How do you get your wife on board?

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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.
 
Kombat, your OP says:

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?
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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.
 
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.
 
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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"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.

2Cor521
 
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
 
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
 
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.

Take your wife with, she may listen to an expert.
 
haha said:
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.
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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.
 
FIREdreamer said:
Stocks, as risky as they are, return only 12% a year on average.
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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).

:rolleyes:

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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kombat said:
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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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
 
haha said:
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.
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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.
 
kombat said:
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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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.
 
...my wife believes this stuff. She has no reason not to. How do I convince her that he's spouting garbage?
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Why is the burden of proof on you? This seems backwards to me. If I'm looking at putting my HARD EARNED money into something, I start out believing it's a bad idea, and look hard for reasons why it might not be.

That said, I sense a larger issue here. You may be having a little bit of a power struggle here. I am the "slow and steady wins the race" investor and maybe you are too, but your wife seems to be looking for the big win.

Why?

Is she more of a gambler by nature? If so, it might make sense to have most of your investment money in a joint pot, but have seperate pots for each of you so you can play with it as you will.

Is she feeling some urgency to make money fast? Does she hate her job? Are you saving toward an important goal she really wants to reach and she's feeling you'll never get there?

Is she generally gullible by nature? Maybe you need to stand aside while she invests some (reasonable) amount in one of these schemes and loses it. Maybe then she'll be more cautious.

I'd take a little time out to search for the root cause of your disagreement.

As to whether this is a scam or not, I think there are other factors to consider. The first, of course, is continued marital harmony. The second is that you're in something you don't understand completely, but which is causing you to lose sleep and to doubt your own judgment.

If I were you I'd say the investment wasn't right for me on the face of it, scam or no scam.
 
Sarah in SC said:
6 years? Now there's a track record!
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A smart guy, a rich man, and along term survivor in the investment markets named Martin Whitman long had a policy of only investing in regulated securities markets.

We have recently discovered that this regulation is often not up to snuff, but there are filings to read, and the possibility at least of managers going to jail for certain types of lies.

I personally feel more comfortable with this type of investment.

But as you say, your situation might be just fine. "It could happen"!

Partly it is a matter of personality. Some are disposed to believe; others to disbelieve. Not Ha's role to try to tell you; you are many times more likely to know what is right for you and your wife than I ever could be.

Ha
 
Ha, Marty is a god around here. Seriously. Go Third Ave! (well maybe not lately) ;)

My 71 yr old boss just walked in here after doing some tinkering with a volatility model that came from a book by EO Thorpe (the famous card counting Wall Streeter), and said "I've looked at this stuff for a week now, and you know, I guess I'm just more for making money slowly than riding the volatility stagecoach". Wise words from a man who made his money with his hands and is still kicking!
 
This thread has reminded me of what psychologists call an "investment trap." (It's not about whether this investment is a good one or a bad one -- it's about how human brains function and lead us to make decisions the way we do.)

I don't know if that's what's going on here, but I'm going to take the liberty of using this situation as an example, in case this hasn't been discussed before:


First, you are asked to make small, incremental commitments. Initially, just a meeting with a rep. Then, $4000 to join. Then, monthly meetings. Each week, you are given new opportunities and asked to invest more.

Along the way, you get mixed in with a bunch of folks who are "eating up" the pitches being made to them, so there's the pressure of the crowd working on you also. The enthusiasm is infectious. In fact, you'd be a fool not to join in.

Not surprisingly, you invest -- who wouldn't like to pay off their mortgage -- it's a great goal! But you get to the point where you're starting to get uncomfortable. Small investments are adding up to an increasingly big number, or the promises are starting to sound too good to be true. You start to feel "cognitive dissonance" which means that you are holding two competing thoughts in your brain at the same time. "This is a scam," says one part of your brain, while the other is saying "I still believe this might pay off... the Better Business bureau thinks they're ok," etc. etc.

Having two competing thoughts in your brain feels bad. You must make a choice. You can decide that yes, it's a scam, and you've made a mistake -- a VERY hard thing to do, (least of all because of the money). On the other hand, you can decide that everything is ok, that you're still a smart investor, and that your worries are groundless and should be ignored.

Because you've invested your money, your time, and your concept of yourself as a smart investor in this program, you really REALLY want to believe that the deal is a good one. Your human brain is wired to chose this alternative. Experiments in psychology have documented this over and over again.

Investment partners may find themselves at different stages in this process. One may not be at the cognitive dissonance stage yet, or may in the stage where she's escaping her worries by rejustifying and rejustifying her decisions. This feeling is so strong that she wants to invest MORE to justify what's already been spent. Your wife's statement "we've got to get our money's worth out of this" is classic. Good money after sunk costs.

I think it's instructive that the majority of folks who replied to this thread -- and who have not made the same incremental investments --immediately saw it as questionable.

I don't know how to get out of this trap myself -- in the past it has manifested for me by my hooking up with the wrong man and hoping he'll change somehow... :p

One way you might compromise is to say that you'll invest in new ideas using the profits from current investments, when they come in. Your wife isn't forced to choose between investing and admitting a mistake, and you're not plowing more into what might be a dubious enterprise.

It might be useful to do some reading to see if this model applies to the situation at hand, in addition to reading about investment principles. The alternative seems to be to continue to arge with one another and / or to put still more money into a program that's making you unhappy.

Whatever happens, good luck to you!
 
There is nothing to lose by talking with a Canadian version of a securities lawyer. Do it.
 
kombat said:
We've participated in 2 "ventures." The first one is a land-banking program with "S&D International." We've purchased 2 half-acre shares of a lot of farmland just outside of Edmonton. They've claimed we can expect 15% CAGR, doubling our money in 5 years. This was 2 years ago. We're still in the waiting stage with this one. We're in this one for about $80,000, and so far (according to the newsletters) they haven't started anything with our project yet. Sometime this fall, they expect to "approach the city to discuss how the land could best be developed." I'm still optimistic that this one might pan out.
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I have lived, worked, and invested in and around Edmonton all of my life. OK, a few words of encouragement and warning for you. I looked at the S&D website, and the properties all actually exist. The Saunders lake one is on my way to work, and does have the S&D sign planted on it. I don't see Edm. developing very many of them since most are in outlying counties where Edm. has no jurisdiction. That said, most of the areas that they have invested in are easily worth your $80K per acre, but let me know and I can tell you which are the areas that are most likely to see growth and why. Bear in mind that this rapid rise in land prices has made many farmers in the area into instant multimillionaires and there are lots of for sale signs on the farmland in the area, so plenty of choices for developers.

My business is just 15 min south of Edm. and bare land in the industrial park is selling at $300K per acre, 6 years ago I paid $62K per acre. (U.S. and Can dollars are pretty much at equal value right now). 10 years ago my home 3.5 acres would sell for about $10K per acre. Now it would sell at easily $80K per acre but of course farm land out where I live is somewhat less. It would be more like $20K zoned agriculture.

A big problem with Edm. expansion outward is that the mayor recently announced that Edmonton would attempt to grow "up" rather than "out". This is because land wise, Edmonton and its satellite communities are huge compared to most major cities and it takes a lot of $$ to build roads, but if someone builds a skyscraper the city still gets taxes from it, but they won't need to build and maintain a long road or get a vast infrastructure of electrical and plumbing in place.

Cross your fingers and hope that the land is south of the city. If it is, then you pretty much automatically win big. Edmonton is in a boom due mainly to oil, both the conventional, and more importantly, the Alberta Oil Sands. Edmonton is a 4 hr drive away from the oil sands, but it is the main supplier of services, and a staging area for the huge tanks etc. that need to be made for all of the billions of dollars of projects taking place.

The latest non oil related mega dollar project that may directly impact your investment is something called "Port Alberta". Alberta is inland, but once the freight from China is offloaded from ships on the west coast it will travel by rail to a vast area to the immed. west of the Edm. International Airport which is 15 min. south of Edm. It is apparently the most logical spot in North America for freight from Asia to be dispersed by road or rail or air. It is also to be the air hub for items from China because they fly over the N. pole to get to North America, and Edm. is already set up with the runways that are needed for these huge transport planes.

Overall, I'd say that you likely have not been taken in on this one. Although it looks much like the types of gains that the U.S. housing markets had prior to that bubble burst, these ones aren't based on crazy lending or anything suspect. Here's the warning. Pay close attention and always remember this. The value of land in Alberta is going fluctuate exactly in parallel with oil and natural gas prices. It always has and always will. The current lull in price appreciation of your investment land is directly due to the low conventional drilling activity in the province since the price of natural gas is low and nobody is drilling for it right now.
 
Grizz said:
The current lull in price appreciation of your investment land is directly due to the low conventional drilling activity in the province since the price of natural gas is low and nobody is drilling for it right now.
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$10.33 /mmbtu, basis Henry Hub. This is low?

ha
 
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