Scams, Cons and Questionable Deals

[JW Najarian]

It is inevitable that two things may occur on CREPIG. One is that a person with great integrity is working as an agent for someone that does not. I have found that many scams are perpetrated via very intelligent, but not necessarily savvy deal makers.

I do not want to be judge and jury on any member of CREPIG, but if there are questionable or shady dealers on CREPIG we all need to take a moment and report them.

Lending Scams:

You should never pay an advance fee to secure a loan. Legitimate loans, like loans obtained through Lending Club, do not require an up-front payment. Here are tips from the Federal Trade Commission on how to avoid lending scams:

• Don't pay for the promise of a loan. It's illegal for companies doing business by phone in the U.S. to promise you a loan and ask you to pay for it before they deliver. Requiring advance fees for loans also is illegal in Canada

• Ignore any ad — or hang up on any caller — that guarantees a loan in exchange for a fee in advance. These are called Front Money Scams.

• Remember that legitimate lenders never guarantee or say that you will receive a loan before you apply, or before they have checked out your credit status or contacted your references, especially if you have bad credit or no credit record

• Don't give your credit card, bank account, or Social Security number on the telephone, by fax, or via the Internet unless you are familiar with the company and know why the information is necessary

• Don't make a payment to an individual for a loan; no legitimate lending organization would make such a request

• Don't wire money or send money orders for a loan through Western Union or similar companies. You have little recourse if there's a problem with a wire transaction. Legitimate lenders don't pressure you to wire funds

• If you are not absolutely sure who you are dealing with, get the company's number in the phone book or from directory assistance, and call it to make sure you're dealing with the company you think you are. Some scam artists have pretended to be the Better Business Bureau or another legitimate organization

• Check out questionable ads by calling Project Phonebusters in Canada toll-free at 1-888-495-8501. If you live in the U.S. and think you've been a victim of an advance-fee loan scam, report it to the FTC online at www.ftc.gov or by phone, toll-free, at 1-877-FTC-HELP (1-877-382-4357)

Bulk REO Scams

I have been involved in several of these. Most of the people involved are seasoned and legitimate professionals that seem to be taken in by large sums of money paid as commission. In your usual day to day deals you are used to working with people you may know as legitimate and if you do not know them at least there is a procedure where you will be able to check with who and what you are dealing with.

Many of the professionals I have worked with in the bulk REO market seem to throw caution to the wind in order to get these mostly fake deals done.

If you are not a Real Estate Lawyer and you solicit million and billion dollar BULK REO deals on the internet, and are asking for proof of FUNDS etc. you are probably in violation of the LAW!

Make sure you find out who you are dealing with and beware of the realm of secrecy and have to move tactics that are so prevalent in these deals.

Find out and corroborate any past deals that have been done.

There are legitimate brick and mortar companies that handle bulk REO and you should seek them out if you are an investor in these commodities.

BG’s, PPP, MTN, LC and SBLC’s

These deals seem to be scams also. Bank Guarantees almost definitely are scams. You can search out the Internet for more information and you can check out the FBI site http://www.fbi.gov/majcases/fraud/fraudschemes.htm

Gold, Oil, Diamonds and other commodities

More of the same. I have worked many oil deals and know the ins and outs. Again most are scams.

I am sure I will get emails back about this information from those of you that claim to have legitimate sources of money, property or investment platforms. I will not argue the validity or your deal with you or anyone else. What I will say is that if your stuff is legit, then it should be easy to prove. I say if you have nothing to hide than you hide nothing.

I was just on the fringes of an FBI sting for upfront money investments and the people that were duped were all successful, seasoned and intelligent. The problem is that we all seem to lose our heads when large amounts of money are involved. Also when your life is falling down all around you and someone tells you they can get you millions without great credit or collateral be very leery.

Please do not come back to me to check out your particular deal. I will not. It is up to you to do the due diligence.

Respectfully,
JW Najarian
www.CREPIG.com

[Jeff Pordes]

Good reminder for all of us...thanks for bring this to everyone's attention.

[Craig McCord]

Thank you for taking the time to prepare this post. I have been walking thru a number of contacts that I felt I was in a mine field at times.

Thanks

Craig McCord
[e-mail]

[Magi Bird]

Thank you JW!

I would also add that it is a violation of the law to copy, rebrand and/or publish under another name the proprietary documents, articles and information belonging to another company. At best it is copyright infringement, at worst fraud, misrepresentation, breach of the UCC or intellectual piracy.

Magi Bird
[e-mail]

[Richard McCray]

Thanks for that info, JW!

My partner and I just spent several thousand dollars to a supposed broker for "due diligence" fees that a supposed private investor was requiring in order to look at our 193 unit Houston apartment deal and see if he would be interested in funding us. Two other "supposed brokers" confirmed that this was "industry standard" when working with these type investors. Needless to say, we still have not gotten our deal funded and that particular "investor" is not interested in funding us.

Richard McCray
[e-mail]

[Roger Hayward]

Thanks JW, good stuff cheap. There really are amazing opportunities out there, I think you will all agree. The challenge is as you point out JW is when the numbers drown your reason, emotion sets in and all rationality goes out the window. For me, when something seems to cool to resist, I ask the question that usually sinks the best of em out there (scammers). "Could you please provide me with the names of 3 people you have closed a deal with in the past 30-60 days"? Folks that you want to deal with should be able to do this without blinking an eye, none of this "I'll get back to you on that", this only gives them time to prep their reference, get me? Your very first voice to voice or face to face contact that you have with anyone, anywhere, you need to ask, Who are you?, Who do you know?, Who have you done business with, and why should I do business with you?. Don't be a ying yang folks, a very wise man said to me once, "Trust but Verify"!! I say, keep your darn emotions out of anything that will cost you more than you can afford to loose, and you might not. Thanks JW

[Sossi Crilly, Crepig Advisor]

Roger,

Very good advice.
Thanks for sharing,

Sossi

[JW Najarian]

Wow, great replies! Thank you to everyone that did reply. I actually thought I would get some nasty stuff back from many of the people that beleive a lot of this crap is real. I did not. I would like to believe it is because we have worked hard to make CREPIG a safe place to do business without fear of being spammed or solicited for crazy deals, but I know there are probably a few either ignorant or maybe even a few con men on this site.

What I have received is a very positive thank you from many of the members here and more great information. I loved Roger's reply as it is so simple to ask the "What deals have you closed question" I always get a reply like we have several ongoing at the moment.... As Peter P explained; we need to educate the investor to help them stay clear of scams and cons.

I would like to ask that we put our heads together and come up with the top 10 top questions to ask or steps to take, when they come accross funding programs and sources or investment opportunities.

Also what questions is it fair for CREPIG to ask members without being too intrusive, as we at CREPIG don't want to be judge and jury, but we want to keep out the rif raff.

Let me know if you agree and would like to throw in your two cents.

Regards,
JW Najarian

[Rick Meyers]

John,

I have had these problems myself and have dealt with cautious Investors that have told me horror stories of Bulk Scams.

I provide my Investors with an Affidavit Of Facts that express that every Tape or Property and each Document that they receive from me is given to me from that Bank. I receive the documents from the asset manager’s desk top to mines. I am either on the phone with asset managers or emailing them many hours of each week day negotiating. And very little gets accomplished, because the Investors either began to get too picky or just wanted to see my list so that they can find a way around me to the Bank for themselves. Just so they do not pay a simple fee of 1.5 down to .5.
That is narcissism, because of the fact that they do not feel that they are wrong and that their excuses for doing so should be accepted as the word of God.
This statement IS NOT broad, because as quiet as it is kept there is an epidemic of Narcissism in the U.S. And being rich and wanting to be rich is the primary cause.

See google: http://www.google.com/search?hl=en&source=hp&q=Is+narcissim...

However, what is my concern and is hardly ever mentioned is the fact that about 70 to 80% of Investors that I have dealt with are narcissistic and feel as though they can step over me despite of ND NC or MFA agreements they are legally bound by.

John, I will be honestly forward with you and tell you that, for you as a professional to make a statement so broad and far reaching is based on the premises of bias and the use of poor discretion.
And yes you know that you should expect someone to speak up about it.

The little man, like me, worked hard to get my sources. Although being that there is a genuine concern of misrepresentation made by some individuals who do not have the contacts they claim, it should not utilized as a linchpin to be used broadly to accuse of all of being scam artist by a Professional that has gained respect and rapport by their members, hence, wielding their power while exploiting their position.

See the problem is that when the fake "Direct source to the banks" does get an investor into escrow the attachment of the Investor's deposit to clear title will be screened by the escrow agent and/or title company. Thus, the game is over and transaction is not completed, unless the investor was naive and deposits the cash directly into the "direct source's" account. Yes the waste of time and money spent to process and conduct due diligence is a genuine concern, but there is a remedy for that.

However, what is hardly mentioned is the fact that there are millions of Civil Judgments against Investors and Major Investment companies that have used deceit, cheated and defrauded other innocent parties, within the scope of property transactions, who are successful in doing so until they are caught. Which there are many incidents that go unnoticed?
See the below links. Below is extreme minuet amount of Investor fraud.

http://openjurist.org/807/f2d/1509/lorenz-v-l-sauer-m-lorenz

http://www.mayerbrown.com/publications/article.asp?id=3973&nid=6

http://www.consumeraffairs.com/news04/senior_scams.html

http://dealbook.blogs.nytimes.com/2010/04/16/goldman-fraud-case-hol...

http://westregion.com/Title%20Insurance%20Pages/Cases/Opinions/Stew...

I provide my investors with and Affidavit (see the Attachment) that if anyone expects me to be a fraud can lead me to provide them with documents or a list of properties that I have expressed that I received those documents directly from the Bank, can turn in the documents that I provided and my affidavit to the Feds or the State and have me investigated under the law.
See below State Law protections.
Fraud and Deceit Legal Rules
Fraud is defined in California Civil Code Section 1572 (actual fraud) and 1573 (constructive fraud). Liability for actual fraud under California Civil Code Section 1572 is limited to acts committed by or with the connivance of a party to a contract with the intent to deceive another party to the contract and induce that party to enter into the contract.

Actual Fraud: Actual fraud consists of any of the following acts, committed by or with the connivance of a party to a contract with intent to deceive another party to the contract, or to induce the other party to enter into the contract [Civil Code Section 1572]:

1. the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
2. the positive assertion, in any manner not warranted by the information of the person making it, of that which is not true, though the person making the assertion believes it to be true;
3. the suppression of that which is true, by one having knowledge or belief of the fact;
4. a promise made without any intention of performing it; and
5. any other act fitted to deceive.

Constructive Fraud: Constructive fraud consists of any breach of duty which, without actual fraudulent intent, gains an advantage to the person in fault, or any one claiming under the person in fault, by misleading another to the prejudice of the person misled, or to the prejudice of anyone claiming under the person misled. [Civil Code Section 1573(1)]. In addition, constructive fraud consists of any act or omission that the law specially declares to be fraudulent, without respect to actual fraud. [Civil Code Section 1573(2)]

Deceit is defined in California Civil Code Sections 1709 and 1710. Deceit takes place when: "One who willfully deceives another with intent to induce the other to alter his or her position to his or her injury or risk is liable for any damage suffered as a result of the deceit." [Civil Code Section 1709].

There are four categories of deceit [Civil Code Section 1710]:

1. the suggestion, as a fact, of that which is not true, by one who does not believe it to be true, commonly referred to as intentional misrepresentation;
2. the assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true, commonly referred to as negligent misrepresentation;
3. the suppression of a fact, by one who is bound to disclose it or who gives information of other facts which are likely to mislead for want of communication of that fact, commonly referred to as concealment; an
4. a promise, made without any intention of performing it, commonly referred to as false promise.

http://www.timkaren.com/lawyer-attorney-1306546.html

I really feel that your statement was to target all people not just the fakes, because you never made any mention that will distinguish the differences that would clear the matter up.

Again, I am just a little guy trying to support his family with a honest living and having a rough time doing it due to these types of blanket statements that is intended to stigmatize the Tape Investments because some Big Investor does not have that particular connection.
I'm not here to get anyone angry; it's just to let you see what you're doing when acting out carelessly.

It is very hard for me right now, especially in the light of these type of broad complaints.

Can I get a break to feed my little ones? This is what is actually happening in my life.

The poor man,
Rick.

[CHERRY GRACE]

Thanks John. I have just been getting a lot of emails as well asking for supplies of gold worth $100Mn...
It's not to say that I am prejudiced by what I have learned today but it's really quite refreshing.

[JW Najarian]

Please refer to me as JW.

Thank you Rick. I work with people that really are direct to banks so please know my statements are general and though I found that the majority of people I worked with could not back up the promises made. Buyers and Sellers both, I have since met quite a few people that really are direct to banks for inventory.

I am finding that say in California, that the banks will not give any exclusives to these agents so the properties may be sold out from underneth them. This is not a perfect situation. Just back from Vegas where I met with some direct to bank agents that could get a short time frame agreement from the bank, but closing in the short time frame did seem to cause issues. So better, but not great.

I really feel for the people like yourself that go out and do the work... I am on the advisery board of Delta Investments that work on many direct bank property transactions and they are coming accross many buyers that may not be real buyers. And since I worked on bulk transactions for a year and half myself I can tell you that the NCND is not worth the paper it is written on.

For one the smaller businessman cannot afford to sue anyone for circumventing a non-circumvent doc. Here is a scenario I have heard of. ABC Corp signs your docs and makes many promises. They are now in direct contact with bank sources and open XYZ Corp which purchases the package and is not a signee on your NCND form.

Also I stopped signing NCND's with any middleman. I was a middleman so I was not against them, but I found out, as I started getting crazy calls from daisy chains I had set up NCND's with. I would get a call that said I am Alex and you signed an NCND with me and now you are talking to Bob who has an NCND with me and so we will sue you. If everyone has a NC contract with everyone else then no one can talk to anyone. So I only would sign with buyer and seller. You can guess this caused many people to hang up on me.... Oh well..

Rick it looks like you go out of your way to show your clients that you can deliver. I salute that. The reason I wrote this was because I found tons and tons of people all over the web selling bulk packages and I found very little from people that had concerns or cautious tales to tell. This worried me a lot as I lost money, my friends lost money, I saw careers and so much more go down the tubes and was surprised that no one was talking about it.

It seemed to me that if a deal never happened, than instead of questioniong the deal, people just tried to find new deals.... The promise of millions into perpetuity is a strong influence and I have seen many throw all sense out the window to try and make one of these deals work.

I am not trying to make an honest businessman look bad, but I do want to warn the masses about how full the environment is with scams and rip offs. I have seem MANY fall in scams over that last few years and I want to make sure that if anyone gets into these deals to make a quick fortune, then they stand the chance of getting burnt or burning others.

I believe that if you are for real then we are on the same side. If there are people out there that do not represent the industry in the best light, let's expose them so businesses that are legit will not have to run under that shadow of these scams. I believe that a large part of the market is shady, but if you believe that only 10% of the market is nonsense then don't we want to make people aware.... We certainly do if I am right and over 50% of the market is bull.

Kindest Regards,
JW Najarian

[Rick Meyers]

JW, you're welcome.

JW you stated:
"Thank you Rick. I work with people that really are direct to banks...."

I really work directly with the Banks...not with people that really work directly with the Bank.

You stated:
"I am finding that say in California, that the banks will not give any exclusives to these agents so the properties may be sold out from underneath them"

Most banks will desire that you bid on the Bulk Tape or provide you with an exclusive on a time limit bases due to the concern that their assets are not held up by some investor that is not complying or wants to window shop the Tape around.
They want the best price they can get also.

I must include that many banks try to be fair and include the small investor and the public in general when faced with the options. There is an array of strategies and angles that each bank will consider.

However, there are some occasions, if a buyer has established a relationship with the bank as a serious buyer that investor can have his LOI filled and be notified after establishing a Buyers profile with certain Banks. I'm sure that you are aware that hedge funds are a prime example of getting this type of treatment. DEUTSCHE BANK works with their investor like that.

So your point on making the statement is unclear to me.


With regard to specifying California.

The Banks I deal with has property Nation wide along with Branches. So I do not see how California would be any different than any other Bank within the focus of your point.

As for it being "not a perfect situation" That adds credence to the point I am trying to make...Investors will always feel that a deal could be better. And look for ways to squeeze me out to make it better. I would like to redirect you the point that you were making about "exclusive" above... My answer is that many Investors wants it all and that is how they expect to be treated.

You stated:

"And since I worked on bulk transactions for a year and half myself I can tell you that the NCND is not worth the paper it is written on."

This has its limits; I studied law for years and have dealt with civil actions In proper persona, and have spanked the type of Investors that you're implying. On many occasions their attorneys have them settle while depositions are being held because my contracts are jammed up and Jelly tight. ; )
However, if that is not what your point was driving at, are you suggesting that there be no contracts when dealing with an investor, or that I shouldn't work in the position I’m in?

Having the Investor notarize Contracts is the key, doesn’t matter what company the investor purchases afterwards.

JW...All isn't hopeless.

I totally agree that letting people know that there are scams, but how we approach the problem is my concern. Whether intended or not, it can create an adverse effect on innocent people.

When we speak in general...it usually is taken as a blanket statement due to the fact that some people harbor feelings of resentment and can readily accuse with a lynch mob mentality. Stereotyping should be one instant that comes to mind.


You stated:
"I believe that a large part of the market is shady, but if you believe that only 10% of the market is nonsense then don't we want to make people aware.... We certainly do if I am right and over 50% of the market is bull."

As I have said in my previous reply, I have experienced that 70 to 80% of Investors are full of "bull" in so many words. To be more specific, I expressed that many of them are narcissistic. That's a fact. Just as what you have implied here..that NDNC is just a piece of paper. If so , why would any Bank have someone sign contracts. Besides I have case law on people that tried to squirm out of NDNC anyway that would show otherwise.

I like you to answer one question. How many blogs or notices you have written about private investors, your personal bad experiences with them, that would also criticize how investors perpetrate scams and include indentifying the methods they use in the same manner that you have done in this blog against people who sell Tapes?

We do not see much of this on the web because many people desire to get cozy with the Million or Billionaire.

Not only that, the other angle for some to be considered as bias when expressing their perceptions on issues similar to this Blogs, is the fact that the Market of Tape buying is damaging the income to certain specific area of Real estate that other professionals have been working in for years and THEY can not get a hold of the Tapes for themselves.
So they must join in on the rhetoric to stigmatize the Tape Buying Market while it is HOT at the moment to draw attention to their specialty of profession.


If you are seriously concerned, I would suggest that in order to curb and help with the problem of scams, that CREPIG complete their work on the Rating system that Bob Schecter has informed me of. I hope that the system includes ratings for Investors also.

Also I believe that the reason investors are lured into the situation you described as... "The promise of millions into perpetuity is a strong influence and I have seen many throw all sense out the window to try and make one of these deals work",.....is that they believe that they are secured. So it doesn’t take long for some nasty people to figure that exploiting greed is the carrot that leads the horse.

I wish the world was perfect and although there are rotten apples in the crowd, I can only do my part by standing up and doing what is right and fair to all with a procedure to sort them out.
Real Estate can be a real dirty game, and has been plagued for centuries with dishonesty no matter how some will try and dress it.

If someone is sincere and has a noble cause to address the problems that innocent people are faced with in the game. They must stand up and speak out about both sides fairly to balance the scales and not to favor one over the other to tilt the scales.

Best Regards to you also.
Just keeping them honest,
Rick.

[Rick Meyers]

By the way...See Attached Tape.

It came to me directly from the Bank that has in house asset managers. They are not outsourced.

Meaning although I sanitized it, that this Tape is directly from the Bank to me.

Now anyone has the opportunity to take my Affidavit and this Tape and turn it over to the authorities to have it investigated.

I am directly working with Banks to get honest investors great deals. And if anyone is a Buyers mandate they will be considered to aid in facilitating the transaction depending on their conduct.