New Jersey Real Estate Fraud Case - Surprise, Surprise, Surprise
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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.
Am I the only one that finds it odd that the ONLY place that looks to be seriously warming is ...
It seems there are numbers posted about how much it could cost the US in home sales from people holding ...
The only people holding off will be those that are financially secure and can manage to hold off. How ...
What an awesome way to generate traffic for a story. Were they trying to time that for Sweeps Week? ...
That's awful. I wonder if using that tactic , if a building can be sold or used as collateral. ...
Good point about people possibly holding off now. The 4.5 percent interest rate could be a self-fulfilling prophecy. 
wow this is a wonderful creation...............i would like to be there once even in my life time........... 
Absolutely agree with Jon, excellent site and very imformative. Keep reporting to us please! 
I will say that had I never been to that site and seen Dean's many deals that he documented and ...
Great Real Estate
post ... very interesting. 
Comment by Chris on 23 April 2006:
As far as borrowing from a bank is concerned, you can’t simply borrow from a bank continually. I lend to investors who fix up houses at a 15% interest rate, and I’ve been on the other side a couple times myself. It’s easier to deal with private individuals instead of banks for several reasons:
- No mountains of paperwork
- Little to no fees
- Standard banks will lend based on the CURRENT value of the house, not the after-repair value
- Standard banks will lend based on income or assets held; in other words, there is only so much the investor can borrow; the banks will not lend based on the potential of one house
That being said, for this company to say they can provide an 85% return is insane. if I was writing a blog about it, I would ask why this company would not partner with private lenders. Partnering with someone typically provides a lower return for that partner than 85%. It usually ends up somewhere in the 20-40% range.