests in, and proposed a royalty arrangement. The paint brush cover makers wound up striking a deal with QVC queen Lori Greiner, who offered $200,000 for 20 percent. Greiner pulled a Mark Cuban during the negotiations, requiring them to decide right away, even before Barbara Corcoran even got a chance to get in.
Cops executing search warrants confiscated about 721 grams of cocaine and about $15,000 in cash during the arrests, which was the culmination of a nine-month, multi-agency investigation code-named Operation Snowball, TMZ reported. The suspects allegedly trafficked about one-third of a kilogram of cocaine every week in the Freehold area.
DePaola’s lawyer told the New York Post that the charge against his client was “baffling” and “without merit” and rejected the premise that his client was a “druggie” or is involved in drug dealing.
In a follow-up Shark Tank segment, the entrepreneur trio explained that their product went into wide retail distribution with Lori Greiner’s help and recorded $1.5 million in sales to that point.
If convicted in a court of law, John DePaola, 53, could face up to of three to five years behind bars.
If you haven’t seen Shark Tank, what happens in the tank is that entrepreneurs or would-be entrepreneurs pitch their ideas to five often obnoxious, but oddly engaging, deep-pocketed “sharks” and try to convince at least one of them to invest in their venture. In grilling the entrepreneurs standing in front of them, the millionaire business moguls, who bring to the table a diverse set of industry experiences, are sometimes overly stingy with their money or overreaching with their demands for equity in a company or with their insistence on outsourcing manufacturing of a given product overseas.
As alluded to above, Mr. Wonderful often proposes convoluted royalty stipulations that are almost always rejected. Occasionally a bidding war breaks out among multiple sharks who want to invest in the new business opportunity, although the more common scenario is for an entrepreneur to be forced to give up significantly more equity than he or she originally wanted to strike a deal with one or two of the sharks. If not interested in investing, which is most often the case, the sharks signify same with the signature catchphrase, “I’m out.”
Each pitch ordinarily lasts about an hour in real time, but only about 15 minutes make it to TV. New episodes of Shark Tank now air on Sunday night rather than its longtime Friday night slot. The national publicity can be lucrative even for a rejected product or service, however, and can spike sales and sometimes even prompt alternative investors to come out of the woodwork.
Watch John DePaola’s 2014 presentation on Shark Tank below.