Take note all you money guys out there! When Barack Obama says he’s the only thing between you and the pitchforks, he’s not totally kidding.
Or, at least he wouldn’t be totally kidding if he were in Germany, which is where pensioners [suspects pictured] kidnapped and tortured a financial advisor who lost them money.
Daily Mail: James Amburn, 56, was ambushed outside his home in Speyer, western Germany, bound with masking tape and bundled into a car boot.
‘It took them quite a while because they ran out of breath,’ said Mr Amburn, who was driven to the Bavarian lakeside home of one of the gang.
Another couple, retired doctors, joined the kidnappers in the cellar where Mr Amburn was chained and tortured for four days last week.
‘The fear of death was indescribable,’ he said. Mr Amburn was rescued when he sent a fax to release funds from a Swiss bank and scribbled a message on it for the receiver to call police.’
The whole story is crazy — almost out of a B-movie we’d say, especially given the premise — and it’s worth a quick read. What’s interesting (though perhaps not surprising) is that the money was lost in a real estate investment scheme out of Florida. Florida’s the real estate/scam capital of the world, and even Germans blow their money in their.
Karl Denninger thinks he has a good idea of what the scam was, and how they lost so much money:
See, back in 2001-04 I had a “friend” in the real estate business who tried to get me interested in flipping condos, most specifically in Panama City Beach Florida. He spun tales of German folks buying blocks of units, 10 at a time, with much being made of the fact that these deals were structured in an interesting format:
- 10% in cash
- Another 10% in a letter-of-credit from your bank
The premise here was that while the units were under construction (typically 2-3 years) you had only 10% of the actual purchase price on the table, and as such if you managed to flip them for 10% more than you bought at (after expenses) you could quickly double your money.
Leverage of 10:1, writ large.
The bad news was that extra 10% LOC from the bank, you see. That was an irrevocable commitment of course, which meant your “cash on the table” was 10% of the total but your maximum loss was at least 20%, and might be 100% if you failed to close and they came after you.
The latter fact – that you were in fact exposed for twice your cash put up, and could be exposed for 10 times the cash put up, was of course only evident if you read all the paperwork. The salesfolk conveniently omitted discussion of that “small” risk to your financial well-being.
Now there were “outs” on the failure to close – the most important being the inability to secure permanent financing. But nobody intended actually take delivery of a block of 10 condos – the entire intent was to flip them before construction was complete.
Anyway, it’s all good stuff!
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