Hello DG Family,
I want you all to be aware of how Jason and I were almost scammed by a potential private money investor.
Jason and I are in constant search of private money for our deals. Quite often we post on FB in regards to private money for potential deals that we have lined up. Well, Jason was contacted by an individual via FB and asked for more details on what we offer. Jason had the gentlman visit our website, he discussed how private lending works, what % we offer and what documents the private money lender will receive to secure his investment.
Initially, the investor asked great questions and seemed to be mulling the idea over. As Jason continued to talk to him over a month period, it seemed that the investor was indeed interested in being our private lender and offered $500k to start. This did not seem strange to us because we had already worked with another lender who gave us $300k.
To make himself seem savvy, he told Jason that he wanted to see our promissory note. We sent one over, he approved it and asked us to get it notarized. We did. Keep in mind there was no rush this took place over a 6 week period.
This is where it starts to get fishy. Jason asked for his contact information and he said that he was catching a plane to Limon to aquire a large food and beverage company via his company. He would return to the US on the 23rd of July. He reads emails daily and would continue to communicate via email. He asked to go direct to his bank at Fifth Third Bank and open an account. According to him all his money was with 5/3 bank and it would be easier to transfer. I called the bank and they said that they're only on the east coast and cannot let us open a business account because our LLC was established in CA.
After several emails back and forth regarding 5/3 bank, the investor tells us he just checked his 5/3 bank accounts and realized that he has spent more than he thought (he had just purchased an apartment building) and does not have enough money. He then told us no worries, he has a large bond that he can convert to cash, however, the bank is located in the United Kingdom.
At first, Jason and I didn't think anything of it. The guy seemed like an international traveler, talked a good game, and besides, he is depositing money into our account not taking out. So, he has his "portfolio manager" contact us via email. He has a sign a document allowing for deposit with account information. We call Wells Fargo (our bank) and they help us fill out the form. We email it back. The next thing we get is email stating that there is $850.50 in account fees and bond to cash conversion fees. So, I forward the email to the investor and basically say here are your fees and I don't know if you have already arranged the payment for this with your portfolio manager. The investor writes back and tells us to go ahead and pay it. He'll reimburse us when he gets back to the states.
No way! Red flag! The guy tells us that he just did this for a real estate firm in "Pitts." He gave them a $1mil and they paid $3k in fees. I politely wrote him back and told him that this scenario does not fit our business model, that we can wait until he returns to the States on the 23rd of July and no reflection on him, but his UK bank has a security warning out on email and internet scammers and that we have been advised not to proceed. Well, the investor wrote Jason and told him I had a negative attitude, Jason should just write the check now and send it because I will be ashamed when the money is deposited into our account. In addition, he is staying a few more days in Limon and then he will probably be stopping in Canada first before returning to the States. Needless to say we nixed the guy.
Some important points!
1. Don't ever pay fees on some one else's investments. You only pay your % and/or back end amount that you agree to.
2. Don't ever do a promissory note unless using a third party like a title company or attorney. This guy has Jason's signature.
3. After giving our account number, we immediatly went to Wells Fargo and canceled our LLC's saving and checking account and had them issue us another one.
4. This so-called portfolio manager used this product called Boxbe. It sorts your email accounts and it's free. If you are not on the recipients email book, then Boxbe pops up and asks for all your personal information. Thank God, both Jason and I were annoyed with the popup box and just entered our first and last name and email address. We did not fill out our address, telephone, etc. If we had, then the guy would have had our account numbers and our addresses. Not a good situation.
5. If you can't get the guy to talk to you on the phone then there is no deal. Looking back the guy did a great job of not giving out his information.
6. This guy is on DG's facebook page and other real estate guru pages, so watch out! He is hunting.
PS Jason email DG and he is looking into it! Thank you DG!