In one of the biggest 1031 swindles in Real Estate history, Southwest Exchange of Las Vegas, Nevada was charged with pilfering $100,000,000 of investors money. According to the Las Vegas Business Press, the principles of Southwest Exchange, CEO Donald McGhan and Shirley McGhan (his wife) face a massive civil lawsuit. According to LVBP in their May 18, 2007 edition:
“The couple is accused of one of the largest, most brazen frauds ever alleged against a Las Vegas financial institution. Along with daughter Nikki Pomeroy, son Jim, longtime investment broker Peter DeMarigney, plus a number of insurance companies, brokerage firms, a local bank and related business associates, the couple are named as defendants in a consolidated civil case. The suit alleges more than two-dozen acts of malfeasance affecting victims in Missouri, California, Idaho, Arizona, Nevada and elsewhere”
In addition, the FBI is investigating. “So too are state agencies that failed to detect the chicanery until more than 130 victims had lost more than $100 million. Those victims are all landowners who placed the proceeds from real estate sales into escrow accounts at the now-infamous Southwest Exchange in Henderson, which abruptly shut its doors in January. Instead of avoiding an IRS tax bill by parking their money in a supposedly safe, bonded institution for 180 days, these victims lost between $25,000 and $22 million each, some of which they will never recover.”
In a phone call dubbed “The Answering Machine Call” made regionally famous by Las Vegas’s Channel 8 CBS affiliate “Eye Witness News” , Donald McGhan attempts to lie to one of his clients who is desperate for answers:
“Uh, the wire for your transaction today was all set up, but uh, it didn’t end up going because of some screw up,. . . uh, with,. . . uhm, the coordination between the, uh, electronic wire transfer, uh, instructions over to, uh. . . , our bank and, uh we’re all set up to do that Monday morning. . . ”
The stumbling excuse filled excerpt continues: “So we recognize that you. . . you, uh, want, you know. . . feel. . . feel, uh, violated and want to do something, uhm, but if, if we get, if we get, uhm, uhm, people involved, uh, it is going to screw up going Monday morning. So let’s not–let’s just be patient for it.”
So it’s up to you to perform your own investigation and due diligence into any independent 1031 Exchange company. Do not allow these painful mistakes made by well meaning people, become your own personal nightmare !