Real Estate Investment Portfolios
Who didn’t want to diversify their investment portfolio and take advantage of the ongoing soaring values of real estate in 2019? Demand for assets other than stocks has been on the rise for several years. Oil and gas investments are always an option, as is cryptocurrency.
But real estate was also a viable alternative. Unfortunately for 100 retail investors who forked over $13.5 million to BNZ, a California-based company owned and managed by Brett Barber and Louis Zimmerle, the investment was not only a bust but also ended up as a Ponzi scheme. It’s unclear if Barber and Zimmerle started their real estate investment scheme intending it to be a Ponzi Scheme, or if it just ended up that way. However, things quickly started to unravel. SEC Press Release
“All told, BNZ invested only $6.4 million of the $13.5 million in investor funds in real estate and alternative investments, generated barely $300,000 in profits, and made at least $1.7 million in Ponzi-like payments to investors. And despite BNZ’s minuscule profits, BNZ transferred more than $1.6 million to GIS [Barber’s company] and more than $700,000 to Zimmerle, while paying certain of Barber’s and Zimmerle’s personal expenses, including for vehicles, meals, and travels.” SEC Complaint
Maybe Zimmerle and Barber couldn’t find enough assets to purchase, after all, real estate inventory was difficult to come by. Unfortunately, that doesn’t help the investors who are out over $10 million, half of which was in investors’ self-directed IRA’s. Instead of the 10% return on investment, they were promised, they have a mostly empty bag of tricks left behind. The case does provide us with a few classic fraud facts that illustrate what a suspicious real estate investment might look like.
1. Neither Barber nor Zimmerle was registered with the SEC.
2. Barber previously held Series 6 and 63 securities licenses. However, as of March 2012, Barber was barred by FINRA from associating with any member firm.
3. BNZ was guaranteeing a 10% return for a one-year’s investment at a time when most real estate deals were selling above the asking sales price. Where were they going to find cheap inventory?
4. Barber communicated to investors that their investments were safe and their returns guaranteed. He even told a few prospects that some of BNZ’s investments were federally insured. How is that possible?
5. Barber wasn’t above self-dealing either. BNZ loaned Barber $1.2 million to purchase his personal home. Did Barber sign a note for the 10% return he guaranteed investors? Nope. How’s 4% sound? SEC Complaint
What Can You Do To Decrease Your Investment Risk?
When exploring financial investment opportunities in securities, oil and gas, real estate, or cryptocurrency, do your research. Check the history of the people in the deal, as well as any past or pending lawsuits. Review the SEC’s website and your state’s securities website to see if the investments and advisors are registered.
Contact An Experienced Real Estate Investment Fraud Attorney
Take steps to verify all data. There are legitimate real estate investments, but you need to investigate thoroughly.
We hope all your real estate, cryptocurrency, and oil and gas investments are safe and profitable. But if you find yourself searching for an experienced real estate investment fraud lawyer, oil and gas litigation attorney or commercial litigation lawyer, we are here to help.
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