Deal Architects and Low Money Investment Scams?

[Jeff Montanya]

Bigger Pockets

I met with a gentleman last Friday who approached me online through a group that Im a member of. He identifed himself as a "deal architect." I didn't really understand what it was he was trying to get me to buy into.  He just promised that he could get me 12% returns.  He did have a website, but it was very vague and didnt offer much info. He also said that he didnt give out references because it would jeopardize his business model. I felt like he was trying to scam me out of money even though I cant really prove it. Below is the exact email that he sent following up our conversation. I've removed any identifying information. Does anyone have story that they can share that elaborates on this?

Openings to investors like yourself allows for real world learning and great double digit returns.

I find opportunities in distressed real estate situations and can engage in subto's, options, assignments, deed sharing, trust beneficiary positions, mortgage wraps, Lease Options, Earnest money collaborations and more.

A Wyoming organized entity with a local mailing address whose phone number is xxxxxxx
Company details:

A proposal to enter into a $5,000 Promissory Note at 12% APR with a 12 month renewable term and the agreement for you to set aside another $5,000 held in your bank account to be used in a real estate transaction until called upon to use the (escrowed) $5,000 until a deal is presented. If you chose to use the escrowed amount in a deal of your own then you wold be released from using the escrowed funds into my deal but if you needed coaching through your deal then I would charge $1,250 if requested to do so.

Summary:

Here is a summary of our discussion and a bit more information about XXXXXX.

Morning.Friday Nice meeting with you

[Robert Plumpe]

Jeff:

My advice to you would to NEVER do deals/business with somebody you don't trust and/or business model that you don't understand/get.  Just don't do it....there are an almost infinite number of deals or possibilities out there.  Just keep watching, analyzing and a deal will come.  

As to that particular email....why would "deal architects" be approaching people for a $5k IOU?  paying 12% interest?  If these guys are so good, why don't they reinvest their profits and reap the rewards?  If these deals are so good, why are they "slumming" trying to get $5k at a time?

Take it another level further...If they are able or willing to pay 12% on their notes, what type of return are they getting on their deals?  15%, 18% or more?  If they are able to generate these numbers consistently, they are going to have massive profits that they can reinvest OR they will be able to get bank/investment company financing.

Most likely it is a newbie that went to a "get rich quick in real estate using leverage" seminar...and is trying to drum up $$$ through anyway possible.

In the alternative, it is a scam, probably a ponzi scheme.

Either way, nothing I would want to be associated with...