Photo: CNBC Screen Grab
Is Wall Street Investment Bankers Inc. just a “straw man” real estate investment fraud?
Yesterday, we noticed their ads on CNBC promising between $20,000 and $200,000 a month from real estate investments with “no upfront or investment cost.”
That sounded too good to be true.
A quick examination of the company’s website, address and contact phone only raised more questions, especially the lack of detail provided about how the business worked, which we noted in a post this morning.
We spoke with Vice President Rob Doucett today, but he declined to describe the nature of the business, referring us to another officer who deals with the press, Kate Arney (We haven’t yet heard back to our multiple requests for comment).
(Doucett did deny a connection to Concord Trading Group, a company banned from the futures industry for deceptive practices, which arose because Wall Street Investment Bankers had the same group address listed, and its voicemail was for Concord. “I’ve never even heard of Concord Trading Group to tell you the truth,” said Doucett in response to our questions. “There are many companies in that building.”)
Regardless, the ad continued to run on CNBC today, and a source tells us FOX News is airing it in the New York area too (Note: FOX tells us the company is not one of its advertisers, so we’re checking with Time Warner Cable about it being a locally-available ad)
While there is no evidence that Wall Street Investment Bankers is doing anything wrong, some of the claims made in the television commercial resemble a long line of fraudulent “straw man” real estate schemes.
An IRS round-up of recently shut-down scams have a common story line:
- The fraudster recruits a “straw buyer” with good credit, often just looking to make an investment in real estate
- The fraudster uses the name of the straw buyer to apply for a loan on a property they claim is undervalued, often exaggerating the straw man’s income level, work information and other financial details to get the biggest loan possible
- The fraudster also exaggerates the value of the property, either through false appraisals or cosmetic improvements, again helping increase the amount obtained from the bank
- The home seller gets paid the market price, while the fraudster gets to keep the additional money borrowed from the bank
- The straw buyer is often paid an up-front fee simply for providing their name and signing the documents (hence the Wall Street Investment Bankers promise of “at least, but not limited to $20,000 a month”)
- The straw buyer is also promised a percentage of the property when it’s resold at a higher price (hence the Wall Street Investment Bankers’ promise to “get you cash at closing” and the potential of a $200,000 a month payout)
- In reality, the fraudster gets most of the loan money — they may even pay the mortgage for a few months, just to be safe — while the straw buyer is stuck with a huge loan for a property that’s worth far less than the jacked-up mortgage.
We asked a real estate law expert to evaluate the ad in light of recent “straw man” schemes.
Shari Olefson, a real estate foreclosure attorney with Fowler White Boggs, had not heard of Wall Street Investment Bankers, but said the language in the television ad was consistent with other fraudulent schemes.
“The obvious conclusion from the reference to using someones credit would be in connection with a mortgage or banking fraud,” says Olefson, author of Foreclosure Nation: Mortgaging the American Dream. “I’d need more info to draw a conclusion but based on what’s here this could fall squarely in the box of [similar] mortgage fraud cases.”
Olefson notes that either the “good credit” investor or the lending bank or both would likely not enter into the transaction “if a lender is induced into loaning money in based on someone’s credit score who is not actually a party to the transaction.”
She adds that the language in the ad could technically be true and legal — “no upfront costs;” “assumes all financial obligations for projects;” and “no down-payment” — but it’s suspicious.
Olefson says she’s seen similar cases in Florida. “Basically they found under educated folks who wanted in on the real estate gig, convinced them they were legit, had them sign documents they didn’t understand,” she says.
“Eventually these ‘borrowers’ were on the hook for the loans they signed for when the people who were supposed to be making payments did not.”
If you have further information on Wall Street Investment Bankers Inc., please send Delevingne and Carney an email (addresses below).