A Real Estate Investment company is under investigation as it promised returns over 85 percent to investors and now is unable to deliver them. The case against REI Group of Asbury Park is typical as peoples greed leads them into deals that when looked at with a jaundiced eye are crazy on the outside. If the returns were this good, why would the organizers need to bring in outside people. They could just as easily borrow the money at 5 percent from a bank and make the profits themselves.

For hundreds of these investors, however, the promise of outsized profits has morphed into the reality of big headaches. State and federal securities regulators said they all were victims of real estate investment schemes and have accused four New Jersey businesses since late 2003 of convincing nearly 1,000 people to fork over more than $100 million.

The latest action came last week when the state Attorney General’s Office sued REI Group of Asbury Park and its owner, Gary Klein. Officials accuse Klein and others of fraudulently promising returns that reached as much as 85 percent to investors who gave him money for property purchases.

But some of the money investors gave Klein and REI to buy real estate didn’t go toward those specific properties, the state said. Instead, officials charged, the cash was commingled and funneled to repay other investors or into Klein’s pocket.
Between August 2004 and November, court papers allege Klein diverted $2 million of investor and company money for his personal use, much of it to pay for renovations to his home in Colts Neck, which he paid $720,000 for in 2004. via NJ.com.

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