Real Estate Investing

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Calgary Real Estate Trusts - Are They All Scams?

In November 2008, at the height of the unbelievable residential mortgage fraud scam that hit Calgary (most prominently from about 2006 to approximately late 2010), Rainbow Investigations wrote on one of our “Read The Latest Investigative News” stories, that an alternative to investing in residential real estate may be real estate trusts. We went on to explain that these kind of real estate investments seem to require more due diligence, and may appear to be more legitimate. But, we said at the time, even these types of investments should be checked out.

Some four years later, we really have our doubts of this concept. In recent years the following real estate trusts, all based in Calgary, have either fallen apart or are in serious trouble – Shire International Real Estate Investments, Concrete Equities, Signature Capital, Platinum Equities, and most interestingly Foundation Capital otherwise known as the Harvest Group of Companies.

Concrete Equities was started in 2005 by Dave Jones and Dave Humeniuk in 2005. The article in Canadian Business tells what happened in this debacle – read it here. http://www.canadianbusiness.com/article/73454--concrete-equities-fraud-rallies-investors

Shire International Real Estate Investments was the brainchild of Jeanette Cleone Couch. In March of this year the Alberta Securities Commission banned Couch permanently from trading in securities, and fined her $750,000. The ASC decision describing this mess is here. http://albertasecurities.com/Enforcement/Enforcement%20Orders/Shire%20International%20Real%20Estate%20Investments%20Ltd%20DEC%202012%2003%2005%204124926%20V1.pdf

Signature Capital seemed to fall apart in about 2009. The principals of this real estate trust, Pablo Galvez and Simone Rousseau actually are now both licensed realtors working together under the Remax name. According to some comments Rainbow Investigations heard on this trust, most of the blame for the failure of this situation, according to the principals (hearsay remarks from investors) was the downturn in the market.

Platinum Equities continues to be in the news today, and there is now very aggressive litigation filed in Queen’s Bench Calgary on behalf of investors. The ASC has been involved in this matter within the last few weeks. The September 2012 release from the ASC on this matter is here.
http://www.albertasecurities.com/Enforcement/Enforcement%20Orders/Platinum%20Equities%20Inc.%20NOH%202012%2009%2012%209210379%20v5.pdf

Foundation Capital, otherwise known as the Harvest Group of Companies is probably the most interesting of all the trusts that seem to have recently failed. Foundation Capital was the corporation run by Lethbridge native Ronald Aitkens, and was very heavily promoted by a well known politically right of center Christian, Roy Beyer. Beyer was on the Chorus Radio every Sunday under the show “The Money Show” and the company used to have regular investor meetings at their office in south Calgary. "Bring your notebook, and not your chequebook" used to be their slogan.

My, how things have changed today. Beyer has left the company, and is apparently running Beyer Consulting. While the office seems to still exist in the south Calgary area, most of the staff are gone, including all the salesmen, and there are all kinds of blogs, and investor support groups propping up. One group is known to have hired a law firm, and plans on filing a Statement of Claim in the near future to try to recover investor losses. This one does not look good down the road.

Of course these are the more formal real estate investments. Then there are still the Kijiji ads out there, the web listing services of houses supposedly providing unlicensed real estate services to find you your dream house for free, and the list goes on and on. On October 18th, 2012 Rainbow Investigations successfully aided two Calgary residents to get a $22,000 judgment in Provincial Court Civil Division against two well known “real estate investors” who did not forward a deposit they received which was for the purchase of a house. The “investors” instead wanted the potential buyers to look at another property after they were duped out of the first one.

So the point of all of this is that, no matter what anybody may tell you, investing in real eatate does have risks. And in this town, real estate fraud, largely an unregulated buyer beware industry outside of the formal licensed realtor network, continues to be the number one consumer issue here in Calgary.

Service Alberta, and Manmeet Bhuller - have you read the "Latest Investigative News" lately? Honk Honk...

If you are interested in investing in real estate in Calgary, you better do your homework. Anything less and we may be writing about your loss next.

Date of Story: Saturday, October 27, 2012
Story Posted By: Ron Reinhold
Source: Ron Reinhold

http://www.rainbowinvestigations.com/news/story.php?rainbowID=346

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images.jpeg (3.71 KiB) Viewed 20080 times

Nothing posted here for too long, so here is an update:

My opinion is still that those who try to buy into another man's real estate project are fools looking for a fine haircut. (financial loss)

While there may be the occasional real estate corp or partnership that has good intentions, I say the weighting is 99 to one for those selling thin air and snake oil.

About $1.5 billion of exempt market products in Alberta alone (mostly of the real estate kind) are at risk or looking like failures at the moment.

click to enlarge or zoom in

The regulators are at best, asleep at the switch, at worst, profiting handsomely on the legal fees (or their friends) caused by these exempt deals, then a second time from the receiverships.

The operators of most real estate deals can and do operate in a land of lawlessness, akin to the wild west in the 1700's or 1800's. Winner steal all comes to mind in this area.

If you must own real estate, (and I suggest you should) then own it in an area of proven (PROVEN) best practices. NOT from the guys who hold investment seminars in a town near you.......stay away from anything like the "Fast Talk" guys. They are selling pink slime real estate deals and taking your money.

The deal looks like this: Buy some land for $10,000 an acre from a farmer who wishes to sell out his farm at a great price. Then mark the land (or the office building, or the apartment, or whatever it is) up 300% in price, and package it into some kind of RRSP or other plan eligible investment, available to you in chunks as little as $10,000.

In my opinion, RUN! Run from those newspaper ads promising you 8%, 10%, 12%, etc. Run.

Or simply burn your money and do a cleansing smudge with the ashes and smoke. You will be far better served that you will with the current crop of snake oil sellers today, who are selling magic real estate projects.......................

http://www.johntreed.com/BSchecklist.html (great list for real estate bullshit detection)

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Mr. Larry Elford,

I am contacting you to seek your kind advice in respect of our savings including RRSPs invested with a Calgary Real Estate Company as I learn through internet about your having written "Rules of Law in Investment Industry". Part of our investment done against one commercial building, which has gone in to Receivership with RSM Richter Calgary, due to non-payment of interest against bank secured loan by Real Estate Company, is not likely to be received back. 180 days notice for our RRSP withdrawal as per loan agreement was given to this company which will be over by this month end. The maturity period for RRSP loan is already over. These RRSPs were invested through Canadian Western Trust Vancouver and have Canadian Western (CWT) account numbers. CWT Operations Manager confirmed through a letter attached with the loan agreement that our RRSP are under safe custody. The Real Estate Company's Chief Executive is not responding to our communication regarding paying back our RRSP amount. CWT informs that they will pay back to us only after getting the money from Real Estate Company. I complained to Better Business Bureau Calgary but this company did not respond to BBBs various communications as a result BBB have changed their rating for this company from A+ to F. I request you to please advise in the matter as I have lost faith in this company after loosing my investment in the commercial building.

With Regards

R. S
==============================================


Subject: Re: Investments with Real Estate Company
From: lelford@shaw.ca
Date: Tue, 19 Apr 2011 17:28:12 -0600
To:

R, I truly sympathize with your plight.

I would be happy to chat with you if you wanted to drive to Lethbridge (2 hours south) and see if I see any options that might help you. I am not confident, however, since your dealings might have taken place outside my normal area of expertise.

My area where I have experience is with licensed salespersons, those licensed and registered with the Alberta Securities Commission (ASC), and products which fall under the purview of this commisison.

If the real estate investments you invested in qualified for an rrsp, they indeed may have been issued under the ASC. They may also have received permission to violate our securities laws, and if that is the case you may have grounds for asking for your money back if they did not inform you of this.

You can check this by looking at the ASC web site http://www.albertasecurities.com/Enforc ... rders.aspx and doing some searching for the company name that you invested in.

Please search from a few different pages on the ASC site as I found sometimes that helps turn up results that do not always appear at first search.

Also look at the page on the ASC on "registrants" and do some searching for the name of the person and the company that sold you the products.
Look for their license category and see if they lied to you about their license. Look to see if there are any disciplinary actions against them as well.

Beyond that please look at http://www.investoradvocates.ca which has several topics about getting your money back and salesperson/advisor fraud.

I hope there is something there you can grab hold of and make a difference in your situation.

Beyond that, call your MLA and write them a letter and tell them you will NOT be voting for their party at anytime in future unless they take steps to protect consumers better from the kind of fraud that occurs.

let me know if you find anything, need any help, or want to talk in person. I will gladly take some time to try and help you if I can.

larry

PS

if you know of a group of people, social club, or civic group, like Lions Club, Kinsmen, church group, social group, I am happy to come and speak to them and give people information about how to protect themselves and their investments.

take care R

==========================

Mr. Larry Elford,

I thank you for your response and my apologies for contacting you so late.

For my RRSPs I contacted my local MLA and Better Business Bureau but did not get any help from them. BBB, after lot of correspondence, has finally written to me that Certified Financial has done nothing illegal. I am surprised to receive their response as if BBB work for the company and not for individual like me, as BBB has given this company A+, highest rating. I conveyed to BBB that this company is not returning my RRSP money ($350,000) in spite of my giving notice in Nov.2010. MLA told me that she approached Solicitor Generals Office and got information that I should take up the matter through court. Firstly I do not have the money to pay in advance to the lawyer, secondly I am not sure if the contract papers which have been prepared by the company with the help of their legal experts, will stand in my favour in court. My RRSPs are through Alberta Real Estate Board and have their reference number. But BBB say, they approached both ARSB and ASC but without any help and say that this is a private investment and they can not help. I feel this is a sophisticated type of Ponzi Scheme. My RRSP are through Canadian Western Trust but CWT do not take any responsibility for security of investment although they are charging their yearly fee. Finally I wrote a personal letter to company's President Jeffery Colvin (President of Certified Financial Savings & Mortgage Corporation & Medallion Development Corporation) explaining my old age and circumstances but got the reply that the company does not have money to pay and I should wait till company has money to pay. I feel that this company may not pay my RRSP money. I have already lost my $150,000 which I invested with this company against their business center as they lost the court case to the mortgage company as this company defaulted in interest payment against secured loan. I really feel helpless as the money I saved in 15 years for our old age appears to have been taken away by this company. I came to Canada thinking that I will lead a nice and peaceful life but instead I am struggling in the old age.

With regards

R S

=========================================

R, Again I am very sorry for your plight. I do not know what to tell you other than that I am fighting for the rights and protections of people, including yourself. But my one voice is not carrying much weight when stacked against the nearly one million people in Canada who earn a salary to be on the other side of the fence, the side of taking money from people and of not always giving them a fair and honest deal.

Unfortunately, the BBB is not much of a consumer advocate, as they make their living by charging fees to companies to join their bureau, and thus they can be bought.
You efforts to your MLA went brushed aside, as I suspect the MLA is part of the governing party, and therefore does NOT want to be part of the solution, as they are part of the problem.

It is sad to say, but I have learned that the majority of financial people in Canada are in on the game of taking advantage of customers and they also happen to be self regulated. As you can see, self regulation leads to decriminalization.

I have no easy solutions nor answers for you at the moment. I have only my http://www.breachoftrust.ca film work and my http://www.investoradvocates.ca web site to offer to help people. So far most Canadians are not even aware that there is a corruption problem within our financial and investment circles. I am sorry that you had to find this out in such a hard manner, as did I.

The only bright note I can find in all the hard experience, and the only thing they cannot take away from you or I, is my voice, to let others know of the problem, and let others know how to not be a victim.

That is what I am doing and I hope you will find a positive in some way from this horrible experience. Something to hang onto, work on, benefit others.

I wish you the best and I hope to hear from you again R.

Thanks

Larry

[admin]

http://www.johntreed.com/BSchecklist.html

I just HAVE TO mention John Reed and his website, above. This link goes to his "real estate bullshit artist detection checklist".

It is funny and accurate, and needs to be made public. Every day there is a new "fast talking" real estate bullshit artist, some of them based on a $10,000 investment in a RICH DAD franchise so watch out for that one.

this checklist will save someone you know a small fortune

pass it on

[admin]

Jasmine Fiore’s Murder and Concrete Equities

Most of you by now are familiar with the case of Jasmine Fiore, a model whose body was found inside a suitcase. Police are searching for her husband, Ryan Alexander Jenkins, as a person of interest. As an interesting side note, his last job was as a sales representative with a Calgary company named “Concrete Equities.” It was involved in serious real estate investment fraud in Canada and is now in receivership.

I first became interested in Concrete Equities when a friend of mine asked me to check them out as she was interested in investing with them. Being as I am a thorough investigator, I discovered the following:

Many of the return claims were exaggerated. They calculated the annual projected returns by taking the total over 5 years and dividing by 5, which doesn’t take compound interest into account.
The returns quoted includes a large cash inflow by re-mortgaging at the end of 5 years based on an annual increase in the property’s value. First, the market crashed and this won’t be possible. Second, this is like placing a second mortgage on your house and saying ‘Look at all the interest I made.’
After the re-mortgaging at the end of five years, the mortgage payments would increase. Thus either rents would have to increase, or cash distributions would be eliminated and possibly the investors would have to kick in extra funds to make the payments. The interest on the increased portion of the mortgage proceeds probably wouldn’t be deductible for tax purposes, as it was not incurred to earn income, but to distribute cash to unit holders.
I checked the tax opinion in the offering memorandums. They didn’t contain this, and seemed suspicious in several other ways. I contacted the law firms credited with authoring the opinions to see if they actually did them. I was told they did not.
The then vice president of the firm, Dave Humeniuk, was under a lifetime ban by the Real Estate Council of Alberta.
The company president had on his facebook page pictures of the corporate jet and his collection of exotic cars. I had to ask where the money was going.
Since that time several things have happened:

The company has faced disciplinary action from the Alberta Securities Commission with a fine of $82,000. This was for an unrelated infraction of involving investors who did not meet the proper qualifications.
The Limited Partnership Investments have hit hard times and were proposed to be sold to a third party in exchange for unsecured debt for the unit holders. They protested.
The Limited Partnerships have been placed in receivership, and the receivers have notices some irregularities, including funds being diverted.
The company’s website is now offline.
Update: It is now being reported that Mr. Jenkins had been convicted of assaulting a previous girlfriend. I would ask why Concrete Equities would hire someone with a criminal record to sell their investments, but I already know the answer: They hired someone under a lifetime ban from the Real Estate Association of Alberta to be their Vice President. When I asked Dave Jones, President of Concrete Equities, why they would hire such a person as their VP, he just said “I let God be the judge of his character.” Looks like some people aren’t very good judges of character. Then again, when it comes to people with good, solid character, it takes one to know one!
http://danbergen.wordpress.com/2009/08/ ... -equities/

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In 2007 our parents went to their bank, to obtain a mortgage. The bank could not help them at that time due to debt load but they set them up with an on staff mortgage specialist ...this specialist worked with the couple for over 2 months to obtain funding, in the meantime the couple had to obtain some funding to pay off some of the debt they had to qualify for loan...they borrowed said funds from family, that was to be repaid with proceeds at closing from equity mortgage, they later found out after these funds were used that they still were not approved and needed to make further payments which ate up all of the equity and left them unable to pay family as had been the deal. They found out after closing that the specialist in reality had no authority to do their mortgage as it was not through the bank and that he had also enlisted a broker, who the couple never met or were aware of...needless to say their are many issues of unethical behaviour, but there is also fraud/forgery in this mortgage that the family became aware of throughout the course of seeking redress/compensation...to date they are still fighting, but now the fight is also with local police, attorney general, MLA, Premier of their province, and many agencies that are supposed to be set up to protect the [financial] consumer from this very issue....it is almost 2 years later and this family has been forced to use the courts as no one, mandated or otherwise has yet stepped up to the plate to assist this family and resolve and investigate their well documented claims.

[admin]

(July 25, 2008)The Alberta Securities Commission (ASC) has agreed to a $250,000 settlement with Keystone Real Estate Investment of Red Deer over the company's misrepresentations to the public through promotional material and information seminars.

In addition, Ron and Travis Cadman, principals acting as advisors without being registered in accordance with Alberta securities laws. The Cadmans agreed to resign from all positions as directors or officers and to refrain from becoming or acting as directors or officers or both of any issuer for a period of two years.

In the settlement agreement, the Cadmans also admitted that Keystone's advertising included untrue claims with respect to its history of successful past real estate projects. As well, certain offering memoranda used to solicit investments did not disclose the Cadmans' past bankruptcies.

(advocate comments..........I am surprised and pleased to see that the ASC can and will act on matters involving real estate investments. I would have guessed that they could not act, and I would have been wrong.............there is no shortage of desperate salesman who are promoting real estate with guaranteed returns in this province, and some of them should not be in business)

[admin]

Forum Topic : David vs Goliath

My name : Sylvio Gagnon

Posting text : WITHOUT PREJUDICE

The story of David and Goliath is very similar to mine - the small investor facing off against the financial bureaucracy/establishment.

This is a first posting relative to an important scam that changed the lives of 150 small investors, most of them retired Canadian Seniors. Hopefully, the media will pick up this story and write about it to denounce the wrong doers. Anyone who has been involved in this scam is invited to come forward and denounce them as well.

I am one of those stubborn small investors who will not and cannot afford to hire a lawyer to fight my battles against the big banks. In 2005, my wife and I lost $80K, life long savings for our retirement. A trusted Financial Planner arranged to have a figurehead Financial Planner to forge the documentation to open an account and transfer Self Directed RRSP/RRIF to a trust company. Unknown to us, the Financial Planner arranged with a lawyer to process the papers and invest the funds in a mortgage secured by a property located at 1000-1002 Jacynthe Street, Hawkesbury. All this paper work was done behind our back – completely unknown to us. The property owner was a local contractor, a business friend of the Financial Planner. The property was already encumbered by two mortgages, therefore my mortgage became 3rd ranking. The owner of the property conveniently defaulted shortly afterwards and kept all the money. The property was sold for $175K. Total mortgage encumbrance was $252K. Bottom line - we lost our money.

I chose to fight this battle on my own without a lawyer. I cannot afford a lawyer and the amount to be recuperated is not significant. A lawyer’s fees would gobble this amount in no time. However, we did join a class action and I used the services of the Ombudsman Banking Services and Investment (OBSI). The services of the OBSI are free and they are not worth much more than that, i.e. ZERO. I learned a lot during the last three years. Not surprisingly, I discovered the dirty work some Financial Planners, the banks and the lawyers will do to self-serve and to profit. It is a difficult battle but I am relentless. From the comments I had and some reactions by the banks, it is clear that I have upset a few along the way during the last three years. That proves I am on the right track.

For example, after presenting reams of evidence of wrong doing to Desjardins, they offered me $15,000 to settle out of court. The offer was withdrawn later when Desjardins, based on my evidence, was included as a defendant in the class action. To me, this was a victory because it was a first sign of admission of guilt on the part of Desjardins. They certainly did not make the offer our of generosity. Although I did not get money from the Desjardins offer of settlement, I am confident that I will more than make up for it in the eventual class action settlement. Desjardins will have a tough time convincing the court and our lawyers to settle for a lesser amount.

Another example was my review of the forms and documentation used by B2B Trust to process this transaction. The findings of my review were unbelievable. The paperwork was sloppy and the system was “mickey mouse”. Pre-numbered forms were not controlled. Access to data entry into the system was not controlled. Data input into the system was not properly verified and authorized. Accuracy and completeness of data had an unacceptable error rate. Investors rightly expect more than this from a trust company.

After three years of stalling by the Self Regulating Organizations (SRO’s) and the offenders, it is now time to proceed to the next and final phase of my battle : MEDIA COVERAGE. This phase was actually started a few weeks ago with W-Five airing "Road to Ruin" (see video and text at the following link) : http://watch.ctv.ca/news/w-five/road-to-ruin/#clip52091

The link to the video and text shows how a group of small investors (including myself) across Canada were duped by the same financial predators to the tune of $20 million. Lawyers of the defendants in the class action reacted immediately to the W-Five coverage. They are getting more nervous and they are more willing to settle out of court. So, we are hopeful. Media coverage on the SIPA site will be helpful. I am currently working on several media contacts for additional coverage. These include the written, television and Internet media in the Ottawa region where the scam occurred. It is mostly aimed at the francophone media but not exclusively. The objective is to denounce the scam and the offenders and put the pressure on the class action to settle.

The W-FIVE broadcast mentions some names of the parties involved in the scam but it is not an exhaustive list. There are, of course, constraints as to what can be said on these postings but thank God for a 2002 Supreme Court of Canada ruling (R. c. Guignard) that still allows us to forcefully express and defend ourselves in the media.

The investors were advised by the scammers that their funds would be considered qualified self-directed RRSPs and remain tax-sheltered. In fact, there were no tax shelters and their RRSPs were cashed in. Now, the Canada Revenue Agency is demanding hundreds of thousands of dollars in taxes owing.

A class action was requested for all persons who have made various real estate investments, at the alleged inducement, or through, Marc Jémus, François Roy, Robert Primeau and/or their companies, and/or B2B Trust, and/or Whitney Canada, Inc., and/or Whitney Information Network, Inc. and/or Jean Lafrenière.
(see link : http://sec.edgar-online.com/2007/04/02/ ... ction2.asp

The RCMP is currently investigating the case.

I will keep you updated with future postings.

[admin]

Although real estate is a separate animal from that of stocks, bond and mutual funds, it suffers from some similar pitfalls.

It is unregulated, investors can be sold a bill of goods, and desperate sellers can and will misrepresent the product. This forum topic will try to cover a few examples so that others can be forewarned.

My personal opinion is that real estate investing is one of the safest areas available to put ones hard earned capital, provided you seek the investment out yourself, make an effort to understand it well, control the investment in your own name (hold the title) and avoid like the plague all real estate deals which are manufactured by others, offered to you in small portions, managed by others etc. If I only had a nickel for evey fantastic sounding real estate project that was ruined by those insiders who packaged, promoted and sold the product..............

Please follow along and protect yourself, or others, through the experience. send your posts to investoradvocate@shaw.ca