Quote from @Sam Wilson:
Basically- As investors, we're hosed. If you think otherwise I'd love to hear it, but this is not the first time a company has gone belly up and investors have lost all their principal. The likelihood that any scraps will be left after the lawyers get paid and other suits are settled is quite low. Any return of principal- 10% would be a home run in my opinion.But that too seems statistically unlikely. If you've not read Debt Cleanse, you should. It will give you insight into how Jorge will think about your investments. Chalk these losses up to tuition.
I agree that we are not likely to see any return of principal. I have been an investor since early days with 12% rate so have received more distributions than others who joined later. I am not quite 100% whole, but probably better than others who have invested more recently.
I appreciate the mention of the book; I read a lot and have not heard of that one. I had listened to Jorge on podcasts before I invested and know that he had misfortunes in another business which he detailed in Burn Zones.
I think the bottom line is that he played fast and loose with our money. He has no C-Suite and no real accountability to anyone in his corporation. While I know that even prestigious Wall Street funds have gone belly up, my learning in all of this (same with ATM Fund with Prestige/Daryl Heller, is as follows:
1. Temptation and Integrity: These individuals get very large sums of money into their syndications, generally do not have to produce audited financials and can pretty much run roughshod with our money. We know what they say they are going to do and when they start sending $$ we think the plan is being achieved. We really have no idea what is going on behind the scenes. So, we have to "hope" they have a very high integrity level. They are a fiduciary and need to consider our interests first. I think that gets lost VERY quickly with certain individuals. Now, how to determine which ones continue to operate with high integrity is challenging.
2. Understanding of the investment: I "thought" I understand the simple business model AHP presented. I could have explained it to anyone. However, after being in the private equity space now since 2016, I have learned there is much more to this kind of note business than what is simplified in the AHP offering. Now I reach to others far ahead of me before investing in these kinds of syndications.
3. Promoters of these private equity investments: I more fully understand how the whole promote aspect of these businesses skews the view we get. I am pretty jaded now on how AHP being on a well known RE podcast seemed like it was just 2 friends talking but in fact those podcasters were paid to promote. Very few fund raisers ask the deep due diligence questions they should. These promoters also take everything at pretty much face value.
Also, check out Eng Taing at Touzi . Another one who falls into this category along with Daryl Heller at Prestige/Paramount. Touzi lawsuit and Touzi lawsuit. Very messy.
