Time for some proper due diligence/ independent auditing in our communities

[Yehuda57]

Makes sense, but there's gotta be a way to encourage people to do proper DD without painting the whole community as a fraud.

I'm agreeing with you :-)

[Yehudaa]

I'm agreeing with you :-)

Ah. I misunderstood you.

[Alexsei]

@op Ever heard the phrase “If it's too good to be true, it probably is”?

I think I know what he's talking about as someone told me about it literally 2 days before it busted. My quote was my only response.

[Something Fishy]

Guys we're almost at the end.

[Dan]

Guys we're almost at the end.

[dealfinder11]

You mean this?
https://forums.dansdeals.com/index.php?topic=36812.msg2701839#msg2701839

It’s a lot different than investing in your brother-in-law’s real estate venture. These people knew they were doing something fraudulent by fake buying “products” that were never intended to ship just for the MCC Coding. Its sad, but the fraudsters got defrauded.

At least with Toner World and the others people thought they were genuinely purchasing a product with their credit cards, albeit in violation of the terms.

Seems like you know more than me. I’m still waiting for more to come out. Hence my characterization as poor investment or fraud.

As an aside, the numbers I’m hearing are significantly higher than the “six figures” mentioned in that thread.

[CountValentine]

Regardless of what OP's exact intention was, I take issue with the name of this thread. The name sounds like our community is one big fraud.

My first thought was there is a scam going on. That an individual took advantage of a trusting community. That is what scammers do. It wasn't that the community are scammers.

[aygart]

Might first thought was there is a scam going on. That an individual took advantage of a trusting community. That is what scammers do. It wasn't that the community are scammers.

+1 Because of those occasional scammer who will take advantage of a trusting community it is important for there to be due diligence. This is called Affinity Fraud and happens in all sorts of communities.

[tov hashem]

Ah. I misunderstood you.

this whole yehudaa yehuda57 looks suspicious to me

[dealfinder11]

Allow me to clarify my intent for creating this thread.

I was recently made aware of a large investment that has gone belly up. I'm talking 9 figures, with many investors losing 7-8 figure sums. Those are the headliners. And these are seasoned and educated investors. What I don't know is how many small-sum investors that were in this deal and lost everything in the deal as well.

As mentioned, I don't know if this was an old-school Pyramid scheme, an honest investment that went sour, or somewhere in the many gradients in between. What I do know is that based on my experience and knowledge of the deals peddled in my community (often by syndicators), this could easily be either. Investors are clueless about the actual value of these investments, and proper due diligence is overlooked due to trust, ignorance (of understanding the deal), or laziness. Perhaps a combination of each. I additionally believe there is an element of "this is what everyone does" or "i know this person who is also in the deal and he is a smart guy" ideas that feed into some of the lack of proper oversight.

I'm not necessarily suggesting these are all fraud, just a lot of salesmanship covering for inferior and improperly valued investments.

I am not ignorant enough to believe posting my concerns on DDF is going to lead to real change. Unfortunately, i believe it's going to take a number of these "investments" to go really bad, and public, for the perception to change. Again, unfortunately, people tend to try and keep their poor investments as quiet as possible for a variety of reasons.

I only wish the public was more aware of how easy passive investing can be, as long as you don't stare at the market. It can be incredibly cheap, if not free, is liquid, and will provide decent returns that will compound over time (left untouched). They can be extremely tax efficient as well.

I understand the allure of all these "deals", but I strongly feel the bulk are not "risk-adjusted".

That was my purpose for posting this.

[jye]

Allow me to clarify my intent for creating this thread.

I was recently made aware of a large investment that has gone belly up. I'm talking 9 figures, with many investors losing 7-8 figure sums. Those are the headliners. And these are seasoned and educated investors. What I don't know is how many small-sum investors that were in this deal and lost everything in the deal as well.

As mentioned, I don't know if this was an old-school Pyramid scheme, an honest investment that went sour, or somewhere in the many gradients in between. What I do know is that based on my experience and knowledge of the deals peddled in my community (often by syndicators), this could easily be either. Investors are clueless about the actual value of these investments, and proper due diligence is overlooked due to trust, ignorance (of understanding the deal), or laziness. Perhaps a combination of each. I additionally believe there is an element of "this is what everyone does" or "i know this person who is also in the deal and he is a smart guy" ideas that feed into some of the lack of proper oversight.

I'm not necessarily suggesting these are all fraud, just a lot of salesmanship covering for inferior and improperly valued investments.

I am not ignorant enough to believe posting my concerns on DDF is going to lead to real change. Unfortunately, i believe it's going to take a number of these "investments" to go really bad, and public, for the perception to change. Again, unfortunately, people tend to try and keep their poor investments as quiet as possible for a variety of reasons.

I only wish the public was more aware of how easy passive investing can be, as long as you don't stare at the market. It can be incredibly cheap, if not free, is liquid, and will provide decent returns that will compound over time (left untouched). They can be extremely tax efficient as well.

I understand the allure of all these "deals", but I strongly feel the bulk are not "risk-adjusted".

That was my purpose for posting this.

It’s human nature to be embarrassed about poor judgement and want to sweep it under the rug. For every guy that goes public and has the guts to admit his mistake to try to save others there are 10 guys who won’t admit to having been duped. Everyone was talking about their amazing judgment and prowess at picking winning deals in commercial real estate for the last decade to anyone who listen but you won’t hear anyone talking about their souring investments that are underwater today.

[EliJelly]

Allow me to clarify my intent for creating this thread.

I was recently made aware of a large investment that has gone belly up. I'm talking 9 figures, with many investors losing 7-8 figure sums. Those are the headliners. And these are seasoned and educated investors. What I don't know is how many small-sum investors that were in this deal and lost everything in the deal as well.

As mentioned, I don't know if this was an old-school Pyramid scheme, an honest investment that went sour, or somewhere in the many gradients in between. What I do know is that based on my experience and knowledge of the deals peddled in my community (often by syndicators), this could easily be either. Investors are clueless about the actual value of these investments, and proper due diligence is overlooked due to trust, ignorance (of understanding the deal), or laziness. Perhaps a combination of each. I additionally believe there is an element of "this is what everyone does" or "i know this person who is also in the deal and he is a smart guy" ideas that feed into some of the lack of proper oversight.

I'm not necessarily suggesting these are all fraud, just a lot of salesmanship covering for inferior and improperly valued investments.

I am not ignorant enough to believe posting my concerns on DDF is going to lead to real change. Unfortunately, i believe it's going to take a number of these "investments" to go really bad, and public, for the perception to change. Again, unfortunately, people tend to try and keep their poor investments as quiet as possible for a variety of reasons.

I only wish the public was more aware of how easy passive investing can be, as long as you don't stare at the market. It can be incredibly cheap, if not free, is liquid, and will provide decent returns that will compound over time (left untouched). They can be extremely tax efficient as well.

I understand the allure of all these "deals", but I strongly feel the bulk are not "risk-adjusted".

That was my purpose for posting this.

Crazy and sad story. The real question is if/how portions of the money can be recuperated. Quite a few raked in large money in abnormal returns out of this "deal". If this was just a scheme all along - likely it was for the most part - than that money is ought to be returned. Will see how that plays out.

[AsherO]

What’s the difference between passive income and this deal of which you speak? Perhaps it’s like jye says and this is one more deal where these big guys took a loss.

I know in CRE deals there are often partnerships, each partner taking only a part of the pie. Ostensibly the reason for this is to pool the risk and limit each investors exposure on any one project (where they could take the rest of the money they could have invested if they had done the project themselves and spread it into multiple/many other projects.

[AsherO]

Crazy and sad story. The real question is if/how portions of the money can be recuperated. Quite a few raked in large money in abnormal returns out of this "deal". If this was just a scheme all along - likely it was for the most part - than that money is ought to be returned. Will see how that plays out.

Recouped/returned by whom? Depending on the structure of the deal and how the invested funds were supposed to be used, the money might or might not be gone, and there might be assets in the investment where there is still value. If someone on the receiving end is sitting on the cash and there was fraud involved (hard to conclusively prove) then they’d obviously have to return those funds.

[dealfinder11]

What’s the difference between passive income and this deal of which you speak? Perhaps it’s like jye says and this is one more deal where these big guys took a loss.

i'm sorry I should have been clear. By passive investing, i am specifically referencing low-fee (Vanguard, Schwab) or no-fee (fidelity) index funds. There is no fraud risk, transparency concerns, or liquidity concerns (other than wanting to pull money when the market is down).

[EliJelly]

Recouped/returned by whom? Depending on the structure of the deal and how the invested funds were supposed to be used, the money might or might not be gone, and there might be assets in the investment where there is still value. If someone on the receiving end is sitting on the cash and there was fraud involved (hard to conclusively prove) then they’d obviously have to return those funds.

It is unclear if this was ever a legit deal but for the last two years or so the guy was looking for new money in order to pay the promised huge returns, essentially a typical pyramid scheme. This is what we know now. He was on time with his quarterly payments until a few months ago, that's why it was so enticing, although it was never logical. The earliest investors netted profits already while the latecomers were hit worst. Those profits should be returned if it was just the new guys money. Question is how, it's not like these people are willing or excited to go to court, so either through B"D or through internal mediators, time will tell.

This wasn't a RE deal and there is no investments or assets. The guy was claiming he has huge government POs and was raising money for supply until he would get paid.

[Dan]

Amazing that these scams still continue post-Madoff.

[AsherO]

It is unclear if this was ever a legit deal but for the last two years or so the guy was looking for new money in order to pay the promised huge returns, essentially a typical pyramid scheme. This is what we know now. He was on time with his quarterly payments until a few months ago, that's why it was so enticing, although it was never logical. The earliest investors netted profits already while the latecomers were hit worst. Those profits should be returned if it was just the new guys money. Question is how, it's not like these people are willing or excited to go to court, so either through B"D or through internal mediators, time will tell.

This wasn't a RE deal and there is no investments or assets. The guy was claiming he has huge government POs and was raising money for supply until he would get paid.

This is awful without due diligence.

The issue with many of these Ponzi schemes is that a long of the incoming money has commissions paid to 3rd parties to help bring it in, and/or on charades that make it seem like there’s a real business behind the smoke. Leaves less money to be recovered.

[EliJelly]

Amazing that these scams still continue post-Madoff.

and the guy's English name is literally Bernie

[Alexsei]

How do you fall for someone offering 4% per month?