I sent it to my state financial investigator and asked is this legal.. here is her response.. 

The bigger pockets application form was thorough and most decisions to exclude were made looking at completed app and my own investigations.

real estate scams are very common and have be going on for years Straw buyers, crooked appraisers , ponzi schemes you name it it has been done Rule of thumb if something sounds too good it usually is Be on your guard investigate ,check references etc  Whenever there is large sums of money involved there is a scam to separate people from their money

Calculating cash flow based on 100% financing is the only way to get a handle on a property when initially investigating the numbers.

Although I am still investigating, I believe that they moved out a week or two earlier.

Before we could get somebody to fully investigation the property suffered further collapse of bricks into the basement causing it to lean over.The insurance company are denying coverage due to "Earth movement" no quakes recorded in the area so I guess they mean from build up of water over the years.

Sometimes it is worth paying a private investigator.

Last but not least are potential investors - are they going to pass on the deal when they see that one of the GPs are being investigated by the IRS?

Hopefully its the former, but there are ways you can investigate to see.

And after all the applicants have filled out an application, I take the applications home with me and I do a more thorough investigation.