Bakersfield is always seen as “the place you drive through to get to….” or maybe the place where “all the cows are.” However, the Bakersfield Real Estate Investment Club came to light a few years ago with the promise of returning riches in real estate through different investments in the market. Today those riches are being returned to investors by way of a receivership that was set up as a probe from the Securities and Exchange Commission against the Bakersfield Investment Club.
Who Started This Investment Club?
The Founder of this club was a former appraiser for Kern County, military veteran, and supposedly wanted to help people make money through real estate investing. Many say he was a good man, and even felt like he was a humble person who was promising real estate investment returns of 15% – 33% depending on who you talk to.
How Do You Get Double Digit Guaranteed Real Estate Returns?
First, you create an air about you that you know something about this real estate stuff that other people can’t know or possibly find out about. Second, you use your background of being a military veteran and “humble” faith based person to attract investment funds from investors that are none the wiser. Finally, you take that money and live a lavish life in the background so no one suspects that you actually cant guarantee double digit returns up to 30+% because once people find out you’re a fake, then the house of cards starts to fall.
How Much Was Invested?
It seems that over time the total investment into the Investment Club was about $16,000,000. It was spread out over approximately 500 investors, averaging about $32,000 per investor. Some people had even put six figures plus into this deal. The reason being that he was still paying out returns, and people kept investing, but once the bull market started to slow down and the investments started going more and more outside the wheelhouse of the person who ran this Ponzi scheme, it started to become evident that this real estate investment club wasn’t going to be a good idea.
I have heard stories about this former appraiser investing in an Oil Company and solar project and other diversified businesses, which is great if you have the people who know what they are doing (and in Bakersfield it is feasible that we can find good oil and solar operators), however, at the end of the day the person running the investment club was the one investing in these businesses and those businesses turned into bad investments and coupled with the Ponzi aspect of the business it all came tumbling down.
How Much Real Estate Investment Money Was Lost?
Over time and after many many years of selling property, collecting rents, and trying to get this portfolio liquidated it finally came to fruition that the receiver who was running the liquidation was able to come up with approximately $9.3 Million in sold asset proceeds, and approximately another $1.5 Million in other assets and incomes. This means that overall there was approximately a ⅓ loss of normal investors money. A true tragedy.
I can understand if the money was lost due to a turn in the market or some unforeseen event, but to actually come out and steal peoples money and be ordered to pay back gains of around $12 million out of the total $16 million raised makes it seem that there was quite a bit of money taken for personal gain, and on top of all this to be a military veteran and take advantage of people in such a way is an even worse action being that your previous job was literally to protect the people on our soil from outside threats, while the whole time you were running your real estate investment business you were the real threat.
People Refuse To Believe
In the throws of losing all of these investor funds, there are still proponents of the operator of this Bakersfield Investment Club. They still believe he was a good guy, and he meant well, don’t necessarily fault him, but fault his business practices and accounting errors.
To those people, I say, you have been duped. This man is a professional con artist who stole your money and used it for his own benefit with no real plan on paying you back. Why else would he purchase these investments without knowing how to run them properly? Why else would he just not come out clean and say that the Investment Club was not performing well and he would be dissolving and returning the funds that he could to the investors before the bleeding got worse? Why else would the SEC have sued him for misappropriation? And along all of these steps the Founder of this investment club has had nothing public to say, and neither have his lawyers.
Thoughts From A Real Estate Company Founder
I have thrown my thoughts in the ring throughout this article, but to me, I feel bad for the investors who lost their money. I feel worse for those who lost sums that they actually needed to live. I don’t believe that promising double digit returns on a regular basis is a real thing, and most, if not all, successful investors, I would have to believe, agree with me. At some point it becomes about the person’s greed, or the person’s inexperience, or a person’s hope that this will be their get rich quick scheme, and from what I have seen, there is no get rich quick scheme. There are tons of get rich slow schemes, and hard working get rich schemes, but those who focus on the get rich quick always seem to end up on the short end of the stick.
It is my dream and goal to create an investment fund that does not promise double digit returns, if we promise returns at all. Our goal will be to find solid properties based on solid fundamentals and invest in those properties, and over time we look to get a large return by adding value to the communities that we enter, and improve those locations we invest in. I believe that in real estate there can be a win win scenario in which the investor wins because he has prudently invested in properties that make sense on some base level, and where the community and citizens of the community win because their previous blighted property/street/neighborhood/city is now back on the upswing and there is plenty of new potential coming into the area.
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