Jeffrey Lubin blames the economy for Scripps’ collapse. “I never touched the money.”
  • Jeffrey Lubin blames the economy for Scripps’ collapse. “I never touched the money.”
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"Speed is the name of the game,” boasted Jeffrey Lubin, head of a real estate lending operation, Scripps Investments & Loans, in a San Diego Magazine advertisement in September 2004. “We try to give real estate developers answers fast. We don’t fool around.”

Scripps was founded in 1999, expanded at a frenetic pace, and collapsed in the real estate crash of 2007–2008, leaving investors sadder and wiser, although many had raked in big bucks when the market was hot. Lubin acquired Scripps in 2001. “We were looking for a name recognizable in San Diego. We lucked out. ‘Scripps’ was available,” says Lubin.

It was a hard-money lender — one that charges inordinately high interest rates to borrowers and gives high returns to investors, whose capital supports the lending. Scripps paid 10 to 17 percent to investors while the giggle juice was flowing, as it loaned to developers in California, Arizona, Nevada, and elsewhere.

Lubin’s company made $1.3 billion in loans, including those in which banks participated, and had a network of 600 investors, many in San Diego. “For the first five years, everybody was making money hand over fist, but then the music stopped and [the market] took away the chairs,” laments Lubin.

As San Diego has learned to its sorrow, hard-money lending works great when the real estate market is sizzling but comes asunder when the market cools. In the 1980s and early 1990s, Pioneer Mortgage and Boileau & Johnson became Ponzi schemes after they collapsed and scrambled to stay afloat. Lochmiller Mortgage artificially inflated real estate values. Officials of each company went to the slammer.

Lubin asserts that Scripps was different: “The entities were independent to themselves. I didn’t commingle funds,” says Lubin. For example, there might be a condo project in Nevada. A group of investors would put money into it, getting a fat return, at least initially. If it never got off the ground, it would be up to those investors to try to keep it going, possibly with Scripps’ help, or swallow the losses without plunking in additional money. Scripps made money from assessment of loan origination and borrower forbearance fees, among other things.

When the wheels came off, some investors resented the fees, the bucks going out to lawyers, the requests for more contributions to save projects, and the like. “Investors in Bernie Madoff made out way better than Scripps investors; I hear the former got some money back,” says Gary O’Hara.

In one Arizona project, “The lender [Scripps] made more in loan origination and forbearance fees than the property is worth,” says New Jersey–based real estate consultant Amnon Cohen, who was brought in by investors to help rescue two projects. “Some of the losses were due to the economy, some to poor underwriting and greed, some to questionable due diligence, questionable acts. I spoke to investors who basically said it was too easy making so much money.”

Says an investor who lost well over a million dollars, “I never said Lubin was crooked, and I don’t think that’s the case. I do think he recognized what was happening and that he took steps that were to his benefit, perhaps at the expense of investors.”

Some investors cocked an eyebrow in 2005, when Scripps set up a $100 million mortgage fund that was a receptacle for pieces of other Scripps projects. Some suspect that a few loans going in there were already in trouble.

This million-dollar view comes courtesy of the $1.3 billion in 
hard-money loans made by Scripps Investments & Loans.

This million-dollar view comes courtesy of the $1.3 billion in hard-money loans made by Scripps Investments & Loans.

Lubin denies that he did anything wrong, although there is one large judgment against him that he refuses to talk about. One lawsuit was settled out of court. One woman sued for fraud, but a North County judge said that she was a college grad, knowledgeable in real estate, who knew that an investment making 17 percent was risky.

The economy is to blame for his company’s downfall, says Lubin. “It was the market. I never touched the money. A third-party servicing agent collected the money.” Yes, Scripps profited from fees, “but that was fully disclosed [to investors]. It was our business model.” Nor does he feel that he expanded too rapidly: “I expanded with the market.” In hindsight, the market was off its rocker.

Lubin, who is clearly downcast, says, “I lost millions and millions.” So did other top Scripps officials; that can be verified by looking at investor lists. “I lost a headquarters building, a home, investment properties; I lost five properties.”

Scripps Investments & Loans headquarters at 484 Prospect, La Jolla

Scripps Investments & Loans headquarters at 484 Prospect, La Jolla

The former headquarters building is at 484 Prospect in La Jolla. Back in the 1920s, it served as a residence for nurses who worked at the adjacent Scripps Hospital, which in the 1980s was converted to an office/condo building. “Scripps Investments & Loans bought it for $9.2 million and put $1.5 million in it,” says Ben Tashakorian of Marcus & Millichap. The office had 40 to 50 Scripps employees until calamity hit. Comerica Bank, the lender, foreclosed and took over the building. “[Lubin] sort of squatted on the property; we had to go through a process to get him out. It took six or seven months.” Doug (Papa Doug) Manchester, iconic local developer, bought it and will convert it to a medical building. It’s now empty.

Although several of Scripps’ individual projects went into bankruptcy, the parent company never has. “It just kind of petered out,” groans Lubin.

Now there are Scripps corpses lying around the West. The company loaned $32.4 million for Vantage Lofts of Henderson, Nevada. Another lender had put in slightly more. But trades workers walked off the job, later returning. After the project was 75 percent complete, more financial troubles arose. “It is partially complete and not occupied,” says Lubin.

Scripps put $39.25 million of financing into Bachmann Springs, a proposed spa resort and golf course near Tombstone, Arizona. The golf course was partially completed but is not being used. The rest of the project never got off the ground. “It’s not a time to build nice vacation homes, second homes,” says Lubin.

Investors were scheduled to get 17 percent on French Valley Commercial Partners in south Riverside County. “It’s still raw land,” says Lubin.

The Vineyards is a project in Coachella. The south part, devoted to upscale motor homes, has some customers. Houses were built on the north part, but only a handful have been sold.

Scripps provided more than $38 million in financing for the planned Tuscan Hills development in Desert Hot Springs. Scripps foreclosed and bought the property. A Chinese investor planned to build houses that he would market to his fellow citizens who wanted a home in the United States, “but he failed, never built at all,” says Lubin.

And that capsulizes Scripps and the great American real estate crash.

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SurfPuppy619 June 8, 2011 @ 12:13 p.m.

In one Arizona project, “The lender [Scripps] made more in loan origination and forbearance fees than the property is worth,” says New Jersey–based real estate consultant Amnon Cohen, who was brought in by investors to help rescue two projects. “Some of the losses were due to the economy, some to poor underwriting and greed, some to questionable due diligence, questionable acts. I spoke to investors who basically said it was too easy making so much money.”

One woman sued for fraud, but a North County judge said that she was a college grad, knowledgeable in real estate, who knew that an investment making 17 percent was risky.

If you want to play high risk games/gambles, then you better be ready for the bath that comes at the end of the ride.

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Don Bauder June 8, 2011 @ 2:02 p.m.

What surprised me is that victims I interviewed were intelligent people with a high net worth. (Most did not want to be quoted.) I wondered if they had read about hard money lenders that are part of San Diego's sad history -- Pioneer, Boileau & Johnson, Lochmiller Mortgage, ad nauseam. Best, Don Bauder

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Don Bauder June 8, 2011 @ 4:02 p.m.

Things went swimmingly at Scripps in the early days; that was true of the real estate market generally. But it was too good to last. Best, Don Bauder

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delmaresq June 9, 2011 @ 4:14 p.m.

  1. SILI, Inc. filed Chapter 7 bankruptcy in San Diego federal court
  2. SILI, Inc. was represented by Thomas C. Nelson. Check his State Bar status and his standing in federal bankruptcy court
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Don Bauder June 9, 2011 @ 9:40 p.m.

I didn't check that name online. However, I specifically asked Lubin about bankruptcy and he said he hadn't filed. Best, Don Bauder

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MsGrant June 9, 2011 @ 5:19 p.m.

I am not so sure I would call those that lost money "victims". This was common in the second half of the eighties, with companies pooling together investors to lend second, third, and even forth loans on a distressed owner's property (which they sought out through public records). They charged the borrower ridiculously high origination fees and points. They would then assign the percentage of beneficial interest of the note to the investor in accordance with the amount they invested. The company never owned the loan. Once they collected their fees, they were out (sometimes they serviced the loans, though, collecting the payments from the borrower and charging a servicing fee before divying up the payment to the investors, but there were other companies that did this for them, because typically they did not like to be involved.) Sometimes the investors would go on to sell their beneficial interest to ANOTHER investor, with the loan company brokering that deal, with the original investor making points and sharing with the broker. The returns were fabulous for those that chose to keep their beneficial interest, double-digit interest rates being the norm. But they were risky. Requests for notices of delinquency had to be filed for all the upper-position lien holders for each investor to be notified in the event of non-payment to them. If you could sell your interest in the note and make money off the fees, it was a better and less risky way to make money than on the interest, especially if you were sitting on a large sum of money that wasn't making much in conventional investments. This is because some of these (not all, this was before the days people just "walked away") distressed owners went on to foreclosure and the underlying loans got wiped out by the first trust deed holder, usually a large financial institution. Almost all of these borrowers used the hard money loan as a last ditch effort to bring their other loans current. But by the time they received their proceeds, the costs had reduced a loan of maybe $50,000.00 to $35,000.00 or less. It's when market conditions change and the companies dupe their investors into continuing to invest to support the principles in the company's lifestyle that gets them in trouble. A lot of the little companies just went away, Pioneer being a glaring exception. Scripps operated on a much grander scale, but these investors knew what they were getting themselves into. It's called due diligence. If you don't do your due diligence, it's called greed, and you get what you deserve.

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Don Bauder June 9, 2011 @ 9:43 p.m.

Yes, as the column points out, hard money lending was once very popular in San Diego. Then the real estate crashes of the late 1980s and early 1990s wiped them out. Yes, anybody should be wary of an investment paying 17% -- particularly a real estate investment in a super-hot market. Best, Don Bauder

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SurfPuppy619 June 10, 2011 @ 10:07 p.m.

Pioneer being a glaring exception. Scripps operated on a much grander scale, but these investors knew what they were getting themselves into. It's called due diligence. If you don't do your due diligence, it's called greed, and you get what you deserve.

Pioneer, still geting press after all these years!!

No one deserves to get scammed, but you are correct, if you have cahs to invest in these deals wiht too good to be true ROI, then due dilligence will set you free.

Having said that I RECENTLY saw a VERY unsphosticated minority women with little formal education, making $20K per year at a retial store, get scammed for over $1 million in a ponzi type scheme, she had inherieted the $1 million, and these frauds just scammed and conned her. She was not to blame.

I agree due dilligence is a big part of investing but that does not give crooks a license to defraud people, and the victim should not be blamed-at leats not in a major way outside of failing to due their DD.

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Don Bauder June 11, 2011 @ 7:19 a.m.

Due diligence is critical, but it is an evasive and enigmatic concept. Lawyers and accountants are paid to obfuscate documents of publicly held companies, for example. Even very bright and conscientious investors get fooled. Real estate is very volatile in certain markets such as San Diego. Investors may believe that their money is covered conservatively, but then values collapse quickly. Best, Don Bauder

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ZObserver June 11, 2011 @ 9:15 a.m.

The due diligence process for many investment offerings is no better than the AAA credit ratings that were issued for sub-prime mortgages and repackaged by Wall Street. The fundamental problem is the same---the issuers of securities and other deals are paying the so-called “due diligence” firms that write up big reports. It is little more than CYA.

Some research into due diligence work done on another real estate disaster in Idaho, shows that an examiner for a court found that two due diligence firms were paid handsomely by the issuer. The firms wrote reports largely verbatim from details provided by the issuer. If the report contained any language that was considered “negative”, the issuer demanded a revision and the language removed. I suspect these due diligence firms are going to be sued over and over again and they will eventually be put out of business.

This problem, however, will never go away unless there is some “truly independent” source of due diligence which has expertise and can opine on how much risk that the investor is being exposed along with some judgment about a reasonable expected return on the investment.

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Don Bauder June 12, 2011 @ 6:52 a.m.

You are so right. First, consider the bond-rating agencies that gave AAA ratings to junk derivatives. They are paid by the institutions they rate -- an obvious conflict. Thus far, they haven't been disciplined. Their defense is the first amendment. Similarly, research by brokerage houses is always suspect; you never know whether the house is providing investment banking services to the company and there is pressure on the analyst. (They claim there is a "Chinese wall" protecting analysts from in-house pressures. Yeah, sure.) In real estate, appraisers are paid to hike their appraisals. You get the point. Government regulators have cozy financial relationships with law firms and companies. Congress is owned by lobbyists. Best, Don Bauder

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MsGrant June 11, 2011 @ 9:45 a.m.

"Real estate is very volatile in certain markets such as San Diego. Investors may believe that their money is covered conservatively, but then values collapse quickly."

Timing can definitely be your greatest asset or your ultimate demise. I always appreciated this answer from Bernard Baruch when asked how he became such a financial success - "I made my money by selling too soon."

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Don Bauder June 12, 2011 @ 6:54 a.m.

Money managers who claim they are successful market timers are usually liars. Best, Don Bauder

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surfdog June 12, 2011 @ 10:37 a.m.

I'm glad to see that Doug purchased the 484 Prospect building. A historical beautiful building orignally part of the Scripps Clinic- 484 was used as the residence hall for women nurses.Mr. Lubin had previously tried to convert this historical building into a medical housing complex. He failed at this conversion. I chuckled at Mr. Lubin's comment on bankruptcy and how he lost everything. A reader mentioned Sili filing bankruptcy. Yes, it was Sili filing Chapter 11, Case No. 09-00995- I assume Sili stood for Scripps Investments Loans Inc. Total Liabilities were over $19 million and Comerica Bank shilled out expensive legal fees on this bankruptcy and eviction proceedings in SD Superior Court. The bankruptcy was converted to Chapter 7. The Scripps name certainly was smeared and Mr. Lubin had no affiliation with the good name of the Scripps family and or Scripps Bank. Anyone who invested with Scripps Investments could either be viewed as greedy or ignorant.

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Don Bauder June 12, 2011 @ 8 p.m.

I remember seeing the name Sili while I was researching this column. But I didn't believe it was the parent company. Perhaps I was wrong. When I checked bankruptcies, I only checked Scripps. But then I asked Lubin about a bankruptcy filing of the parent company and he said there had been none. Best, Don Bauder

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ZObserver June 13, 2011 @ 9:10 a.m.

Scripps seems to been on top of its game to raise money. It got a great recognized name in San Diego, a wonderful business address, and worked within a community loaded with prosperous investors that most investment managers would love to have. Somehow it blew-up.

From doing forensic research on financial breakdowns like this invariably points to how the projects got the cash from investors. Did people just walk in the door and give them money to invest?...or were there feeders involved. Did management pay out commissions or big finders fees to raise money? Does any reader know more about how this worked?

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Don Bauder June 13, 2011 @ 8:25 p.m.

I asked some investors about money finders but didn't hear of any. Scripps had a large staff that raised funds aggressively, and also had its own money in the various pots. That can be persuasive. Scripps did a lot of fancy entertaining; that often impresses investors. And the beautiful headquarters building no doubt wooed investors, too. Best, Don Bauder

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ZObserver June 14, 2011 @ 9:10 a.m.

As far as money raising for Scripps, it appears that it was done in-house and probably with employees or contractors who earned commissions or other incentives for bringing in investors.

I still am curious how these investors got interested in Scripps lending. Did other investment brokers or real estate agents refer investors to Scripps? And were there people who got paid as feeders?

I doubt the money came in the door without referrals.

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surfdog June 13, 2011 @ 11:14 a.m.

IRA accounts usually feeds the money machine on these lenders. In Scripps case- I do not know

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ZObserver June 13, 2011 @ 12:20 p.m.

IRA money???? Really.

If that is the case, you big-time custodial problem here and trustees have plenty of questions to answer. Personally, I think this speculation about IRA money going into "hard asset lending" is extremely unlikely.

As I understand, Scripps at least in one case, was careful to make sure the investors filled out an "accredited investor" questionnaire. This usually applies to RegD investments, but as far as I know, RegD and securities law didn't apply here.

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Don Bauder June 13, 2011 @ 8:28 p.m.

Oh yes, investors had to state their incomes, and the bar was pretty high. One lawsuit on the question of appropriateness was settled. I tried to reach the plaintiffs but their number was not listed. Best, Don Bauder

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Don Bauder June 13, 2011 @ 8:26 p.m.

I am aware of some IRA money but have no idea how much of the pot it constituted. Best, Don Bauder

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ZObserver June 14, 2011 @ 9:08 a.m.

If there was any significant amount of IRA money that went into Scripps---who acted as the custodian?

My understanding is that about 95% of IRA custodians or trustees would never touch a real estate investment and even less would allow a “hard asset” loan. Real estate is more complicated than stocks or bonds or bank CD’s---and the typical custodian doesn’t want to fool with notices of liens, property tax issues, etc.

If there was a significant amount of IRA money here, I suspect it was arranged by a single "dedicated" custodian who worked closely with Scripps. The custodian also is required to report "fair market value" of the investment to the IRS each year. This reporting would require help from Scripps and certainly raise even more questions if the "fair market value" that had been reported in past periods was over-stated.

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ZObserver June 14, 2011 @ 1:48 p.m.

As I understand, most Scripps deals were partial interests in secured "mezzanine" real estate loans where the only recourse is limited to property foreclosure. Anyone other than a first lien lender would be wiped out.

But, on the other hand, looking into the $100 million investment fund in 2005 that Don cited in his article---this apparently was a securities offering under SEC rule 506 form D. This fund would be subject to “securities law” and could have much more potential for litigation.

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Don Bauder June 15, 2011 @ 7:54 a.m.

In researching the column, I talked to one securities lawyer who counseled a number of Scripps victims. The lawyer took no action, though, greatly because of perceived difficulties showing that these real estate deals were actually securities. Best, Don Bauder

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Don Bauder June 15, 2011 @ 7:51 a.m.

Remember that when Scripps was booming, there was a general feeling that, nationwide, real estate values don't fall. (Locally, such as in San Diego, such values had taken several pratfalls.) Still, overall, there was excessive optimism about real estate, and so-called fiduciaries may have been caught up in the giddiness. Best, Don Bauder

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ZObserver June 15, 2011 @ 2:16 p.m.

I agree that custodians and fiduciaries probably got caught up in real estate hype of recent years. There are a few specialized custodians who will actually allow one to purchase stuff like tax liens for an IRA account. You also can set up real estate IRA LLC just to shield oneself from lawsuits.

My question about the use of IRA money in Scripps and the custodian involved--relates to another lawsuit against Fiserv-- which was the only custodian that Madoff would deal with. If an investor went to Madoff with IRA money, Madoff sent them to Fiserv. Lawsuits were then filed against Fiserv for turning a "blind-eye" to Madoff.

Fiserv has also been involved as the sole custodian of a couple of other blow-ups or ponzi's (Louis Pearlman and Daniel Heath.)

Did Fiserv or another firm serve as the sole custodian for Scripps?

How in the heck did the custodian(s) provide a "fair market valuation" statement once a year to a Scripp's IRA client---without disclosing the investment might be a disaster or worth a minimal amount? Maybe the amount of IRA money here was piddly and it is moot.

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Don Bauder June 15, 2011 @ 3:32 p.m.

Again, I don't know if the amount of IRA money was piddly. Any purported ficuciary that didn't know the history of hard money lending in San Diego was not doing his/her job. Best, Don Bauder

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surfdog June 15, 2011 @ 7:41 p.m.

Court Wilson is an Investment Retirement Consultant with Scripps Investments and Loans, Inc. The company provides opportunity for those interested in using their IRAs to invest."What my company does are Trust Deed Investments. We do a loan and we use a pool of investors' money to fund that loan. And some of it comes from personal money and some of it comes from retirement money,"says Wilson. "We can offer (investors) a real estate loan to a retirement account paying anywhere from 12-14 percent, collaterized by a first trust deed," says Wilson. "Having diversification and wide variety of investment choices for your IRA brings more opportunity for success," It just opens up another window," says Wilson

<p>IRAAA.org DATE: November 29, 2004 by Phoebe Chongchua

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Don Bauder June 15, 2011 @ 9:49 p.m.

Good bit of evidence. Scripps sought IRA money. But I still don't know how much of the pot it constituted. Best, Don Bauder

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Twister June 15, 2011 @ 8:21 p.m.

SP, please explain the concept of fiduciary responsibility, and the "gotcha" concept, or, if you prefer, the responsibility of the sucker to do due diligence, especially that which requires unraveling cleverly tangled webs of clever deception.

For icing on the cake, can you suggest any examples of similar paperwork that distinguish said deceptions from the tangled legalese that would pass due diligence muster?

Should I hire a lawyer to perform said due diligence on my behalf? If so, what kind of due diligence must I perform before hiring said lawyer?

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Don Bauder June 15, 2011 @ 9:53 p.m.

You can hire a lawyer to do due diligence on an investment. But Scripps had a battery of lawyers, both inside and outside, that wrote the investment material in legalese. There were red flags in the offerings; even if an investor's lawyer caught them, the high returns in real estate in that hot market might have been too persuasive. Best, Don Bauder

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ZObserver June 16, 2011 @ 9:37 a.m.

My feeling is that the term "due diligence" is very misunderstood. You can rely on lawyers to review certain aspects of an investment, but how are they going to know if a shopping center or an oil well has good return potential?

If you are about to invest in real estate, my suggestion is to find someone who can offer a second opinion on the specific category. If you want to invest in an office building, for example, get the secondary opinion of someone who knows the market conditions, demand for space, and the relative risk/reward potential.

Don't rely on lawyers and CPA's to know such stuff. I know of an oil deal in TX where lawyers reviewed a deal and gave it a go ahead. They never bothered to check that the operators had no drilling record or experience. The investors were just sucked into a persuasive sales pitch by amateur land-men. There are plenty of other examples of so-called "due diligence reviews" which missed the essential facts.

Always remember the saying: A "gold mine" is a hole in the ground with a liar posted at the opening.

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Don Bauder June 26, 2011 @ 11:21 a.m.

Do you suppose the lawyers were paid under the table by the inexperienced drillers? Best, Don Bauder

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Twister June 15, 2011 @ 8:32 p.m.

"Phoebe's writing is also featured in Donald Trump's book: The Best Real Estate Advice I Ever Received and The Complete Idiot’s Guide to Buying Foreclosures. She is the author of If the Trash Stinks, TAKE IT OUT! 14 Worriless Principles for Your Success." http://realtytimes.com/FinancialWire/pages/1.47_5usingira.htm?opendocument&ID=lennharley

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Don Bauder June 15, 2011 @ 9:54 p.m.

Sounds like there might be some pithy advice there. Best, Don Bauder

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Fred Williams June 18, 2011 @ 3:14 a.m.

Googling Phoebe Chongchua is illuminating...I remembered her from KGTV.

Looks like many other former "journalists" she now produces pseudo-news. Her LinkedIn profile brags:

"Using a feature video story that showcases your business creates a compelling, entertaining, and educational video that your prospective clients will want to watch. It's like watching a story you'd see in an evening newscast but better. Your story is always positive, delivers a powerful message, and reaches beyond even the airwaves of national TV. We tell your story, produce, and broadcast it to the world via the Internet, establishing your company as a leader in the future of advertising but using a highly credible news-style approach."

Phoebe is also a realtor whose articles over the years are well archived...worth a read if only for proof that those who completely missed the real estate crash are still somehow cited as real estate experts.

Most interesting of all from her LinkedIn profile (and finally relevant to this story) is that she used to sell something a bit odd:


Vice President Communications Nabers Group

Marketing and Advertising industry

December 2008 – December 2009 (1 year 1 month)

Helping to educate investors about unlimited alternative investments to create greater wealth using a Solo 401(k). Ongoing client of Live Fit Magazine.

Producer of content and financial news about the little-known retirement vehicle, the Solo 401(k) for Nabers Group. Co-author of Five Steps to Freedom: How to Cut Your Dependence on Financial Institutions and Escape Financial Slavery.

Goal: To bring self-directed investing from an unknown possibility to a widely and successfully used wealth management strategy.

Read more at http://realtytimes.com/rtpages/20090206_irasolo.htm

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ZObserver June 15, 2011 @ 9:50 p.m.

This is a wild guess. Scripps IRA biz was placed by C. Wilson to First Regional Bank in Carlsbad that did unconventional real estate custodial trust ops. First Regional was taken over by the FDIC in 2010. FDIC sold bank to new operator in LA but trust biz was excluded. The trust accounts are now being managed by reciever.

Can anyone confirm or deny this scenario? Thanks to surfdog for the IRAAA.org tip.

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Don Bauder June 15, 2011 @ 9:55 p.m.

Court was a very active Scripps salesman. I don't know what bank he dealt with. Best, Don Bauder

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abstractheory Oct. 29, 2012 @ 11:16 p.m.

Court promised all was well and checks were in the mail, right up until the phones disconnected.

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madatscripps June 17, 2011 @ 8:38 p.m.

Court Wilson was first with Bank of Commerce and then went to First Regional Bank in Carlsbad.

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Don Bauder June 18, 2011 @ 12:59 p.m.

You are on his trail. Best, Don Bauder

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ZObserver June 18, 2011 @ 10:38 a.m.

As confirmed by "madatscripps" there apparently is some level of connection between First Regional and Scripps Investments. This makes sense because First Regional was a bank that took way too much risk by specializing in real estate loans. You can find a FDIC report on the web that explains more about how they got into trouble.

It brings up more questions such as did First Regional provide loans to some of the Scripps deals (or was Scripps funding projects referred to them by the bank)?

There could be intertwining of real estate deals that were partly funded by senior loans from the bank and mezzanine loans from Scripps investors.

Some entity or persons "introduced" prospective investors to Scripps and /or the other way too. How did Scripps find the people who gave the money? Perhaps further investigation and interviews with Scripps investors who got burned might show some patterns.

(As a great example, showing how these deals are made possible by feeders there is another big financial blow-up in the Midwest for example that paid "feeders" to send them investors from religious organizations. They got plenty of trusting folks like ministers who invested their life savings.)

Perhaps this is a future story for the Reader.

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Don Bauder June 18, 2011 @ 1:01 p.m.

Yes, we might look into these interconnections. In San Diego's scam history, there have been feeders galore. Best, Don Bauder

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abstractheory Oct. 29, 2012 @ 11:15 p.m.

Many of Scripps investors were Lubin's close friends and relatives. I know this for a fact because I was one of them, and an investor.

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Twister June 18, 2011 @ 5:48 p.m.

Bottom-feeders? Top predators? Or just leeches leeching each other when they can't find enough prey?

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Don Bauder June 19, 2011 @ 9:41 a.m.

Keep your eye on those predators at the top of the food chain. And keep your wallet pocket buttoned. Best, Don Bauder

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ZObserver June 18, 2011 @ 6:30 p.m.

Real Estate publication in 2004 had Wilson and First Regional boasting about using IRA money for unconventional deals. Find it at realtytimes.com.

First Regional company report said it's IRA trust administration was run out of it's Carlsbad location.

FDIC estimated it would eat 800+ million when it closed First Regional. This represented about 30% of 2.1 billion in assets. A VERY large loss for a bank of this size.

FDIC for unknown reasons could not dispose of Carlsbad trust operation--seems odd why they could not find buyer.

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Don Bauder June 19, 2011 @ 9:44 a.m.

That trust operation looked good in the giddy days. Not so good after the bank was shuttered and the giddy days were over. Best, Don Bauder

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surfdog June 19, 2011 @ 10:32 a.m.

First Regional Bank Custodian now transferred to Sterling Trust out of Texas. More connections with First Regional to other local hard money lenders.

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Don Bauder June 19, 2011 @ 4:51 p.m.

Let's hear about those further connections to hard money lenders. Best, Don Bauder

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ZObserver June 21, 2011 @ 11:14 a.m.

First Regional’s name has come up in connection with Scripps.

Whether or not it was active with asset based lending may not be relevant. I think the bigger question is if First Regional’s DISASTER real estate banking operation was somehow interlinked to Scripps downfall??

We may never know and since the bank is out of business, any litigation appears unlikely.

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Don Bauder June 21, 2011 @ 8:51 p.m.

I don't know if First Regional was a major contributor to the collapse of Scripps. I do believe that Scripps's main problem was one common to hard money lending: it works in a robust market but collapses in a weak one. Best, Don Bauder

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ZObserver June 21, 2011 @ 11:16 a.m.

What seems to be UNIQUE about Scripps Investments is that they apparently had found a way to attract money from amateur investors to significantly fund a very complex and risky asset based lending operation. And they were able to raise investor money largely by avoiding broker dealers or any meaningful of regulatory oversight---other than a $100 mil Reg D offering.

I really wonder if there are or were any other asset based lenders or hard money lenders in the entire USA that could access amateur investor money in same way that Scripps could do it?

Hard money lending can be quite complicated and provides necessary working capital to businesses on the ropes that might not have any other source. There are success stories. It’s risky and most of the people involved in this stuff are very sophisticated. Scripps investors, on the other hand, seem to be fish out of water.

And, asset based lending deals also can be quite intertwined with many loans with different security interests. I am wondering if there were other major lenders involved that provided liquidity to Scripps real estate deals ONLY BECAUSE the amateur Scripps investors had agreed to provide a secondary source of funds. These major lenders really wouldn’t care what rate of return was promised to Scripps investors as long as the major lender is protected.

It is also possible the major lenders helped Scripps find its investors through referrals For example; any bank has plenty of customers that are unhappy with current CD rates these days--- Did major banks send these grumbling investors to Scripps which offered high rates?

Were referral fess and or commissions paid? It goes back to the question--- how did the investors find the path to eventually write a check to Scripps?

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Don Bauder June 21, 2011 @ 8:54 p.m.

Yes, hard money lenders are often the only source of money for a marginal project. That's why the loan interest rate is so high and why the rates received by investors are so high. It's a gambler's game on both sides of the equation, but not enough investors recognize this. They think they are investing. Actually, they are gambling. Best, Don Bauder

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surfdog June 21, 2011 @ 2:09 p.m.

ZObserver and Don,

Scripps developments in Palm Desert and Desert Hot Springs area were the Scripps Villa Portofino, LLC headed by Michael LaMelza and the Tuscan Hills project headed by Walter Luce. Both developers had interesting backgrounds

Scripps Villa filed Bankruptcy, Case 08-11947 and many of the investors came from First Regional Bank, Custodian IRA accounts

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ZObserver June 21, 2011 @ 2:33 p.m.

Surfdog, Do you know if First Regional was also providing more senior loans or funding to the Scripps Villa projects?

If so, was First Regional a first-in-line creditor after Scripps Villa filed bankruptcy and, at the same time, was the bank in a more senior position on the creditors committee--- compared to the custodial IRA accounts of amateur Scripps investors?

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Don Bauder June 21, 2011 @ 8:57 p.m.

Personally, I don't know First Regional's role in that project. Best, Don Bauder

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Don Bauder June 21, 2011 @ 8:56 p.m.

Tell us about the backgrounds of LaMelza and Luce. Best, Don Bauder

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surfdog June 21, 2011 @ 3:06 p.m.

Imperial Bank had first trust deed. Bankruptcy court records will show vesting w/ detailed membership units and percentages. See Doc 9-1, Pg. 1 of 2

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ZObserver June 21, 2011 @ 5:46 p.m.

I assume you mean Imperial Capital Bank? It is the same kind of animal that First Regional was with heavy risk concentration in real estate. Imperial was also taken over by the FDIC at the end of 2009 and the FDIC was expected to eat a $600 million loss on about $ 4 billion in assets.

It doesn't sound like First Resource had a conflict on Scripps Villas if their only participation was custodial. I wonder how FR reported the yearly "fair market value" to the IRS and account holders?

Still don't know a great deal here about the major banks that provided funds on Scripps deals. So far, the blog tally of "sound and solid" banking organizations that dealt with Scripps is 0 out of 2.

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Don Bauder June 21, 2011 @ 8:59 p.m.

Nothing sounds sound and solid in this misadventure. Best, Don Bauder

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ZObserver June 22, 2011 @ 9:56 a.m.

WOW. Look at these digs at 484 Prospect. Someone shot a you-tube video and posted it on the web.

http://www.bubbleinfo.com/2011/03/04/per-public-records/

If I were a prospective investor that was visiting Scripps Investments, I would be more than just impressed. ( Hell-- I might even give them some money to invest-- even with the hindsight I now have. My ego would be puffed even if my pocket book was emptied!!!)

These guys had to be great marketers even if they were not as smart as once thought on real estate deals. They got one of the most impressive offices to knock the sock off of prospective investors along with a prestigious San Diego/LaJolla name.

This stuff will suck up a prospective investors ego as fast as anything. Any broker in the country would give blood to be allowed to invite someone into the 484 Prospect environment. The furniture is beautiful. They had good taste. I am most impressed by the facility.

If they only could have duplicated the same quality in the bum real estate deals they did!!!!

I wonder if this and probably some other yet unknown life-style perks is what Scripps investor money actually funded??

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Don Bauder June 22, 2011 @ 10:57 a.m.

Actually, investors should be wary when the digs are so opulent -- and, of course, when the return is 17%. Lubin threw lots of lavish parties, I understand -- another red flag. Best, Don Bauder

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Duhbya June 22, 2011 @ 12:33 p.m.

The Walmart globe was a classy touch.

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Don Bauder June 22, 2011 @ 7:35 p.m.

I don't know what you mean by the Walmart globe. Best, Don Bauder

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Duhbya June 23, 2011 @ 3:03 p.m.

About 3-4 minutes into the video referenced in post 61, you see one of those faux opalite globes sold in places like Walmart. I ten noticed that much of the "opulent" decor was anything but. . http://www.bubbleinfo.com/2011/03/04/per-public-records/ .

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ZObserver June 23, 2011 @ 8:30 a.m.

The building at 484 Prospect was reportedly financed with a big mortgage issued by LaJolla Bank.

Of course, LaJolla Bank later failed in early 2010 and was taken over by the FDIC.

It seems that Scripps Investments must have had a "field of magnetism" surrounding 484 Prospect that successfully attracted zombie bankers.

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Don Bauder June 23, 2011 @ 12:02 p.m.

Yes, financial institutions dealing with Scripps were suspect. That is not surprising. Greed feeds upon greed. Best, Don Bauder

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ZObserver June 24, 2011 @ 8:50 a.m.

Investors caught in the Scripps mess might want to check out the "hard money industry" investigative reporting done by the Sacremento Bee newspaper. One excellent article appeared on June 6.

Hard money lending is apparently state regulated to some degree. In CA, the Bee reports hard money lenders fall between the cracks of two state departments Real Estate and Corporations and there were some 340 hard money lenders in CA at the peak in 2005. My guess is that most were far smaller than Scripps and did not have the same level of money raising skills.

In any event, the Bee reports that the CA legislature has been reading about these fiasco investments, which apparently tend to prey on less-sophisticated older investors seeking higher yields. A June 16 article in the Bee describes this lawmaker concern and plans to hold hearing and/or investigations.

If you invested in Scripps deal that went sour, and have valuable input, it might be a good idea to contact your legislator--just to let them know of the extent of problems and issues with hard money investments.

(On a different subject, it is amazing to see some Reader comments from “drive by” experts on Scripps decorating. Do they profess to know the difference between the $5000+ gemstone globe mounted in a unique wood base as shown in the video at 484 Prospect-- compared to a cheap copy apparently sold at WalMart? I guess I can only conclude these “drive-by” commentators of the Reader must know much more about what can be bought at WalMart than most LaJolla decorator/collectors!!!! )

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Don Bauder June 24, 2011 @ 2:42 p.m.

If there were 340 hard money lenders in the state in 2005 -- near the peak of the housing bubble -- I wonder how many are left? Few, I would guess. Best, Don Bauder

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Twister June 24, 2011 @ 11:21 p.m.

CRIME USUALLY PAYS!

If you can create enough fog, you can get away with just about anything.

And another thing: All kinds of criminal activity goes undetected, and that which is has a low conviction rate, and those convicted often get off with fines/terms that are a fraction of their net. Psychopaths can handle prison just fine for a few years. And most activity you and I consider criminal is PERFECTLY LEGAL, with an emphasis on PERFECTLY! And this phenomenon is growing, growing, GROWING at a phenomenal RATE!

Bottom line: There is little deterrence value in the law. On the basis of sheer numbers, like the ratio of enforcement resources to criminal activity, crime usually pays!

Justice delayed is justice denied.

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Don Bauder June 25, 2011 @ 7:35 a.m.

Many -- if not most -- scams are legal. They are based on rapacity, but slick amoral lawyers -- who often once worked for the government -- can get the cozeners off. You are correct about the fog surrounding scams. That fog is created by lawyers writing in unfathomable Latin and accountants juggling numbers. Can you remember the days when lawyers and accountants were guardians of public probity? Now they are exactly the reverse. As I have said many times here, the essence of white collar fraud is contrived complexity. The lawyers and accountants create the impenetrable miasma. And rake in millions of dollars a year doing so. Best, Don Bauder

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madatscripps June 25, 2011 @ 11:23 a.m.

The sales pitch was unbelievably convincing. After the pitch, we were escorted through the amazing offices and conference rooms. Then we were introduced to the staff and then finally to the main office of Mr Lubin where we were welcomed to the "group".

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Don Bauder June 25, 2011 @ 3:47 p.m.

This is not surprising. I do say, however, that victims could have done their due diligence by looking into the history of hard money lending in San Diego and elsewhere in California. Also, 17% is a red flag. On the other hand, America's leaders, including the central bank, along with almost all economists, did not see that residential real estate was a colossal bubble, even though ratios of price to household income, and other measures of relative valuation, were far out of line with historical levels. Best, Don Bauder

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surfdog June 25, 2011 @ 4:06 p.m.

Clinical Psychologist Martha Stout argues in THE SOCIOPATH NEXT DOOR, that high successful people are in fact more likely to lie and take more risks than average people.Per Stout " Characteristically, they can charm others into attempting dangerous ventures with them, and as a group they are known for their pathological lying and conning, and their parasitic relationship with "friends".

Good read is James Stewart -TANGLED WEB-

Who knows some journalist one day will write a book on this company. Another good read is Captain Money and the Golden Girl which covered La Jolla financier D.David Dominelli

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Don Bauder June 25, 2011 @ 8:52 p.m.

Any time you do a coroner's inquest on a big scam, you have to look at sociopathy as a contributing factor. Con artists con themselves; that's one reason they can be so convincing. Sociopaths, the classic con artists, have an advantage: no conscience. James Stewart is an excellent writer, although I haven't read Tangled Web. As to the author of Captain Money and the Golden Girl....well, modesty and conflict of interest prohibit me from commenting. Best, Don Bauder

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Twister June 25, 2011 @ 9:30 p.m.

“Contrived complexity” indeed. Fiduciary? What’s that? Hell, even that “old” saw for escaping it, “responsibility to the stockholders” is now out the window! What’s left? What manner of rabbit pellets will our heroes of the economy now pull out of their silk hats?

So how does one square an “impenetrable miasma” with the admonition to do one’s “due diligence?”

Almost a half-century ago, I wrote a paper on the Federal Reserve which necessitated an introductory essay on the history of money and trade. I began with pre-capitalism, cooperation and exchange for an agreed-upon rough equivalence of value and extension of “credit” using, if I recall correctly, a hunter-past-his-prime making spears and spear-heads of stone, sinew, and wood in the anticipation of the young hunter-recipient bringing home the bacon or mastodon or whatever, following that through millers and growers (the first capitalists) up to the system in force at that time.

To compound the irony, I negotiated a “deal” with the government professor and the Econ prof to give me credit in both courses for the same paper, which I promised to make ever more of a magnum opus, requiring more than twice the work of two papers. Well, the government prof goes ape kaka for it, extolling its virtues before the class (I was unaware that he was gushing about my paper) at great length (“A professor hopes, often in vain, for a student paper of such exceptional quality, blah, blah . . .") and then asks me to step before the class and extend my remarks, engaging the other students in some impressive display of my brilliance, etc. Well, I could barely stand, so weak kneed and in shock was I, and, to make a long story short, flubbed the impromptu oral completely. What was he supposed to conclude? Apparently that I was not, in fact, the true author of the paper. He never spoke to me again, much less push me toward greater academic heights. The Econ prof said nothing. I left—went to the mountains and lived in a cabin, digging weeds and doing odd jobs for more than a year. No more writing, no more academics. Done. Finished. Not only a failure, but a weak-sister besides. Flunked at life again. Man without an Economics. “Dam the Economics of Academia. . . . may I never hear of the Economics of Academia again!” (Apologies to Anonymous/Hale.) I don’ need no stinking funny gown and ribbons!

To be continued . . .

In response to By dbauder 7:35 a.m., Jun 25, 2011

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Don Bauder June 26, 2011 @ 11:16 a.m.

As you'll recall, I recommended that investors do their due diligence. But then I added that flunking that process might be excusable, because lawyers and accountants are paid to create the impenetrable miasma that thwarts those trying to do their homework. That said, you have a way with analogies and metaphors, and I am sorry those two professors didn't recognize it. Best, Don Bauder

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Twister June 25, 2011 @ 9:33 p.m.

Apologies to all for driveling on ad nauseam . . .

So much so that I do not do my due diligence; I have turned over the paltry sum of shekels I saved through thankless toil over the years, losing around fifty percent of it in the Crash of ’08, to some “money managers.” I just tell them to be conservative with the investments (but yea, tho I walked through the valley of economic ruin, they are still with me, and after all, I didn’t lose it all). Now my grand ole party wants to renege on the Social Security System the gummint required me to pay into because they squandered it on war and Wall Street. What, I ask you, would my due diligence have done for me? I could have been long dead from the vapors brought on by such worry. I throw out tons of tree’s worth of miasma from various financial leech-houses every year. What good will my “proxy” do with respect to my future. Well, to hell with my future. “It’s my money, and I need it NOW!”

In response to By dbauder 7:35 a.m., Jun 25, 2011

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Don Bauder June 26, 2011 @ 11:19 a.m.

And those money managers are still with you? Why didn't you fire them? Best, Don Bauder

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Don Bauder June 26, 2011 @ 11:32 a.m.

Greenspan said that while head of the Fed he was wrong 30% of the time. Double that percentage. Huffington Post doesn't mention that he completely missed the housing bubble, which was greatly his fault, and that he backed the Bush tax cuts for the rich, which not only worsened the economy, but helped to cause the corrosive wealth and income inequality that plagues us. Best, Don Bauder

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SurfPuppy619 June 26, 2011 @ 1:15 p.m.

Greenspan said that while head of the Fed he was wrong 30% of the time. Double that percentage.

Sorry, NO ONE was as WRONG as this clown was;

. http://www.youtube.com/watch?v=7rmbiu... .

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Don Bauder June 26, 2011 @ 11:34 a.m.

Ditto for our readers. Best, Don Bauder

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Burwell June 25, 2011 @ 10:54 p.m.

Who knows some journalist one day will write a book on this company. Another good read is Captain Money and the Golden Girl which covered La Jolla financier D.David Dominelli

==========

Captain Money is filled with gratuitous sex and violence. I can't recommend it. Judge Gilliam had Don ejected from the courtroom during Nancy Hoover's trial for making faces at her when she testified. Judge Gilliam made Don stand before the bar of justice and explain why he should not be found in contempt of court.

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Fred Williams June 26, 2011 @ 5:02 a.m.

I read Captain Money and the Golden Girl mostly for the sex and violence.

I hear the author is a dangerous misanthrope, agitator, and troublemaker.

:-)

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Don Bauder June 26, 2011 @ 12:15 p.m.

Fred, the older we get, the more misanthropic we become. Some of us get so old we can't remember the sex and violence, even though we wrote it. Best, Don Bauder

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SurfPuppy619 June 26, 2011 @ 1:22 p.m.

I hear the author is a dangerous misanthrope, agitator, and troublemaker.

=============== I don't know what a misanthrope is, and I thought an agitator was that thing in the washing machine, but Don is NO trouble maker!

Don is the peace keeper, always setting me and the public employees straight with opposing views.

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Don Bauder June 26, 2011 @ 12:12 p.m.

Damn! I don't recall the sex and violence, gratuitous or otherwise. And I read that book several times. Burwell, your accuracy is impeccable, but I have to make some corrections in your account of Judge Gilliam throwing me out of the court in the Hoover trial. I wasn't making faces at Nancy. I suspected she had told a whopper in court, and turned with an astonishing look at the fellow next to me, who was a J. David victim. Unbeknownst to me, a lawyer for Hoover's firm was sitting right behind me. I might have said something sotto voce. Don't remember. The lawyer jumped up and told the judge something or other. The judge asked several jurors if they had been swayed by my action, and they said they hadn't. Then Gilliam threw me out of the courtroom, which he had a right to do. But I don't remember him saying anything about contempt of court. The next time I entered the court in the Hoover trial, he lectured me to behave, and I did. Incidentally, he sentenced Hoover to ten years, but she got out in two. Upon getting out, she admitted that she had told untruths in that court under oath on two matters: I don't remember whether either one was the statement that had startled me. All told, mea maxima culpa. I should have guessed that an opposing lawyer might be sitting behind me. And I shouldn't have revealed my shock at her statement. In short, I was stupid. Best, Don Bauder

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SurfPuppy619 June 26, 2011 @ 1:18 p.m.

DON,you haven't lived until you have been hit with a contempt of court charge for standing up to a dirty judge (not that this was the case with you)-preferably a federal judge!

Same goes for telling them off so bad they sic the US Marshalls on you and you get your very own FBI file!

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Don Bauder June 27, 2011 @ 6:02 a.m.

I don't know if I am in the FBI files, but I have definitely been tailed by private dicks. One mob-tainted conglomerateur of the 1960s/1970s had two vicious dogs trained to attack me if I ever showed up at headquarters. I didn't learn about it until after I had left. Best, Don Bauder

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Twister June 26, 2011 @ 7:52 p.m.

Every blanket needs a burr in it. Well, thanks for the review; I had not read it because I figgered it wouldn't have any gratuitous sex and violence in it, but now I'm gonna run right out and buy it. I look forwerd to more deep stuff--particularly all the dirt that's fit and unfit to print about that scoundrel, that muckraker, that, that, puff, puff, badder than bad, Don Badder!

Re: By Burwell 10:54 p.m., Jun 25, 2011

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Twister June 26, 2011 @ 8:01 p.m.

Those two professors were top people, but human. They were grit that helped grind some more important stuff than government and economics into me. Yes, it threw me for a loop at the time; I was just out of the military and had a worse case of WW III shock than I realized, not to mention not being all growed up in my late twenties. I was thus able to escape the plague that dogs us to this day: A feeling of entitlement.

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Don Bauder June 27, 2011 @ 6:11 a.m.

Your forgiveness is appreciated. But those two doubledomes, as you so aptly described them, deserved your contempt. They were shocked by a student's perspicacity. Best, Don Bauder

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Don Bauder June 27, 2011 @ 6:07 a.m.

If you want sex and violence, almost any book these days will fulfill your desires more than will Captain Money. But if you want to read about greed, you can probably still get a used copy online. Best, Don Bauder

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Twister June 27, 2011 @ 8:40 a.m.

I don't "forgive," because I don't sit in judgment. "Doubledomes?" Who aptly described them?

The value in spreading such stories is that they exemplify principles that can't be taught, "lessons" that go on being useful. Low tolerance for plagiarism, presumption of facts not in evidence, the injustice of Kangaroo Courts, failure to prosecute so the accused can confront the accuser and the evidence, the vicious nature of gossip, and the value of adversity in opening one's eyes to reality while resisting cynicism.

But above all, to continuously question rather than to conclude.

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Don Bauder June 27, 2011 @ 10:16 a.m.

Many years ago, while I was a columnist at the U-T, I used the word "doubledomes," and was challenged by an editor. Best, Don Bauder

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Twister June 27, 2011 @ 9:02 a.m.

I know that there is an FBI file on me, because I had a Top Secret clearance in the 60's, but I don't know if there is any new "dirt" on me. I had one direct and explicit death threat back in the 70's and at least one implicit one; another in the 80's. I racked up my first one via email just this year. Those (partners) nutcases went silent, and they are the most dangerous because the nuts usually do their own work; back in the day, hits cost money. But boy, am I glad those gangsters loved their money more than they hated me!

Re: By dbauder 6:02 a.m., Jun 27, 2011

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Don Bauder June 27, 2011 @ 10:18 a.m.

Through the years, I have gotten death threats -- some by mail. I haven't received any by email yet that I an remember. Best, Don Bauder

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SurfPuppy619 June 27, 2011 @ 2:47 p.m.

I know that there is an FBI file on me, because I had a Top Secret clearance in the 60's, but I don't know if there is any new "dirt" on me

Twister-I just sent you a PM, it is very easy to get your FBI file, it took me with than 1 minute to fill out the form and naother minuter to fax ot off, and then mail a hard copy, to the FBI.

Thanks for letting me know you could get that stuff, I had no idea it was there for the asking, for free ;)

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Don Bauder June 27, 2011 @ 7:33 p.m.

OK, tell us what the FBI has on you. Best, Don Bauder

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SurfPuppy619 June 28, 2011 @ 12:15 a.m.

Don't know yet-I just faxed off the FBI request today-should know what they have in my "file" in a few weeks.

I really blasted some federal judges in some of the briefs I filed last year-and they deserved every word I wrote about them.

So I want to see what that dust up caused........

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tomjohnston June 28, 2011 @ 8:56 a.m.

surfpuppy619 did you send your request only to their HQ in D.C. or did you also send your request to any applicable field offices? I can tell yopu from personal experience that not all "information" gathered by local field offices makes it's way back to DC.

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SurfPuppy619 June 30, 2011 @ 11:51 a.m.

did you send your request only to their HQ in D.C. or did you also send your request to any applicable field offices? I can tell yopu from personal experience that not all "information" gathered by local field offices makes it's way back to DC.

I faxed in the copy to DC and then sent the hard copy in the mail;

. http://www.fbi.gov/foia/requesting-fbi-records .

. http://www.fbi.gov/foia/u.s.-department-of-justice-form-361-certification-of-identity .

Federal Bureau of Investigation Attn: FOI/PA Request Record/Information Dissemination Section 170 Marcel Drive Winchester, VA 22602-4843

The Fax # is on the website, don't know why I didn't save that too.

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SurfPuppy619 July 1, 2011 @ 12:45 a.m.

Yeah-I went back and added the fax number into the saved contact.

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tomjohnston June 30, 2011 @ 5:07 p.m.

you probably should also sent a letter along with you 361 to whatever local filed office that might have been involved. for example if it happened to be Los Angeles it would be FBI Los Angeles Attn: Freedom of Information Officer Suite 1700, FOB 11000 Wilshire Boulevard Los Angeles, CA 90024-3672 FREEDOM OF INFORMATION ACT / PRIVACY ACT REQUEST

The first 100 pages used to be free and it was 10 cents per page after that. You should have indicated in your letter how much you would be willing to pay for a copy because if it is more than 100 pages they won't send anything until they contact you to see if you want to pay. If you have a file, you will probably be suprised at the detail or lack there of in it. It's likly at least some portion is going to be redacted. I would say it could be 60 days before you hear anything.

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SurfPuppy619 July 1, 2011 @ 12:48 a.m.

It was LA, I will send them a request too!~

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tomjohnston July 1, 2011 @ 10:03 a.m.

wow, how funny is that! I used the L.A. office as an example because we live here. In fact, we live maybe 7 miles away from there.I didn't realize you are L.A. From your postings, I assumed you lived in San Diego. So I'm sure you're familiar with the building. It's the big tower off the 405 at Wilshire, right actoss from the Cemetary. I've never personally "visited" the feds offices, but we have been to there to deal with some passport issues.

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SurfPuppy619 July 1, 2011 @ 11:05 p.m.

I know the area you are speaking of but not the building, never been in there, but the federal court is downtown, spring street....it is one of the busiest federal courts in the nation.

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tomjohnston July 2, 2011 @ 9:31 a.m.

Yep. never been to federal court, but I know the area well. Next time you're there, you should drop in and say high to the mayor, City Hall is right across Temple. You cant miss the feds building. it's right there on the right when you exit NB at Wilshire.

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ZObserver June 27, 2011 @ 10:49 a.m.

Back to the original script here, which I think was Scripps Investments and Loans….wasn’t it?

I am a bit troubled by the postings that seem to implicate them as a "scam." There simply isn’t any evidence being written about here that would justify this accusation.

I think “madatscripps” confirmed the great sell job and the impressive facilities which were used to bring investors into the act. Car dealers have some great salesman too. So does Sears appliance dept. This is not enough to implicate anyone.

It also appears that each Scripps investment was a separate deal based on the specifics of the location. There are a great many questions on how investors exactly got drawn in to a particular deal. What the circumstances of the deal’s merits at the time the loans were made? Were shaky promises made? Does anybody posting here really know?

Hindsight is easy...of course....nobody has said if these deals actually lacked potential or were "dead-ducks" from the get-go. I personally wonder about some terrible real estate deals in Nevada, but it is hard to make conclusions without more facts.

It’s probably going to a bankruptcy court to authorize an aggressive bankruptcy receiver to delve exhaustively into each deal that went bad and then to make a judgement about the impact of each of these separate transactions on the parent entity, which I believe is called Sili Inc. A court might not even bother unless there is a decent chance of meaningful recovery for creditors (or investors.)

Possibly, one could argue that Scripps was actually selling “securities” because the loans were split up among different investors….but it might not matter if there are no deep pockets to access for damages.

Facts are hard to come by....speculation is growing....the real story about Scripps is yet to be told, in my humble opinion.

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Twister June 27, 2011 @ 12:42 p.m.

A victim is a victim is a victim. PERIOD.

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Don Bauder June 27, 2011 @ 7:38 p.m.

Back to Gertrude Stein again. Best, Don Bauder

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ZObserver June 27, 2011 @ 3:06 p.m.

Almost every investment that I know of that carries an expected return above 15% also is accompanied by a risk that the investor might get zero and no return of principal. Anyone who seeks 17% in a Scripps deal any thinks they share no blame might be a bit naive. Real estate was crazy and lots of folks happily drank the kool-aid.

If you were misled, lied to, or otherwise cheated you may well be a victim to some unknown extent. Eager pursuit of above market yields doesn't necessarily produce victims when the deal goes sour.

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Don Bauder June 27, 2011 @ 7:41 p.m.

Agreed: when you get 17% you acknowledge that you are taking on risk. However, as has been revealed herein, some people think that certain critical details were concealed from investors. This will have to be worked out in civil suits or the bankruptcy. Best, Don Bauder

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ZObserver June 28, 2011 @ 10 a.m.

Don, I haven't seen a smoking gun here. I have not read anything in your column or the comment postings that clearly shows "specific allegations" of wrongdoing. This would be information where an investor claimed they "were lied to" or "misled" or "cheated" about investing in Scripps or possibly where a deal was corrupted with developers that borrowed from Scripps. Maybe you have heard this type of "scam" allegation --off the record-- that you have not reported here--but it sure isn't visible or obvious.

If this goes into a federal bankruptcy proceeding and no one comes forward with specifics it will die.

Is there any money left for investors to recover here? It's a sad story. Investors might just be out of luck. This isn't like the Madoff case where the receiver has/will recover 75% or more.

As you know, financial fraud cases are complex, time consuming, and typically difficult for a jury to understand. Unless someone is caught red-handed with incriminating and indisputable evidence and pleads guilty AND offers to cooperate to prosecute the top people--- it won't go to court.

No doubt the big law firms like Girard and Milberg, that specialize in class actions, are monitoring potential articles and blog comments looking for a case. They probably read this blog. So far, I haven't heard of any class action in process and wonder if it is just not worth the effort because there are no deep pockets involved with Scripps left to pursue. If First Regional Bank is implicated as custodian, for example, there is nothing to recover by suing the FDIC....a waste of time.

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Don Bauder June 28, 2011 @ 1:25 p.m.

As the column states, there is one large judgment that Lubin refuses to talk about. Best, Don Bauder

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ZObserver June 28, 2011 @ 3:17 p.m.

The article stated that there is ONE large judgement from the past. Was it a settlement and sealed by the court?

Even if it contained damning evidence, it probably has zero effect on current investors.

We still don't have anyone coming forward with specifics about how they wuz wronged. Plenty of speculation...that other investors have a legitimate claim.....but, so far, very few real facts.

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Don Bauder June 29, 2011 @ 12:45 p.m.

We have some complaints about amorality, but only a few about alleged illegality. Best, Don Bauder

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Twister June 28, 2011 @ 2:40 p.m.

I know where there is a gold mine that was active until 1933 when the owner "closed" the entrance by blowing it up with all of his remaining stock of explosives. He said that there was "$15,000,000 in gold ore in the mine at the time."

How much will you pay me to reveal its location?

If you don't find any gold, will you sue me?

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Don Bauder June 29, 2011 @ 12:46 p.m.

Mark Twain defined a gold mine as a hole in the ground with a liar on the top. Best, Don Bauder

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surfdog June 28, 2011 @ 7:30 p.m.

ZO Observer,

Scripps was a rather new entity. I'm surprised that the investors did not perform any due diligence on the principles of the firm- especially Lubin. What was his background in real estate? I remember the Naiman nightmare at Pioneer and all the costly litigation. Did any of these investors really care about the business background of Scripps and the actual investments? Probably not

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ZObserver June 29, 2011 @ 11:33 a.m.

@surfdog There are a lot of unanswered questions here. I suppose I could believe that Scripps principals were new and inexperienced in finding decent real estate investments. They certainly got in big. I don’t think we know much about them as shrewd real estate deal-makers just from the postings on this blog.

As I see it, the investors in Scripps made a decision to supply money for reasons known at the time of investment. They may have consulted outside lawyers and accountants and performed some research or due dilly before taking the plunge. They may have been referred by friends or trusted experts. Perhaps some burned Scripps investor will post future comments on this blog on exact reasons why they bought in.

Scripps principals must have made a pitch and provided some sort of documented literature with info how the deals worked in the past. Scripps could have even provided investors with documentation showing outside experts opinions on the deals –and-- called it “due diligence.” Eventually each investor came to that “magic moment” when they decided to plunge with Scripps.

Think of it like buying a car. The dealer gives you facts about the car and you eventually decide to buy. When most people have made the decision on the exact model and color, they want it yesterday. There is new car "euphoria."

This is typical of most investment decisions…too….I would bet that most investors who bought left the Scripps building feeling like they were the smartest guys or gals in the room---at the time.

Scripps, from what I understand, seems to have sold itself somewhat like Madoff did, where one should have felt privileged to be wanted in an exclusive investment group. You became part of the club.

It’s very powerful magic and investor common sense is therefore blown into the wind. The office at 484 Prospect was no doubt impressive to all (excepting Wal-Mart shoppers, of course.) Great marketers for sure at Scripps....whether or not they were inexperienced in hard asset real estate lending remains to be determined.

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Don Bauder June 29, 2011 @ 12:53 p.m.

Lubin bragged to me that he had a battery of lawyers both inside and outside. The investment materials were more lawyerlike than they were slick. I spent a lot of time going over those materials. It seemed to me that Scripps is defending itself by saying that it followed full disclosure -- that is, all the dirt is disclosed in legal Latin so nobody understands it. Best, Don Bauder

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Don Bauder June 29, 2011 @ 12:49 p.m.

I did some reporting on Lubin's background. He had been in the hard money lending business for some time. As I recall, he had worked at a Scripps predecessor, had a part ownership perhaps, then bought control. Best, Don Bauder

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ZObserver June 29, 2011 @ 7:57 p.m.

Investor prospectuses and other long-winded disclosures are rarely read. They exist because lawyers try to minimize lawsuits in case it goes sour. I would bet that fewer than 2% of these documents are read even with less-complex mutual fund products.

If an investment is so complex that the investor barely understands the sources of cash flow, they should stay away. Chalk it up to lessons learned.

I seriously doubt investors will recover much with Scripps. No info is emerging to contradict this assumption--at least as of this writing none has emerged.

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Don Bauder June 30, 2011 @ 8:17 a.m.

You are right: few, if any, read the prospectuses. The main reason is that lawyers and accountants smoke them up deliberately. Who wants to cut through the concocted obfuscation? That's why the SEC's concept of full disclosure is basically inadequate. Best, Don Bauder

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Twister June 30, 2011 @ 5:04 p.m.

Re: Lawyers, bean-counters, and other superior beings. They do that so they can increase their prospects, but that's not all they smoke.

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Twister June 30, 2011 @ 5:12 p.m.

"I jus' can' Stein it! --forgot the name of the "old" movie . . . about and exceptionally inarticulate silent movie queen (in the previous sense of the word relating to self-admiring female heterosexuals). Did I just screw this up more than if just let it stand and risk all sorts of misinterpretation?

INCOMING! INCOMING! Hit the dirt--inCOMING! (The PIC is the DGZ for the PC.)

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Don Bauder June 30, 2011 @ 7:38 p.m.

I seldom watch today's movies. How am I supposed to recognize a movie from history? Best, Don Bauder

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madatscripps July 15, 2011 @ 5:30 p.m.

Scripps Investments has all the makings of a best selling movie/novel.

Not all of the deals were offered at 17%. If you just wanted to " park " your money for a short time ie: under a year, you were coaxed to the 'Mortgage Fund' and promised from 10% to 13% with the "assurance" that you could redeem your money at any time without penalty. That was towards the end when new money was being chased. At the time, it was not a huge return and did not seem exhorbitant.

Promises and lies.

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Ponzi July 16, 2011 @ 9:09 a.m.

The SILI bankrupcty was not discharged, is was dismissed.

SILI, 09-bk-00995 "Dismissed for Other Reason" 09/13/2010 Chapter 7 Trustee's Report of No Distribution - dismissed or converted, no funds.

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ZObserver July 19, 2011 @ 11:15 a.m.

I assume that the courts are not going to do much here. First of all, it appears that there is no deep pocket to raid for repayment. Perhaps someone has other valuable insight into the latest action into the dismissal of the bankruptcy case.

For investors in Scripps, I suspect the best use of your information and experience would be to share it with the California legislative committee that is investigating hard money asset lending.

It seems that this topic has attracted plenty of folks who post and also think that the government must be interested in investigating people and businesses to a much greater extent than actually happens in real life.

My guess is that the government authorities may have little interest in pursuing Scripps Investments and Loans at this point in time---other than in legislative discussions about changing the laws in the future. Such laws might help avoid potential abuse of individual investors in hard asset lending.

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Twister July 19, 2011 @ 12:02 p.m.

Just try waving a gram of pot in front of government authorities and see how little interest they have in prosecuting you.

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SurfPuppy619 July 19, 2011 @ 5:31 p.m.

Just try waving a gram of pot in front of government authorities and see how little interest they have in prosecuting you.

===================== White collar perps go free wiht million/billion dollar losses, but drug crimes will get you 20 plus in a federal pen.

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tomjohnston July 20, 2011 @ 11:58 a.m.

Better yet, try driving through the Yuma inspection station, in either direction, with even hust a single seed in your ash tray and see what that gets you.

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