Deal Architects and Low Money Investment Scams?

Question

Bigger PocketsI 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 · Answer

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...

Jay Hinrichs · Answer

I have a couple of comments... 5k investments at 12% is only 600 a year... thats risking a lot of money for VERY little return.. not to mention anyone trying to raise money at 5k at a time is suspect unless its a full blown nationwide crowdfunder who have created that niche.On the references that I don't worry about much.. one.. if its a scam references are schills.. I know i get asked for references but I dont give them out either as my investors are very private .. but my minimum is 500,000 . not 5k I have other ways to prove my bona fides and that is bank letters of reference and public record of all my deals. Plus I have no website etc etc... raising money at 5k to me screams of something to be very careful about.

Andrew Johnson · Answer

Jeff Montanya I mean the easy answer is...just...run! No references is an absolutely deal breaker. I am, however, surprised that a scammer wouldn't have 2-3 shill references set up for the scam. It reminds me a little of those Nigerian Prince email scams. They're so poorly worded that any moderately savvy person would run for the hills. Those that don't care about horrible grammar/spelling/etc. from a "lawyer representing a prince" are likely those that will fall for it. It doesn't cost much to set up a website on Wix. It's free to reach out to people on online forums. And all it takes is meeting enough people to put money in to make it work. Granted, this is all supposition but Madoff didn't want to reveal his super-secret strategies either. All his investors thought they were getting a great return. Until they weren't :) I guess my bottom line is that if someone is offering 12% (more than 200% more than what a bank would charge) I really, really, REALLY want to know why. Especially if they're trying to get there $5K at a time.

Jeff Montanya · Answer

@Robert Plumpe thanks for sharing your thoughts. I wanted to see if anyone else has had similar experiences. Hopefully these types of post will help keep newbies like myself from getting ripped off.

Kevin Yeats · Answer

This does't pass the smell test.

Guy Gimenez · Answer

There is nothing here that sounds legitimate. All the red flags are present that are needed to convince you to run from this "deal architect" (ie scam artist)

Gail Greenberg · Answer

If you want to PM the identity of this person/entity I could tell you if I know anything about them.@Jeff Montanya