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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8840  
Subject: Re: secured promidary notes Date: 4/14/2014 2:11 PM
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Recommendations: 26
A CFA was consulted. He has close to 30 years experience. He can be asked the questions you raised. Some he has already answered;
Interest rate 12%.
Secured by the real estate borrower is using the loan for. Mostly flippers but occasionally owner occupied homes. The notes would be anywhere between 30K and 80K.


1. This is a scam, I don't care how "trusted" you think this guy is.

2. Nobody is giving 12% interest on anything. Junk bonds - the riskiest of the riskiest - are now paying around 6%. You think somebody is going to double this? Why would they?

3. He may not have any complaints, but then it appears he doesn't have many customers, either. Bernie Madoff had no complaints, right up until the entire thing fell down and everybody got hosed.

4. If he is charging you $150 an hour, and it takes two hours, then why is he wasting his time doing this? (Answer below.) Why doesn't he just put all his own money into it? Surely he's a millionaire by now; with a million bucks in this deal he's making more sitting and doing nothing than teaching people at $300 a seminar.

5. Answer: he's a feeder. He gets paid a fat commission for delivering suckers to to pyramid. They then get nicely printed paper statements assuring everyone how much money they're making by doing nothing. The problems come when they try to withdraw their actual money and find that there's a) a problem with the computer or b) a temporary liquidity problem in the fund or c) some other series of excuses.

6. If this is legit, ask for the names of three other investors who have been in for at least 3, preferably 5 years. Make sure they are people who have both deposited and withdrawn. If it's on the up-and-up, surely those people will be delighted to tell you how swell it all is. If it's all "confidential", well, that tells you why you can't find any complaints.

7. Seriously. It's a scam. It not only sounds too good to be true, it is. You are walking your savings into the jaws of the valley of death. Open your greedy eyes and see the evil.
 
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