No offense taken at all. In fact I have written over 40 articles on the 1031 Exchange industry. My focus has been on the 1031 Tax Group and Okun as well as McGhan from Southwest.

I was originally put on the subject by a close friend who works for one of the major title insurance company’s 1031 subsidiary.

As a real estate consultant, I have met far more reputable and well meaning people in the industry; most have been quality individuals who are concerned with the welfare of all their clients.

My statement was a byproduct of the stories that have been emailed to me, sent to me through comments on my blog, and phoned in. Many investors were ruined by Okun and McGhan. Of course those are only two men but the roughly $200 million gone remains a hardship to those victims.

The other reason for my negativity was the fact that there are few professional standards, outside of the FEA, for people wishing to become Qualified Intermediaries.

Finally, according to legislation that I have followed, only Nevada has enacted any kind of laws to regulate the industry. California is apparently considering following Nevada’s lead but things still remain wide open for abuse.

My statement was not meant to harm those outstanding well meaning and ethical 1031 exchangers. Instead it was my opinion that the only 100% true lock of a safeguard was to avoid the investment until laws and regulations weeded out the minority of rip off artist that prey on the unsuspecting.

I honor the fact that you wrote in. I also honor the fact that you must be a positive and ethical businessman. I appreciate your balancing the ledger and giving everyone the other part of the story. Thanks Chad

As to your comment: “The only real safeguard, until nasty criminal penalties are enacted, is to avoid a 1031 exchange completely and search for another investment vehicle which would provide a safer tax sheltering strategy.”

I just wanted to say as a Qualified Intermediary myself, that Edward Okun is an anamoly. Every industry has ways to cheat the system. The 1031 industry set up its own regulatory body, the Federation of Exchange Accommodators (FEA), in order to control itself.

My advice to anybody thinking of doing a 1031 exchange is to look at http://www.1031.org, the FEA’s website, and find a reputable Qualified Intermediary you can trust. You should also make sure to get personal testimonials of the character and reliability of your Qualified Intermediary BEFORE you do the 1031 exchange.

The 1031 exchange industry is unfortunately being represented solely by the few who make negative headlines. Look to the thousands that follow sound business practices and are adding to society positively.

Sorry to sound terse, but I just thought this needed to be said.

The 1031 industry is attempting to clean up. State run legislation in Nevada and California are in the works or have already been implemented. These laws are designed to help consumers avoid the heart ache and pain of losing a retirement nest egg to a crooked Qualified Intermediary.

The reality remains unchanged if you watch the 1031 Tax Group proceedings of crook Edward Okun. Many consumer’s lives have been financially ruined as a result of their retirement savings being stolen.

The only real safeguard, until nasty criminal penalties are enacted, is to avoid a 1031 exchange completely and search for another investment vehicle which would provide a safer tax sheltering strategy.

You are right on the money. I just picked up on the Dept of Justice’s announcement that pertains to your post. I whole heartedly agree with your assessment.

The sad fact remains that only a handful of states have taken it upon themselves to “attempt” to create legislation that protects the consumer.

In the case of the victims of Ed Okun, many have commented that they are now fearful that they will be out their life savings AND that they are being threatened by the IRS for taxes in their 1031 deals!

How insane is the idea that a consumer would lose their entire nest egg and then be liable for the taxes in a failed 1031 deal?

Thank you to John Harper for the kind mention

Dean