Legal Question in Real Estate Law in California

Re: Investment Trouble

Unfortunately, Mr. Stone is entirely correct. The rate of return is usually related to the degree of risk; a 50% return equals about a 200% risk. As a passive investor, why would the person operating this business give you a 50% return when they could raise the same amount of money with a 20% return? The company has to make money also, so the rate of return would have to be greater than 50%. Based upon the few facts you give, I do not see how it would make much money. If the company merely goes to banks and buys at a discount their non-performing loans, it can not go and refinance the loan, it must first foreclose on the home, which means the whole process for one home would probably take 6 months or more. The bank originally holding the loan would have to give the company at least a 60%-70% discount in order for this scheme to work.

The only things you can do now are go physically to the operators of the company and demand your money back via a cashier's check; perhaps they will be scared, but probably not. Go immediately to the police and get them arrested; also see the local District Attorney's Office as some of them have attorneys devoted to handling this type of crime, since it is so common now. Contact the department of Real Estate as they have a reimbursement program for some similar types of crime, but it probably will pay you very little if anything. Go to the properties you supposedly purchased and find out if any of the owners had really gotten any money form this company; sometimes the company will actually do some of what its claims it is doing. Get together with the other investors to co-ordinate some of your planning. But remember, every dollar some one else collects is a dollar less for you to go after. Look up the IRS rules on the best way for you to take this as a tax dedcution.

If you actually bought shares in this company, which is why the SEC is involved, then you may be in even a worse situation to recover anything because then you must demonstrate fraud. Companies go under all the time and their investors can not recover anything. You would have to first deduct the losses against short term capital gains, then long terms, then I believe you are limited to a $3,000 deduction against income per year.

Re: Investment Trouble

It's called a Ponzi scheme. The "company" doesn't invest in anything. The first two times you were paid from other people's "investments." This was to convince you (successfully) that the scheme was legitimate. You can sue, or complain to the SEC, but chances are you're out the money. Maybe if you are the first or second person to sue you can get some of the remaining money before it's gone.

Re: Investment Trouble

We would have to review your documents, any prospectus, and then can assist you in advising you the best way to proceed.