Protect yourself

I think this either seems like someone way over his head, or who is having a breakdown. For you, though, it kind of doesn't matter. What does matter is protecting yourself.

1. Protect yourself legally - Have someone check over your contract as a contractor for things that go wrong. For example, are you on the hook if this guy says you'll do a bunch of work, then bills someone for it? What about for issues with poorly explained work? Can you recover things he owes you in court?

2. Protect yourself financially. You want as little money owed to you as possible. Bill weekly, if you can, and insist on payment before you do the next job. Renegotiate the terms if you have to. Don't keep any tools on site or on his premises - if the company folds and ends up in bankruptcy, it might take a while to get access or prove they are yours.

3. Protect yourself from his issues. Everything gets written down. If he has a conversation, write it down and send it to him. If he makes a last minute change, send him a text asking if that last minute change is correct.

4. Consider just leaving. If you're a contractor in decent levels of demand, you could just walk away. This looks, at most, like you'll get a few more months out of this job before it sinks like a stone.

From what I've seen of friends with startups, there's a period when everything starts falling apart - this looks a bit like that. His erratic behavior could be psychological. It could also be because he's hemorrhaging money and is about to lose everything, and is trying to keep it afloat with increasingly elaborate lies.

I'm going to agree with Lupe - protect yourself. What are your contractual payment terms? Many people aren't aware that they can negotiate better payment terms during contract set-up to limit risks to themselves. When I was an independent contractor, I wouldn't work for terms longer than Net 15, invoiced every two weeks. Net 30, which is common, means you might start work on day 1 and not get paid for it until day 45. Not cool! And I have actually had people dare to ask me for Net 60 payment terms, or the old "we'll pay you after we get paid by our end client". Don't freaking do it.

In your situation, however, I would switch to a retainer basis, like an attorney. This is where the client gives you a certain amount of money up front (maybe covering two or three weeks worth of work) and you invoice against that. When the retainer goes beneath a certain amount, you require the client to fill it up again, or the work stops. This is a better way of protecting your valuable time.

In any case, get your current invoices paid up ASAP. Tell 'em your granny needs an operation, or aliens ate your roof... anything to get your money right now. You've already done the work. And then, when you get a check, do not delay with depositing it, and don't spend any of the funds until the check fully clears. (Can you tell that I've dealt with this before? HA HA HA)

If your gut feeling is that something is awry, DO NOT ignore that feeling! Do not fall for the "millions and millions" crap.

Lastly, do some research on the legal term "anticipatory breach". A company tried to use the "we'll pay you when they pay us" approach on me in spite of our contractually agreed terms of net 15. When I shared my awareness of this concept with them and told them I would give them 24 hours to reconsider (no direct threats!) they sent my money the next day via Fedex, two weeks early!! I am not an attorney, and this does not constitute legal advice.

Sad things happen - This person's health is one of them. You can't do anything about it. They likely have family members that are closer to him that could or should do something.

Bad things happen - Business doesn't always work out. Things fail. When it is likely and obvious to happen that it the trajectory at a company, get away.

You can't save this company and you can't help the CEO. That is the hard truth. There is no future there.

What would the best case possibly be? Return everything and go.