Class Action - Cardone Capital

[Patrick McGrath]

Thoughts?

Looks like he was doing some shady deals.

https://therealdeal.com/miami/2020/09/30/lawsuit-seeking-class-action-status-accuses-grant-cardone-of-misleading-investors/amp/

[Eric Bilderback]

Interesting, Cardone comes across like a knucklehead but I don’t see anything that proves he broke a law.  I feel for folks but god how can you trust a guy that carries himself in that kind of way?  If he did break the law I hope he gets justice.  But if he didn’t break the law because he is slicker then an oil spill hopefully in the future beginning investors will look to cooler heads to handle their money.

Thanks for that post I have followed the conversation surrounding him for a while,

[Joe Splitrock]

@Patrick McGrath the article didn't say he was doing shady deals. This is just another law firm advertising to pull together a class action lawsuit. The lead plaintiff invested $10,000 and says they were promised 15% annual return. It doesn't even say he lost his money. Apparently he got less then he expected, which any investor knows can happen in ANY INVESTMENT. Cardone offered him a refund on his $10,000 and he said no. How bad could he have been harmed if he is not taking his money back?

The investor was not an accredited investor. Cardone opened himself up to this by accepting non-accredited investors. On top of that Cardone has a big mouth. He is a salesman, so he makes everything sound good. It seems obvious to anyone who knows Cardone that he wasn't promising anything. All it takes is someone naïve to feel they were mislead. I stopped listening to Cardone long ago, because the BS was too deep. Maybe he did overpromise, but I have never seen a marketing proposal that didn't try to convince me to invest. It is a fine line.

I have said it before... Most people are better off investing in index funds. The stock market is highly regulated and relatively safe. This is the entire reason behind accredited investor rules, to protect people from themselves. 

[Nick Robinson]

@Patrick McGrath

Patrick,

After reading the article it sounds like that guy thought he would get 15% annual returns. Like everyone else that has posted he obviously didn’t do his homework and doesn’t understand what was being offered. This is an issue with going with non accredited investors or people that don’t understand what they are investing into. I believe with cardone Capital they say you will average a 15% return which includes the payout or refinance of the building.

I personally invested some money in cardone and he has been paying me about 4.65% monthly for the last 3 years even during covid.

I also get a K1 every year. He obviously also didn’t understand that when you invest money it’s never a guarantee that you will make money. The S&P500 has averaged a10%return since it was started but you can still lose money based on when you buy and sell the investment. No matter what or where you invest you have to have a long term,@ least 5 year, outlook.

Successful people come to a decision and act quickly and make changes slowly. Unsuccessful people take forever to make decisions and act and are quick to change their minds.

[James Hamling]

I think at this point with enough "capital under the bridge" it is safe to say Cardone Capital is not doing any scam operation, they have done far too much business for too many years with millions upon millions upon millions placed by very savy investors who are extremely adept at vet'ing organizations, and here is Mr $10K calling scam.... 

THAT SAID I think this is a perfect example of why I have a rule of "NEVER be #1, and if you are #1 pretend to be #10". Especially in this day & age of everyone striving to be a media/youtube star, being #1 mean being TARGET #1. Grant Cardone has put himself out there A LOT, some is business but I am betting most is ego, and in turn he has had to spend how much time & money defending against all the negative attention such brings? 

No thanks, I would much rather be free to do the business I do and to be known only to those who really matter, I value my anonymity with highest regard. 

[Steve Morris]

Originally posted by @Eric Bilderback:

Interesting, Cardone comes across like a knucklehead but I don’t see anything that proves he broke a law.  I feel for folks but god how can you trust a guy that carries himself in that kind of way?  If he did break the law I hope he gets justice.  But if he didn’t break the law because he is slicker then an oil spill hopefully in the future beginning investors will look to cooler heads to handle their money.

I think it's the standard, "you promised me 15%/year and I'm only getting 9%/year" sort of thing.

I'm sure he's got disclosures all over the place and being a qualified investor probably raises the bar for making a claim, but, hey, lawyer's gotta eat too!!!

[Jay Hinrichs]

Originally posted by @Steve Morris:

Originally posted by @Eric Bilderback:

Interesting, Cardone comes across like a knucklehead but I don’t see anything that proves he broke a law.  I feel for folks but god how can you trust a guy that carries himself in that kind of way?  If he did break the law I hope he gets justice.  But if he didn’t break the law because he is slicker then an oil spill hopefully in the future beginning investors will look to cooler heads to handle their money.

I think it's the standard, "you promised me 15%/year and I'm only getting 9%/year" sort of thing.

I'm sure he's got disclosures all over the place and being a qualified investor probably raises the bar for making a claim, but, hey, lawyer's gotta eat to

Virtually every syndicator will say the exact same thing   "PROJECTED RETURNS"  its illegal to guarantee returns unless your doing a REG A filing and then I think you can guarantee  a return ?  could be wrong but I think i remember that right.

[Joanne Speak]

Loved his book, The 10x Rule.  Hate everything else he does.  Cardone is the King Cobra of snake oil salesmen.  He pedals get rich quick schemes to the naive, hopeful and desperate.  His coaching seminars are 20% content and 80% upselling.  Another sell out who started with good intentions and got greedy.

[Jay Hinrichs]

Originally posted by @Joe Splitrock:

@Patrick McGrath the article didn't say he was doing shady deals. This is just another law firm advertising to pull together a class action lawsuit. The lead plaintiff invested $10,000 and says they were promised 15% annual return. It doesn't even say he lost his money. Apparently he got less then he expected, which any investor knows can happen in ANY INVESTMENT. Cardone offered him a refund on his $10,000 and he said no. How bad could he have been harmed if he is not taking his money back?

The investor was not an accredited investor. Cardone opened himself up to this by accepting non-accredited investors. On top of that Cardone has a big mouth. He is a salesman, so he makes everything sound good. It seems obvious to anyone who knows Cardone that he wasn't promising anything. All it takes is someone naïve to feel they were mislead. I stopped listening to Cardone long ago, because the BS was too deep. Maybe he did overpromise, but I have never seen a marketing proposal that didn't try to convince me to invest. It is a fine line.

I have said it before... Most people are better off investing in index funds. The stock market is highly regulated and relatively safe. This is the entire reason behind accredited investor rules, to protect people from themselves. 

Have to love his taste in Jets though  big bad G 550  

[Darius Ogloza]

Having learned the lessons of 1929, the feds created the SEC and the securities acts of 33 and 34, imposing very strict disclosure requirements on issuers of securities.  The courts substantially relaxed the reliance element over the years, allowing most investors to make out a case simply by pointing to statements that could be deemed false and misleading because they omit additional facts necessary to make the statements true.  The most recent rules relaxing disclosure requirements around non-accredited investors only add fuel to the fire.   Glass-Steagall separating commercial from investment banking came out of the same experience - after its repeal in the 1990's we pretty quickly got into the financial crisis of 2007-2009.  Maybe I am getting jaded in my old age but now when anyone proposes "change" I put the burden squarely on him/her to explain how it will make things better.    

[Curtis Yoder]

Have followed Grant Cardone for several years now. Attended his first three Growth Con events and met many great folks. Grants book, The 10X Rule, one of the best books ever. If you read and follow the principals laid out in that book you will be successful at nearly anything you do. Basically, do more than the 1X effort most of us put in, a few extra calls, more customer visits, etc. I looked into investing with him over two years ago and decided to just keep investing in my own SFH's and small MF. I was not turned off by his fund information, I just want more control. My in-house returns are proven and I make sure things are done correctly for myself, thus protecting my capital and returns. If you are going to invest with someone as sharp as Grant Cardone you should definitely do your homework, understand the deal.

[Wyatt Franta]

Hey Patrick,

I love lawsuits like this because it becomes a game of "Who Has The Better Legal Team?". I skimmed through the lawsuit on my break looking for any keywords that could nail Cardone, but I don't see anything guaranteeing or promising the elusive 15% IRR mentioned in the class action. There were terms such as "expect", "you can achieve 15%", etc. and those are close, but can easily be danced around by a good defense.

However, I think his social media posts are extremely deceptive and could potentially lose him this case. He makes the claim that an investor's money is safe with Cardone Capital several times on his Instagram and that in no way can be guaranteed by a brokerage unless it's explicitly mentioned in the funding contract (don't know the exact term for it), stating something along the lines of "Investor's distributions upon exit will be at their initial contribution (plus inflation?) at minimum".

End of the day, it comes down to the contract Susman signed. I think Cardone will win or will be slapped with a small fine at worst.

[Jay Hinrichs]

Originally posted by @Wyatt Franta:

Hey Patrick,

I love lawsuits like this because it becomes a game of "Who Has The Better Legal Team?". I skimmed through the lawsuit on my break looking for any keywords that could nail Cardone, but I don't see anything guaranteeing or promising the elusive 15% IRR mentioned in the class action. There were terms such as "expect", "you can achieve 15%", etc. and those are close, but can easily be danced around by a good defense.

However, I think his social media posts are extremely deceptive and could potentially lose him this case. He makes the claim that an investor's money is safe with Cardone Capital several times on his Instagram and that in no way can be guaranteed by a brokerage unless it's explicitly mentioned in the funding contract (don't know the exact term for it), stating something along the lines of "Investor's distributions upon exit will be at their initial contribution (plus inflation?) at minimum".

End of the day, it comes down to the contract Susman signed. I think Cardone will win or will be slapped with a small fine at worst.

this harkens me back to about 91 and was in a arbitration.. and the opposing council kept showing my marketing piece where we stated that first trust deeds were safe..  well they were until the market dropped 50% in SF  LOL.  I won by the way.. 

[James Hamling]

Originally posted by @Wyatt Franta:

Hey Patrick,

I love lawsuits like this because it becomes a game of "Who Has The Better Legal Team?". I skimmed through the lawsuit on my break looking for any keywords that could nail Cardone, but I don't see anything guaranteeing or promising the elusive 15% IRR mentioned in the class action. There were terms such as "expect", "you can achieve 15%", etc. and those are close, but can easily be danced around by a good defense.

However, I think his social media posts are extremely deceptive and could potentially lose him this case. He makes the claim that an investor's money is safe with Cardone Capital several times on his Instagram and that in no way can be guaranteed by a brokerage unless it's explicitly mentioned in the funding contract (don't know the exact term for it), stating something along the lines of "Investor's distributions upon exit will be at their initial contribution (plus inflation?) at minimum".

End of the day, it comes down to the contract Susman signed. I think Cardone will win or will be slapped with a small fine at worst.

 If class action has a good litigator I am guessing there going to shoot for fraud but lay groundwork for theft by swindle, given cardone's fee's and marketing/ mass media messages, it will be very hard to disprove and leads into a settlement. I give it about a 1% of actually going the full road, 89% of settlement with gag orders and NDA's galore, and 10% cardone will lawyer them to death. 

All in all, rather par for the course of big business, I believe they call it a Tuesday......

[Justin Thorpe]

If you show up on YouTube everyday flashing some expensive toy you “own”, you will draw attention from

everyone including law firms. They will not care if you have a mess of a balance sheet and are laden in debt, actually they’d prefer if you did.

These law suits don’t surprise me one bit. As most posters have said this gets settled quickly and Cardone will be back flashing his toys & talk on YouTube and trying to attract the young guns who for their part completely missed the bus on a good financial education and are now playing catch up on the wealth food chain hoping that uncle Grant is their ticket to them to Nirvana.

[Bob Floss II]

I haven't read the complaint so I don't know the full extent of the accusations, but I did listen to one of Grants presentations on getting people to invest in his syndication deals. He came on a little too strong on projected returns for passive investors on a syndication deal. I knew it was only a matter of time before this happened. The syndication isn't the problem. The problem is he seemed to be targeting investors that had more of a "get rich quick" mindset and pulling them into his syndication that is meant for a slower, stabilized growth. He used his presentation skills to push a square peg in a round hole.

[James Wise]

Originally posted by @Joe Splitrock:

@Patrick McGrath the article didn't say he was doing shady deals. This is just another law firm advertising to pull together a class action lawsuit. The lead plaintiff invested $10,000 and says they were promised 15% annual return. It doesn't even say he lost his money. Apparently he got less then he expected, which any investor knows can happen in ANY INVESTMENT. Cardone offered him a refund on his $10,000 and he said no. How bad could he have been harmed if he is not taking his money back?

The investor was not an accredited investor. Cardone opened himself up to this by accepting non-accredited investors. On top of that Cardone has a big mouth. He is a salesman, so he makes everything sound good. It seems obvious to anyone who knows Cardone that he wasn't promising anything. All it takes is someone naïve to feel they were mislead. I stopped listening to Cardone long ago, because the BS was too deep. Maybe he did overpromise, but I have never seen a marketing proposal that didn't try to convince me to invest. It is a fine line.

I have said it before... Most people are better off investing in index funds. The stock market is highly regulated and relatively safe. This is the entire reason behind accredited investor rules, to protect people from themselves. 

 Looks like nothing but a money grab. Not only did the dipstick investor not lose his small nugget of money I think he actually made some money from his investment. Something small like a 3.5% return or something lol. I like you saw this coming when Cardone started doing deals letting folks in with a $5k investment. That many people doing investments that small is going to be nothing but trouble. When $5k is all you've got you're probably a dummy. This is what happens when dealing with dummies.

[Bryan Hancock]

With all of the accompanying hype it seems rather easy for anything he has said to be integrated with an offering he has made and thus it would become part of the offer.  I saw all kinds of ridiculous stuff from this guy years ago and it didn't even pass the sniff test to invest time listening to it based on how the ads were presented.  

Best of luck to him, but marketing hype and securities laws don't really fit all that well together.  Hopefully everyone will get their money and whatever returns the deals should offer.  If he did in fact use the word promise that should NEVER be used with securities law....ever!  Sponsors should eliminate that word from their vocabulary.  

[Taylor L.]

Originally posted by @Bryan Hancock:

With all of the accompanying hype it seems rather easy for anything he has said to be integrated with an offering he has made and thus it would become part of the offer.  I saw all kinds of ridiculous stuff from this guy years ago and it didn't even pass the sniff test to invest time listening to it based on how the ads were presented.  

Best of luck to him, but marketing hype and securities laws don't really fit all that well together.  Hopefully everyone will get their money and whatever returns the deals should offer.  If he did in fact use the word promise that should NEVER be used with securities law....ever!  Sponsors should eliminate that word from their vocabulary.  

I think that's where I fall on this. The securities attorney I informally discussed this with believes the marketing was too far separated from the reality and disclosures in the legal docs. We'll see what happens.

[Joel W.]

I'll have to check out Cardone's 10X book. Heard there's some good ideas in it. But I have to say, when I saw him a while back with Tai Lopez I was off of Cardone. Wasn't sure how they could fit so much sleaze and ego into  one room. LOL

[Matt R.]

If you 10X you also get 10X the legal fees. 

[Jay Hinrichs]

Originally posted by @James Wise:

Originally posted by @Joe Splitrock:

@Patrick McGrath the article didn't say he was doing shady deals. This is just another law firm advertising to pull together a class action lawsuit. The lead plaintiff invested $10,000 and says they were promised 15% annual return. It doesn't even say he lost his money. Apparently he got less then he expected, which any investor knows can happen in ANY INVESTMENT. Cardone offered him a refund on his $10,000 and he said no. How bad could he have been harmed if he is not taking his money back?

The investor was not an accredited investor. Cardone opened himself up to this by accepting non-accredited investors. On top of that Cardone has a big mouth. He is a salesman, so he makes everything sound good. It seems obvious to anyone who knows Cardone that he wasn't promising anything. All it takes is someone naïve to feel they were mislead. I stopped listening to Cardone long ago, because the BS was too deep. Maybe he did overpromise, but I have never seen a marketing proposal that didn't try to convince me to invest. It is a fine line.

I have said it before... Most people are better off investing in index funds. The stock market is highly regulated and relatively safe. This is the entire reason behind accredited investor rules, to protect people from themselves. 

 Looks like nothing but a money grab. Not only did the dipstick investor not lose his small nugget of money I think he actually made some money from his investment. Something small like a 3.5% return or something lol. I like you saw this coming when Cardone started doing deals letting folks in with a $5k investment. That many people doing investments that small is going to be nothing but trouble. When $5k is all you've got you're probably a dummy. This is what happens when dealing with dummies.

Yes this is what has taken down a few of the crowdfunders.. having micro investors.. then deal go wonky and they have no where near the customer service needed when the 1k investor who is in a loan with 100 other investors all start calling and wanting to know where their payment is and whats going on with the asset.. 

[James Wise]

Originally posted by @Jay Hinrichs:

Originally posted by @James Wise:

Originally posted by @Joe Splitrock:

@Patrick McGrath the article didn't say he was doing shady deals. This is just another law firm advertising to pull together a class action lawsuit. The lead plaintiff invested $10,000 and says they were promised 15% annual return. It doesn't even say he lost his money. Apparently he got less then he expected, which any investor knows can happen in ANY INVESTMENT. Cardone offered him a refund on his $10,000 and he said no. How bad could he have been harmed if he is not taking his money back?

The investor was not an accredited investor. Cardone opened himself up to this by accepting non-accredited investors. On top of that Cardone has a big mouth. He is a salesman, so he makes everything sound good. It seems obvious to anyone who knows Cardone that he wasn't promising anything. All it takes is someone naïve to feel they were mislead. I stopped listening to Cardone long ago, because the BS was too deep. Maybe he did overpromise, but I have never seen a marketing proposal that didn't try to convince me to invest. It is a fine line.

I have said it before... Most people are better off investing in index funds. The stock market is highly regulated and relatively safe. This is the entire reason behind accredited investor rules, to protect people from themselves. 

 Looks like nothing but a money grab. Not only did the dipstick investor not lose his small nugget of money I think he actually made some money from his investment. Something small like a 3.5% return or something lol. I like you saw this coming when Cardone started doing deals letting folks in with a $5k investment. That many people doing investments that small is going to be nothing but trouble. When $5k is all you've got you're probably a dummy. This is what happens when dealing with dummies.

Yes this is what has taken down a few of the crowdfunders.. having micro investors.. then deal go wonky and they have no where near the customer service needed when the 1k investor who is in a loan with 100 other investors all start calling and wanting to know where their payment is and whats going on with the asset.. 

We've done several JV's in the past. Apartment building purchases in the $300k-$900k range with a handful of folks.

Most of these resulted in us buying out the passive partners within 5-6 years because it just wasn't worth dealing with them any longer. Constant calls or emails with the latest dumb ideas they read about or saw on YouTube or BP that would not actually work in practice. Or partners not having enough money to hold up their end of the bargain should a major renovation take place. Or just a lot of dudes who end up doing something else stupid and losing money to where they need to cash out their investments to keep the roof over their heads.

Eventually you get to the point where you're like here is some money, now STFU. I could only imagine the horror one would face by being in a deal with a 100 $1,000 investors. Good god that would be a nightmare.