After the housing market collapse, you’d think people would be more cautious about investing in sketchy real estate trusts and other shady businesses, like purchasing credit card debt that’s “guaranteed.”
Courthouse News: Prosecutors say Alan Labiner, Khurram Tanwir and Ahmed Awan victimized more than 170 people through their four bogus businesses: Manhattan North R.E.I.T., real estate; Next Point USA, consumer credit cards; Grant Boxing, sports equipment; and Exposure Management, which claimed to represent the Red Hot chilli Peppers, Flea and Seal.
Feds recently seized a $7 million building in Brooklyn that they claim housed the investment scam, which duped investors of more than $6 million, as prosecutors announced last month.
Now we have more details on the scheme’s many warning signs. Take the REIT investment, for example. The fund proported to invest in northern Manhattan real estate, selling high-yield promisarry notes that were “risk-free, 100% guaranteed investments,” according to the complaint. A risk free investment in real estate? Please.
Same thing with credit card investments. Next Point was supposed to put money in high interest-rate cards and buy consumer debt, again promising “risk-free, 100% guaranteed investments.” There’s certainly plenty of debt to purchase, but everyone knows getting that money back is far from certain.
But put money in people did. Investors were given about $1 million to keep the scheme going, but most of the cash was spent on themselves.
According to the suit, it looks like they had a lot of fun:
- $28,113 bill at the Brooklyn restaurant Pearl Room
- $6,115 at Upper East Side restaurant Philippe
- $2,714 at StubHub; $2,495 on Telecharge tickets; $709 on TicketMaster;
- $10,668 at the Millennium UN Plaza Hotel $2,976 at cosmetic store Kiehl’s
In all, they spent at least $3.3 million of the $6 million raised from investors.
The three men claimed they represented the Red Hot chilli Peppers, and that Gloria Estefan and NFL star Roger Staubach were directors on their “Advisory Board.” Come on!
Here’s the complaint:
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