Family Members Should Never Lend Money to Each Other

“Neither a borrower nor a lender 
be. For oft loan loses both itself and friend.” - Shakespeare's Hamlet

Recently, I've had a serious writer's block. But something happened the other day that has shaken me up and I want to write about it. Today's post is an amazing story in how it displays just how stubborn and stupid people can be and, on top of that, it is a true story. 

Those are the easiest to write for me. You just can't make this stuff up. 

This story is about one of the oldest reasons people destroy their families and lose dear old friends: Money. Specifically, lending money or "borrowing" money from friends or family.

It's one of the oldest stories in the book: a family member borrows money from a sibling and, whether the money deal goes good or bad, the mere fact that there was a money exchange destroys the family because, win or lose, succeed or fail, someone feels that they were cheated in the deal.

This is what happened to my family. 

My oldest brother borrowed money ($10,000 in the early nineties) from my youngest brother to invest in some sort of new business that the older brother was starting up. 

They are both idiots; one for asking a sibling for money, the other for giving it.

The business went bad, if you ask my older brother. If you ask my younger brother, it went bad too, yet my older brother somehow wound up with a multi-million dollar court settlement. 

As I understand it from the both of them, initially, the business went bankrupt. My older brother, claims that he lost all his money when the company went belly-up. So bad were the loses that he had to sue another company for copyright infringement in court. He won, hence the multi-million dollars.

It is a complicated issue. Who won? Who Lost? Did the company go bankrupt solely because of the copyright infringement or did it go bankrupt due to incompetent management? (Give you one guess which reason I think it was...) Why didn't the younger brother share in the settlement? Why didn't the younger brother even get any of his money back?

I don't know. I wasn't a part of this and didn't want to become involved.

I became aware of this transaction a full year after it had already blown up in everyones face. I was living in Japan and had no idea that this deal had even occurred. One day, my father asked that I intervene and mediate in this case as it had turned into a full-fledged war. Upon discussing mediation with both brothers, they agreed - promised - that they would abide by whatever I decided that was fair to resolve this issue.

I wanted nothing to do with it, but my father was getting old and in poor health so, I reluctantly agreed to try to solve this issue. It wouldn't be good if this situation destroyed the family and my father passed away while this still boiled.

Now, before I go on an important point is that, at this time, there had been no court case and my older brother had not yet been awarded any settlement. This is an important point to remember. Because, conveniently for my older brother, he will claim that the court case had nothing to do with the business. The younger brother claims it does.

I have a very holistic view of these things and don't like the cherry-picking idea as it seems to lend itself to selective morality in far too many cases. Dear reader can decide for themselves.

I asked that both brothers provide me with documentation about this business deal. The interchangeable words I noticed in these mails were "loan" and "investment." Soon, I received an avalanche of emails from both brothers concerning items about "who said this" or "you said that."

It was too much of a clusterf*ck to deal with, by that point. I didn't know what to do. It weighed heavily on my mind. Who was right and who was wrong? I didn't know.

One night, I went to my favorite drinking place and there were two Buddhist priests there who I sometimes played Chinese Checkers with. We had a few drinks and I started telling them about my troubles with my family. 

These guys have always had the most calm and reasoned advice. They are great. After listening to me for a while, one said,

"I see. This is a difficult question to answer as to who is wrong and who is right. But I will say that, in spite of that, it is an ancient story that has gone on, over and over, throughout the history of mankind: A family is destroyed by money. Don't you, in the west, say, 'Never lend money to family or friends'?"

"Yeah." I replied. 

He continued, "I think we can agree on is this; there are stories about families being destroyed by money and these stories are at least 5 millennia old. I think it is too difficult to try to place blame here. But one thing we can agree on is that this situation is like a cancer eating away at your family. I suggest that it is best not to place blame, but to put things back the way they were."

A light went off in my head! I thought that was genius!

I went home and the next day I triumphantly wrote to my brothers that I had decided what the best course of action was: To put everything back. 

I told my older brother to apologize (because family should never borrow money from family) and to give back the $10,000. I told my younger brother to apologize and accept the $10,000 and never complain about it again.

My younger brother reluctantly agreed (after I berated him for a money transaction with a family member). My older brother reneged on his promise and said he would never pay back the money nor would he apologize. He claimed that he needn't apologize because the younger brother was trying to make money too. I countered that the apology wasn't for that. I said the apology was for the entire situation and causing so much trouble for the entire family. 

Hell, I had nothing to do with this crap and I was sorry it happened.

L'Enfant Terrible

My older brother was adamant. He said that he would never apologize. He said, "I haven't done anything wrong, so I'm not going to apologize." Once again I said, "It's not for doing anything wrong, it's not accepting any guilt. It is apologizing for the entire mess."

He would have none of it.

That just shows how obstinate my older brother is. Imagine, you witness some old lady walking across the street. She is hit and killed by a car driven by someone else. You see her family later and they ask you what happened. Isn't it normal for most people to say, "I'm so sorry!" Of course it is. "I'm sorry" isn't an admission of guilt. It is showing some empathy for people.

On a side note, I think my older brother has a problem with serious denial and telling the truth. If this deal were such a 'great deal' like he claimed, when he first asked my younger brother for money, then why didn't he invite me to join? - I had much more money than either of my brothers at that time....

But I digress....

I realized then that my older brother didn't have the money and I suspected that this excuse of not apologizing was actually a cover for not having the money. No problem. I then told him, "Look to make peace in the family and to try to fix things for our nearly 80-years-old dad, I will secretly give you the $10,000 and you give it to our younger brother. You don't have to pay me back. Then you say, "Sorry for the entire mess" (not admitting you did anything wrong) and hug and make up for the problems.

"If anything, do it for our dad." I added

But my older brother wouldn't do it. He refused. Saying sorry was a mountain too high to climb for this person. I was appalled.  My patience with this little child was nearing an end. 

By this time, this problem had grown to crisis proportions. My younger brother had fought over and over with both my dad and older brother about this. Though my younger brother I have always enjoyed a good relationship, he was no longer speaking to either of them. My younger brother was angry that, even though he felt that he was 100% in the right, my father always took sides of my older brother.

I did admonish my father about it. But, bless his heart, my dad wasn't the kind of guy who would put his foot down. Had my mother still been alive, my older brother would have never been able to get away with this.

I took no sides. I just tried to make it right. (If my mom had been alive, I know what she would have said. I'd have taken her side).

I was asked to mediate. I did. I offered the $10,000 (Free. Not a loan. A gift) and asked that my older brother give the money to the younger brother and apologize. I told my younger brother that, if he gets the $10,000, to accept and to apologize too. 

My younger brother accepted the terms, my older brother refused. Time went by and, after continued fights with my older brother and father that just kept making things worse, my younger brother's heart grew harder and colder still.

Finally, I gave my older brother an ultimatum. I told him that,

"This families problems are your making. Everyone knows that you don't borrow money from family and friends, yet you did. Then, when this problem became great, you came and asked for my mediation, I didn't want to get involved, but you asked. I did it for the family. You said you'd follow my decision. But you don't.... You have no honor.

Our father is sick and would like to see peace in the family, but, in your narcissistic obstinacy, you refuse. It's been nearly ten years, you asked for my help, you lied and refused. 

This borrowing money from family and friends is an old story and we all know what will happen. Father will die someday and you will still be the one responsible for this mess.

Now, until the day you fix this problem, I have no way to force you into doing what is right. So, until you do apologize to your younger brother and fix this mess you created, I will never speak to you again." 

That was at least 15 years ago.

My father died on Saturday night Sept. 25, 2011.

My brothers still haven't spoken to each other in about 20 years.

I have no intention of ever speaking to my older brother until he does what he said he would do. I am astounded that a guy who gets a multi-million dollar settlement cannot fix a $10,000 problem with his brother. I seriously think this person has some serious issues.

What do you think?

(This article originally appeared in 2011 - dates have been altered for today)