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Old 04-17-2008, 09:52 AM   #21
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It sounds like you paid $4,000 to join and also $80,000 for venture 1 and $11,000 for venture 2 (when you said "we" I'm assuming you mean you and your wife, not the whole club). So sorry. Those people are such incredible pros at their pitches and two years ago when you joined it did seem like the sky was the limit for how much money could be made.

Agree you should drag your wife away and at the very least chalk it up as an expensive yet valuable life lesson since I bet you can't get any money back. It is really helpful that you are sharing this with the forum readers--thank you.
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Old 04-17-2008, 09:52 AM   #22
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Go to page 5 of that thread and search for "kombat".
mea culpa
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Old 04-17-2008, 10:01 AM   #23
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It sounds like you paid $4,000 to join and also $80,000 for venture 1 and $11,000 for venture 2 (when you said "we" I'm assuming you mean you and your wife, not the whole club). So sorry. Those people are such incredible pros at their pitches and two years ago when you joined it did seem like the sky was the limit for how much money could be made.
Correct. But here's the problem I'm having with my wife: There's no proof we've been scammed. We get these newsletters from S&D reporting about other developments that have "sold," and listing how much profit the investors in these developments made (typically doubling their money). Are they outright lying? Is it possible that they don't actually own those developments, or that the people involved in them aren't actually making the money claimed in the newsletter? If they were lying, wouldn't the investors in those properties have cried foul? Do those investors even exist, or is S&D lying about them?

We have a deed for the property we bought. There's no doubt we actually own that parcel of land. S&D has been around for 6 years, and has a "Satisfactory" rating with the BBB.

I have no ammo to convince my wife it's a bad deal. As for the income tax scheme, we did get the money back, and we have not yet been ordered to repay it. It's been over a year. My wife still thinks I'm being overly conservative. Moreover, she thinks I'm being contradictory, and that these real estate ventures are safer than my index fund buying, so she can't understand why I'm OK with the "risky" tactic of buying stocks, but shying away from buying a safe, "hard asset" investment like land.

I think the court case is still pending, but there will no doubt be appeals. It'll be years yet before we know conclusively whether either of these two ventures (the land banking or the charity tax scheme) are legitimate or ripoffs. That's my problem - how do I get my wife to understand why I don't trust these guys, when by all appearances, they seem to be delivering (without us making any actual profit yet)?
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Old 04-17-2008, 10:13 AM   #24
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Get your wife to watch "American Greed" on CNBC... It smells like a lot of the scams they present on that show. Promises of too-good-to-be-true guaranteed returns with no downside risk, exotic investments in far away locations... When your wife sees all those people who lost their life savings in such "ventures", she won't walk out, she'll run... Try to get your money back as soon as possible. If it's a Ponzi scheme, you have to get your money back before it collapses.

Quote:
Correct. But here's the problem I'm having with my wife: There's no proof we've been scammed. We get these newsletters from S&D reporting about other developments that have "sold," and listing how much profit the investors in these developments made (typically doubling their money). Are they outright lying? Is it possible that they don't actually own those developments, or that the people involved in them aren't actually making the money claimed in the newsletter? If they were lying, wouldn't the investors in those properties have cried foul? Do those investors even exist, or is S&D lying about them?
It could be fairly typical in a Ponzi scheme (though in your case I'm not sure it's such a scheme). Everything looks legit at first. Older investors get paid with new investor money, so on the surface it looks like everything works as promised. Everyone seems to be making money. It's not a "lie", but rather a slide of hands. Then something happens, the scheme collapses and the newer investors are left holding the bucket.

Quote:
I have no ammo to convince my wife it's a bad deal. As for the income tax scheme, we did get the money back, and we have not yet been ordered to repay it. It's been over a year. My wife still thinks I'm being overly conservative. Moreover, she thinks I'm being contradictory, and that these real estate ventures are safer than my index fund buying, so she can't understand why I'm OK with the "risky" tactic of buying stocks, but shying away from buying a safe, "hard asset" investment like land.
Stocks, as risky as they are, return only 12% a year on average. Savings accounts, as safe as they are, return only 3% a year. Real estate is in between those two extremes IMO. Personally I would be very wary of anyone trying to sell me RE while promising me the safety of a savings account and quadruple the returns of stocks. It just doesn't make any sense and if there were such an investment out there, we would all be on it. Maybe it's the kind of logic your wife could appreciate?

By the way have you and your wife actually visited that "hard asset" you supposedly own? Have you checked with the local authorities to make sure you are the sole, legitimate owner of this property? If you are, then you should receive a property tax bill each year. Do you?
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Old 04-17-2008, 10:54 AM   #25
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I agree, and I'd love to cut all ties with the club. However, we paid $4,000 to join. My wife is still determined to "get our money's worth." Except I keep roadblocking us from investing in the shenanigans they promote each month, hence the marital discontent.
Oh God! They really got you hook line and sinker!

I wish I could think of any advise other than talking to your state attorney general to see if there are any investigations being made of this "club" or any way to discredit them to your wife.

Audrey
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Old 04-17-2008, 10:56 AM   #26
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There's a guy in Charleston that bilked people all across the country out of money, including the school where he taught economics. Everything looked good, until, well, it didn't. These were informal investment pools that supposedly invested in hard assets.

He had them all fooled--and cost a local CFP his practice in the end, as he recommended clients to invest. Al Parish stories Bad for everyone involved, and they thought the returns were great until it was revealed that it was a Ponzi scheme.

There were some pretty smart folks among his local investors, or so they thought.
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Old 04-17-2008, 11:02 AM   #27
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Kombat, your OP says:

Quote:
How do I convince my wife that this guy is not being totally honest? How do I convince her that a promise of a "50% return with low risk" is nonsense, when these snake-oil salesmen make such a convincing case? The "wealth club leader" portrays these presentations as though he's vetted them out and is confident they will play a key role in helping us build wealth. I, on the other hand, am thoroughly convinced that these are little more than infomercials, and the presenters are paying a (probably hefty) fee to our "wealth club leader" to have a captive, pre-screened audience of inexperienced investors with substantial pots of money set aside, ready to invest. My wife thinks I'm being too cynical. I'm just trying to protect our money. I recognize that nobody cares more about our money than I do, and these guys are just trying to get a piece of my pie. How do I get my wife to understand my point of view?
But then you present "her" side of the argument. You seem to be on the fence about it.

Do you really want to get out? If you do, just tell your wife you're done and be done. If you don't, then stay in and see what happens. It's your call, good luck with either choice.
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Old 04-17-2008, 12:43 PM   #28
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You're out 84 grand and you still need to convince your wife? I know you have a deed. I think I would try to get back my 80k and see what happens. Hell, even if you get back only 70k, I would consider it a victory.

We just had a ponzi scheme uncovered recently. Guy screwed over 700 borrowers for 20 million. Wasn't pretty.
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Old 04-17-2008, 12:48 PM   #29
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I have been surfing a bit the internet and I found quite a few of these "land syndication companies". The S&D website was very vague at best. But other websites are more detailed. These companies seem to thrive in Alberta (Edmonton and Calgary), so I wonder if it is because of the huge increases in the price of land there recently, or because of some legal loophole in Alberta. I don't know. The striking thing though is that many of them have an explicit Asian connection. One website I found states that the potential profit return is up to 100% a year, though they do mention that these projections are based on speculation and that the company neither guarantees aforementioned returns nor accepts any responsibility whatsoever if things go south. Another interesting tidbit: "The projected rate of return will depend solely on how much you invest...". Odd. It also mentioned that investors are "shared owners" in the land, whatever that means. Investors can also sell their portion of the land to anyone at anytime, so it looks like there might be a way for you to recover your 70K if you can find a buyer for your 2 units. I still can't decide whether it's legit or not (I haven't found much in the way of negative comments about land syndication companies on the internet), but if it is, it sounds at best very speculative to me...
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Old 04-17-2008, 12:51 PM   #30
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"How do I get my wife to understand my point of view?"

How do you get to understand her point of view? I think you need to break down her viewpoint into little pieces and then go through each piece. Where you disagree on those little pieces, see if you can talk about those with her.

She views these investments as "safer" because you own a hard asset, which I interpret to mean she believes that the land won't go down in value. So here's how I would break it down: (a) Do kombat and wife really own the land? (b) Was it really worth what you paid? (Maybe you overpaid?) (c) Will it be worth more in the future? (Maybe if it's developed -- if so, will it be developed?) (d) Who's going to pay that future higher price? Why? What assurances do you have that they will buy it at that price?

Since you haven't received your money on the $80K deal yet, you should ask her on what basis she trusts these folks to deliver. Can you verify that they've delivered to other people? Does their business plan make sense (could be a Ponzi scheme as others have said -- how can kombat and wife distinguish between the two)? Do you know these people's character over a long period of time?

I think you need to back up from the conclusions she's reaching and see where the two of you diverge in your thinking. That way hopefully you can talk about those assumptions or beliefs or logical reasoning or feelings and find the source of the discord. Then, maybe, just maybe you can talk it over and you both can try to understand each other's viewpoints.

Personally, it sounds like a scam to me, but I know how easy it can be to think that something that is too good to be true isn't. It's a trap of human nature, so folks like this wealth building club will always be around.

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Old 04-17-2008, 01:04 PM   #31
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Kombat has been registered here for about 8 months. He has seen us heap scorn on people who pay 1% loads to SEC regulated investment companies.

Woe betide anyone who admits to interest in an annuity.

Yet he refinanced his house to "invest" $100,000 into something with at least a 100% load. When Revenue Canada gets done it may be much more.

I am thinking that Kombat is playing a joke on us, trying to see just how gullible we might be. At lest that is what I am hoping...

Ha
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Old 04-17-2008, 01:10 PM   #32
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Kombat, what a horrible story. The earlier you start fighting to get some of your money back the better your chances of getting some of it back. I heard the old "your protected by the land" speech from a developer 15 years ago when a company I owned was considering investing in a condo deal. We didn't invest and every other partner but the developer lost huge bucks on the deal and even ten years later I had to spend some money on legal fee's to fight off a suit from one of the contractors.
You have to run hard and fast away from these guys, giving them any more money could only be described as nuts and you really need legal advice (I hate paying for legal advice) to try and salvage something. Sorry
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Old 04-17-2008, 01:21 PM   #33
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I am thinking that Kombat is playing a joke on us, trying to see just how gullible we might be. At lest that is what I am hoping...

Ha
That was my 1st thought.
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Old 04-17-2008, 01:22 PM   #34
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If this had occurred in the US, odds are there would be a violation of the securities laws. Canada, I don't know. You say you don't know if you have been scammed yet. If there is a violation of Canada securities laws or consumer protection laws then you may very well have a right to you money back now. I would go see a lawyer asap and discuss this. Sometimes getting out fast is best.

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Old 04-17-2008, 01:27 PM   #35
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I am thinking that Kombat is playing a joke on us, trying to see just how gullible we might be.
Not likely, but if so, then he's remarkably consistent in his joke-playing. See his Nov 5, 2007 post on this forum.
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Old 04-17-2008, 01:29 PM   #36
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Kombat has been registered here for about 8 months.
Yet he refinanced his house to "invest" $100,000 into something with at least a 100% load.
We made the investment in August of 2006. More than a year before I discovered this forum. Apprehension about the venture is one of the things that drove me to do the kind of research that led me to forums like this one.
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Old 04-17-2008, 02:14 PM   #37
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Stocks, as risky as they are, return only 12% a year on average.
Ah, but you see, the idea that to get greater returns, you have to take on more risk, is a myth, don't you see. He told us so at last night's meeting, in exactly as many words, before Wayne Robbins began his pitch for Canyon. Fantastic returns (double your money in 2 years) with almost no risk, because we're buying a "hard asset" (land).



I wish I were joking.

Comments like that are exactly why my feelings for this club have gone from "guarded optimism" to "outright disdain" over the past 2 years. Yet my wife believes this stuff. She has no reason not to. How do I convince her that he's spouting garbage?

The wealth club, by the way, is called HEIR. Home Equity Investment Rewards. The president is Archie Robertson.
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Old 04-17-2008, 02:21 PM   #38
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We made the investment in August of 2006. More than a year before I discovered this forum. Apprehension about the venture is one of the things that drove me to do the kind of research that led me to forums like this one.
I am sorry. Martha has given very good advice, get to a lawyer who is skilled in this area, and perhaps also well connected wouldn't hurt. It can help to be an early demander, because if these things unwind there is never enough to pay off everyone.

The other thing I would at least consider, although it would be painful, is to stop calling this an investment or venture and start calling by its true name- getting defrauded. But you are there, so maybe it isn't as bad as it seems from afar.

Ha
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Old 04-17-2008, 02:28 PM   #39
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I am sorry. Martha has given very good advice, get to a lawyer who is skilled in this area, and perhaps also well connected wouldn't hurt. It can help to be an early demander, because if these things unwind there is never enough to pay off everyone.
I hear what you're saying, but to be honest, there's a part of me that still hopes they will deliver on this. I haven't heard of one single person who's been ripped off by S&D, and they've been around for 6 years. No complaints in the Better Business Bureau database. Why is everyone so sure this is a scam? Is "land banking" not a legitimate investment model? Are they lying in their newsletters, and those investors they report are "voting to accept" offers from developers for their lots, and making double digit returns, make-believe? Do they not exist? Are all the developments on their website fake, except the one we're in, which happens to be the one they sold to all us suckers? I'm just trying to understand what the scam is here before I hit the "panic" button prematurely and lose even more money.
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Old 04-17-2008, 02:36 PM   #40
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I hear what you're saying, but to be honest, there's a part of me that still hopes they will deliver on this. I haven't heard of one single person who's been ripped off by S&D, and they've been around for 6 years. No complaints in the Better Business Bureau database. Why is everyone so sure this is a scam? Is "land banking" not a legitimate investment model? Are they lying in their newsletters, and those investors they report are "voting to accept" offers from developers for their lots, and making double digit returns, make-believe? Do they not exist? Are all the developments on their website fake, except the one we're in, which happens to be the one they sold to all us suckers? I'm just trying to understand what the scam is here before I hit the "panic" button prematurely and lose even more money.
We are a bunch of nobodies on the intraweb with little actual information. So let me describe what I would do before making such an investment, (especially with borrowed money):

- Review everything I could find about the purveyors of this opportunity, including credentials, history, any past infractions, what liability/E&O insurance they carry, etc. I would ask for references and talk to them.
- Look very closely at the investment opportunity. Does the business plan make sense? How could things go wrong? Why will this piece of dirt ever be of interest to anyone? What are the legal or other impediments to the land actually getting built on? What are the implications of a cross-border investment? I would get on a plane and go see the patch of dirt and the general area.
- Look very closely at any potential liability I might be assuming by making this investment. Do I need to form an LLC to hold this investment? Do I need any insurance?
- Assuming the rest passes the smell test, I would build a spreadsheet detailing cash flows (including cost of carry), sensitizing it to see what things looked like under a range of potential outcomes.

I'm guessing you did maybe 10% of the above, right? Seriously, I would consider hiring a lawyer. Go read the fine print of anything you signed, too.
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