Thursday, September 15, 2016
In this blog I usually write about real estate gurus who cheat and steal from their own students. In now what is best described as a "man bites dog" story, an employee of a famous guru has defrauded his company of over $1.1 million.
Tigrent, Inc. is the seminar promotion company of Robert Kiosayki, the (in)famous Rich Dad, Poor Dad guru. One of Tigrent's employees working in the accounts payable department created a series of shell companies and then generated a large number of phony invoices for these imaginary payees. After the invoices were paid, she took the money sent to her shells and spent the cash on vacations and other consumer items.
The FBI eventually got involved and this woman was sentenced to three years in prison, fined $1.1 million, and was also ordered to make restitution to Tigrent. The charge was wire fraud.
I could comment on the loose accounting safeguards at Tigrent but I won't. Her scheme went on for more than two years before it was discovered.
This is the only case I know where a real estate guru was the victim of cheating and not the cheater themselves.
In case you are curious, the woman's name is Junipher Sayers and here is her Facebook page. She just got married in March and was pregnant at the time. Her baby is due October 22, 2016. Reading her posts is quite sad especially since now we know what she was up to while writing them.
Thursday, September 8, 2016
Well placed sources have confirmed a very well known real estate guru from the pre-crash 2000s boom is facing a criminal investigation by both state and Federal agencies.
This guru was known for his real estate wholesaling programs where he claimed to make thousands of dollars every month without tenants using his unique program where anyone could find and flip properties without cash, credit, or even a job. Essentially, this was a subject-to buying scheme. At one point he claimed he was earning $100,000 a month working five hours a week.
The investigations began when this guru's partners and bank grew concerned over financial statements submitted to them about recent seminar and home study course sales. It turned out the guru had been overestimating sales and profits to not trigger loan provisions which would call his debt immediately due.
As the investigation expanded it was learned this guru had phantom employees on his payroll, issuing checks to workers that did not exist which were later cashed by his relatives, including his wife and brother. Ironically, taxes were paid on these checks to keep the scheme looking legitimate. But tax returns were not filed on these fictitious employees which has now raised the scrutiny of the IRS and the use of stolen or fake social security numbers.
Total investor losses on this scheme appear to be more than $1.5 million.
This guru was everywhere on the Internet in the early 2000s. Their wholesaling program was a joke, underestimating the risks and profits which can be earned by wholesaling real estate, which is basically selling real estate property interests without a license, often illegal in many states. Here is an excellent Reddit thread on the subject of real estate wholesaling and its illegality.
Should this guru be arrested or indicted I will let you know.
Wednesday, August 31, 2016
By far the best book on the subject of buying your first home.
There are multiple editions of this book, another sign the author and publishers really care about keeping their readers informed.
I cannot recommend this book more highly. It answers every question you will ever have about the process and gives tons of advice that will save you thousands of dollars.
MUST READ BOOK.
Wednesday, August 17, 2016
Are you a satisfied graduate of Trump University?
Did you buy his programs and actually make money with them?
If so, I'd like to hear your story. I'm writing an article on Trump University and would like to report both sides. The media, as you can imagine, has no problems finding and touting unsatisfied and unhappy students.
I have reviewed many Trump University real estate programs and books and find them to be quite good, in fact, better than nearly all get-rich-quick real estate materials out there. As to how they were sold, that's another story.
For example, one of Trump University's books was written by Gary W. Eldred, a fabulous real estate writer and author of the best (by far) book on real estate investing in print today. The books pictured above and below are both excellent and highly recommended for real estate investors.
If you have a Trump University success story, please email me at firstname.lastname@example.org.
Everything you tell me, including your name, will be kept strictly confidential.
Saturday, July 16, 2016
It is an election year and therefore the silly season of campaigning is in high swing. Politicians eager to use your hard earned income in the form of taxes to buy votes. Simple equation everywhere.
Only in "progressive" cities like Seattle just worse.
Here is a campaign mailer from a candidate I've never heard of named Marcus Courtney. He's running for State Representative in the Washington legislature.
He's got some ideas for providing more affordable housing. Unfortunately, some of them contradict his stated goal.
He wants to create a Washington Department of Housing, the equivalent of HUD on the state level. Perhaps he should first investigate HUD's dismal record in building affordable housing or the mismanagement of HUD's Section 8 program. Since when does putting the government in charge of something actually increase market efficiency?
Next he wants local authority rent control. No comment necessary on this nonsense. When does rent control lead to MORE housing units? This author is correct when he says if you want to destroy a city rent control is the best way to do it. Maybe Mr. Courtney should visit San Francisco and learn about their rent control experience.
The photo above is not Berlin in 1945 but the South Bronx in New York City in 1980. This devastation was the result of New York's never ending experiment with rent control.
My favorite campaign promise from the above mailer is to "ensure residential construction includes infrastructure for electric vehicles." Perhaps Mr. Courtney does not understand the cost of installation and maintenance of this system is not borne by the landlord but by the tenants---MOST OF WHICH DO NOT DRIVE ELECTRIC CARS and NEVER WILL. So the richer car owners will have their fuel rights subsidized by the poorer tenants who do not own cars.
Installation costs for electric car charging in apartment buildings are variable but here is one estimate for about $21,000 for a system. That sounds very low to me given the specifications necessary but on a small apartment building of 8-20 units still prohibitive.
Mr. Courtney has other progressive ideas such as a new income tax for Washington (which currently, Thank God, does not have one) and all the usual green energy and diversity boilerplate required of all liberal candidates for office.
What I can say with certainty is imposing capital spending burdens on landlords does not create affordable housing. Making landlords pay for things, especially boondoggles like electric car charging stations, make housing less affordable. Do politicians think landlords are going to raid their children's scholarship funds or their own 401(k)s to pay for these retrofits? Tenants in a building pay for all improvements through rent, a common sense idea which often eludes the political mind.