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Scripps Investments & Loans 17 percent return didn't last
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.— June 14, 2011 9:10 a.m.
Scripps Investments & Loans 17 percent return didn't last
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.— June 14, 2011 9:08 a.m.
Scripps Investments & Loans 17 percent return didn't last
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.— June 13, 2011 12:20 p.m.
Scripps Investments & Loans 17 percent return didn't last
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?— June 13, 2011 9:10 a.m.
Scripps Investments & Loans 17 percent return didn't last
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.— June 11, 2011 9:15 a.m.
WFP Securities Closes Down
Is your argument that these deals such as MedCap, Provident, and Desert Capital offered "bigger" commissions? I don't think that is true. Plenty of deals offer big compensation, and some brokers choose not to sell them anyway. Money is just one piece of the puzzle. The RegD offering companies usually have powerful and persuasive marketeers who distribute perks and parties and awards for who can sell the most. It's beyond just the commission paid. You might take note of the bank trustee lawsuits noting MedCap parties that were held for certain brokers at the Ritz in LasVegas....in the interest of "due diligence." In any event, somebody at WFP gave the deals the go ahead, for reasons not yet explained.— June 9, 2011 12:48 p.m.
WFP Securities Closes Down
Another website reported that WFP was running lean on capital. I suspect that it just became too costly to pay the legal bills from the Finra arbitrations and now the attack from BNYM--MedCap's trustee. WFP had a clean record with FINRA in recent times. I wonder went wrong here. How did they get involved with so many bad deals?— June 9, 2011 8:37 a.m.
Big Bank Sues WFP, Other Brokers over MedCap Offering
WFP apparently is pursuing a media strategy of saying nothing to anybody except as required by law. On May 31, they filed notices of discontinuation of the firm with FINRA and the SEC. Other than that, its hard to know what is going to happen to WFP in the future. Are they about to be liquidated or forced into bankruptcy with a SIPC receiver appointed? A bit of a mystery. What happens with existing accounts and it's sales force rumored to have numbered almost 40 at one time?? Also, one has to wonder if there is a bigger SEC investigation going on here because of the complicity of certain broker dealers with the MedCap fraud as alleged in the BNYM lawsuit against WFP. WFP had exposure to sales of Desert Capital, which has been forced into involuntary bankruptcy. Interestingly, another broker dealer named Harrison-Douglas based in CO announced it was closing very recently and they also sold Desert Capital investments and the same kinds of undeveloped land deals that WFP apparently pedaled to investors. Stay tuned.......— June 6, 2011 9:42 a.m.
16 arbitrations and 4 written demands registered against WFP Securities
I think that WFP is only being sued here by BNYM and not by Wells. Nevertheless, WFP is going to be challenged by some very top notch litigation talent which will pour over every whit of info in WFP files related to the sales of MedCap. Even if WFP eventually prevails, this discovery process alone might be very costly. I wonder if the banks are pursuing a legal strategy here to minimize blame on them based on a belief that certain brokers "aided and abetted" continuation of the MedCap ponzi?— June 1, 2011 10:29 a.m.
16 arbitrations and 4 written demands registered against WFP Securities
A good news development in the MedCap matter. The State of MA just cut a deal with Securities America to pay back 100 cents on the dollar to investors. This counts 63 investors who put in an average of about $80,000 each. State securities law vary, but maybe this will wake up California regulators.— May 24, 2011 10:40 a.m.