Those of you who know me, know I have waged a war on the real estate guru’s and scam artist out there.  The practice of freely taking people’s money and using it for one’s own extravagant life style is out of control.  When will enough be enough?  When will there be a way to truly know where your money is and what it is doing?  Although logical, these questions may not be realistically answered any time soon.  You see, the criminal mind is always working hard at not working.

This topic hit our office with yet two more major Ponzi schemes hitting the news.  So I asked the question of my staff, how do you know your money is safe?  The response was, “...because I get a quarterly statement.”  My reply, “And so did the people invested with all of the criminals you see on the news.”  The paper document you receive is just that, paper.  The last guy to get busted told the investigators he got so good at using Adobe Photoshop that it became the simple push of a button to forge documents.  Unbelievable!

The second question I had was, “Why don’t they just use the money to make money?”  (I clearly don’t think like a criminal, but like a business person.)  This, to me, is something I truly do not understand.  For example, if I am the guy in Texas who raised 40 million dollars to buy notes at a discount and sell them for a profit, then why don’t I do that?  Better yet, why don’t I build the machine to do it faster than what I promise the investors so I can do it in half the time I promised them. Thus, using the money twice and lowering my cost of funds.  This strategy would make me a fortune. I would have happy investors and not go to jail.  Is the concept of doing what you say really that hard for people to grasp today?  Maybe I’m a bit old school, but at least I won’t end up as someone’s girlfriend in the big house.

Months ago I decided to create a Private Lending group which would do things differently. In the process aid our company in borrowing funds as well as our students who have no other means. All this while creating a very nice return to the investors. In doing so I reached back into my 27 years in the real estate industry to create something which would be fair to both parties, have good liquidity, protect one from the other, create the most secure investment on the market today, and above all give a safe haven from all of the scam artists out there. So you no longer have to be afraid to make money!

That leads me to the question at hand - How do you know where your money is and what it is doing? This is tough for any investment, especially with today’s technology and the ease in which documents can be forged.  After all, if you go to Coke’s head quarters, I am pretty sure they will not let you sit with the bookkeepers and discuss your ownership, let alone be able to tell you if you are an owner.

Here is what we did to try and alleviate some of the worry and allow our investors to be part of the investment, including the ability to see, touch, and feel the properties securing their funds.

  1. We spread the risk.  Our Private Lending group lends on several great deals at once in order to spread any possible risk, and no one investor is on any individual property.
  2. We don’t actually lend, we purchase the property on behalf of the would be borrower and sign a business agreement for them to complete the project.  This means we own the property and all funds invested in said project from the borrower and allows us a quick close to protect our funds if something goes wrong.
  3. We only lend 80% of the purchase, meaning the borrower has a lot of skin in the game which we control through one of our protective measures.
  4. We send out closing documents on each deal to all investors showing where their money is being used.  We are a local firm, go kick the bricks if you like, its yours!
  5. Upon sale we send out closing docs and show the returns and so on.
  6. If you want to go through our books, we are an open book company and I am sure my bookkeepers would like the company and someone to talk to.
  7. I enjoy taking trips to all of our properties so feel free to join me for a car ride any time to see your money at work.
  8. As a company we are liquid and strong, all of our properties are owned free and clear or have a non-recourse loan in place. Again, mitigating risk.

And of course, we send out quarterly statements, on paper.

These are crazy times for the investment community at large and I am only trying to do my part to help alleviate some of the pain.  That being said, it is also the greatest time for what we do as a company. Since the crash, we are having some of our best years.  Unfortunately, the stock market and most other investments cannot say the same thing.  You need to think a bit differently in today’s economy, so think like the money makers.  BE THE BANK!

Below I have provided a link to a great article regarding Ponzi schemes and other trickery written by a great law firm who specializes in helping people recoup any funds they can after they have been taken.  Happy reading.

Thomas R Stanley II

Education to Equity, Inc.


This e-mail address is being protected from spambots. You need JavaScript enabled to view it