Huron Consulting Group Provides Information to 1031 Tax Group Victims: “Beware of the Hand That Feeds You!”

In “Victims of Okun and McGhan: Where Do We Go For Answers” I made a plea to any politician or participant in the tax proceedings for fresh information and answers. The answers I was hoping to elicit were the type that would describe exactly why the losses occurred and how they would be avoided in the future.

I then reprinted two comments I received from two separate victims of each of the 1031 swindles. My goal was to show everyone (reading this blog) the hurt and anger the victims are feeling. In addition I wanted to highlight cases where the victims had lost most if not all that they saved for their retirements. Real people devastated by this situation. A look at the unfortunates.

Although it is early, as expected, I received nothing from any of the politicians who claimed to be “looking into” or “working” on legislation for 1031 Exchange reform. As I expected, I have heard nothing from the Federation of Exchange Accommodators- Qualified Intermediaries only trade organization.

In a move true to their public relations media management role in the Okun case, I received information links from Huron Consultants. In “1031 Advance: Van Prooyen-Greenfield LLP Initial Contact Points for Clients” I documented the fact that these organizations were hired as spin doctors for the Okun disaster. The following are excerpts from that article and concepts to think about when reviewing the “new” information provided by Huron Consulting Group (below) :

Background on Huron Consulting Group
Huron Consulting Group helps clients effectively address complex challenges that arise in litigation, disputes, investigations, regulatory compliance, procurement, financial distress, and other sources of significant conflict or change. . “

Van Prooyen-Greenfield:

“We devise and execute communications campaigns that create and sustain competitive advantage. Clients involved in high-profile litigation depend on us for strategic communications counsel to press their case in the court of public opinion.

The following was a comment in response to “Victims of Okun and McGhan: Where Do We Go for Answers?” written by amahnken@Huronconsultinggroup.com. These are the sources of information provided to me. Critique this information with a regard for it’s source. My next article will examine the following comment and links provided by the Huron Consulting Group:

There are now three websites with information for customers of 1031 Tax Group and its affiliates:

  1. www.1031taxgroup.com – managed by the Debtorswww.kccllc.net/1031taxgroup – managed by the Claims Agent, provides links to all the filings in the bankrupcy case (no charge to download as opposed to PACER)www.committeeinfo.com/1031 – managed by the Unsecured Creditors Committtee, which represents all of the customersComment by Huron Consulting Group — July 18, 2007 @ 12:26 pm | Edit This

San Francisco Magazine: “Ultimate San Francisco Guide and Real Estate Resource”

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San Francisco Magazine is a rich printed mashup that incorporates the classic dramatic flair of “Life” magazine, the hip trend identification of a burgeoning Web 2.0 blog, and the “city centric” feel of a Gentlemen’s Quarterly edition. SF mag focuses on San Francisco trends in the Arts, fashion, food, city life, Real estate, and California culture. Consequently it remains the best and most informative magazine about the City by the Bay and one of the best lifestyle magazines in California.

For the luxury market real estate broker, builder, hotel residence, resort, or agent’s print advertising campaign, San Francisco magazine is the Carnegie Hall of it’s niche. It is where the most successful and well positioned professionals advertise. The pages are full color, glossy, and impressively displayed. The dramatic 10″ by 12″ layout lends itself to luxurious and rich color photographed layouts.

One of the most exceptional, and best, examples of this advertising style is Coldwell Bankers’ Previews International advertisement by Newport Beach, California McMonigle Group. Their property is the magnificent Corona del Mar “Portobello Estate” listed, by Joyce Rey, at a Monte Carlo stratospheric price of $75,000,000. The following is the shot of the Portobello the same type of picture used in SF magazine’s full page advertisement.

If a picture is worth a thousand words, then what is a full page color advertisement targeted to a world wide audience and focused on the San Francisco Bay Area worth to your advertisement campaign?

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Victims of Okun and McGhan: “Where Do We Go for Answers?”

When I started investigating and reporting on the sad 1031 Advance case, I was stunned at the brazen and outlandish losses. I was offended to think that honest hard working people, many with their life savings on the line, would suffer their most significant loss from an industry that purports itself to be nearly flawless. I was angered by the culprits tip toeing out of town under the cover of darkness methods. And as I continued to report on the situation at hand, victims of the 1031 Tax Group swindle began to come out in a voice of unity: “We have been bambooseld and hoodwinked!

The following are two separate comments sent to me by victims of the 1031 Tax Group and the Southwest Exchange disaster in Las Vegas. These comments really struck a nerve; I feel that it is important to recognize the helplessness and desperation of the victims of this terrible rip off. I myself feel angry over the lack of political involvement or attention to this matter. I have written and profiled the politicians who spoke up when the 1031 Advance rip off was front page news on the San Jose Mercury news. I followed that first article up with a progress report on the politicians who “promised” to either “look into the matter” or “take action” to ensure that nothing like this ever happens again. We are still waiting! None of the politicians in California, who were profiled, have lifted a finger to help these people or introduce legislation to regulate the 1031 industry.

  1. Dear sir I don’t understand about what the government does or do sometimes. One thing needs to be addressd is where is the money they
    need to protect us from crooks like that.I’m one of the victims that were taken to the cleaner. Why because the IRS doesn’t trust people to do it themselves they trust crooks like those who are trying or tried to con people out of their own money.It is Funny that a business like that it is not even regulated by anything wow!!!!!
    that means any crook can go and open a 1031 exchange and make good money and file Bk. Only in America.Not sure what to do to get my money from this company who has taken me and lots of others to the cleaner.Do you have any suggestion?
    SamComment by sam eloatri
  2. Jack | athomeintx@hotmail.com | IP: 68.238.154.52I am one of the many that lost money to the McGhan thieves. Not a big amount by the standards of those who lost several million, but the $180,000 I lost was most of my retirement. The lawyers will get most of any that I get back, so my retirement is gone, and at 60 I can look forward to working the rest of my life. I do so hope I can spend some of it visiting the McGhan scum in jail.I am writing to comment on the mention of people needing to do some homework before giving money to a 1031 QI. I actually did quite a bit of homework (not enough obviously). The reason I went with Arrow 1031/Southwest exchange and not with the other 8 I checked out was primarily because Southwest was the ONLY one that was registered with the state of Nevada, and Nevada was the only state requiring registration (I am from Texas).The one thing that frosts me so deeply about this whole thing is that Nevada did nothing to prevent it, and the IRS set up the whole program without requiring any over site or taking any responsibility for the loss.It is a sad truth, but the money is gone, and the McGhan scum will continue to live a life of luxury on the money they stole.Jul 12, 7:40 PM — [ Edit | Delete | Unapprove | Approve | Spam ] — Southwest Exchange: “Uh, Uhm. . . uh. . .” $100,000,000 Reasons to Perform Due Diligence on Your 1031 Exchange Company

Man of Honor: When You Don’t Have a Best Girlfriend to Stand In As Your Maid of Honor

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(image courtesy of copyright holder for “The Godfather 2″ motion picture via Wikipedia)

I will never forget that phone call I received eight years ago this summer. The call was from a dear friend who was excited to tell me she was, in her own words, “finally” getting married. Little did I suspect that the next thing out of Megan’s mouth was the following salvo: “And I want you to be my Man of Honor.”

Man of Honor? I thought what the heck is a Man of Honor except some old Italian relative hanging out at his favorite “social club” sipping espresso and waxing nostalgic-with his bodyguard. Megan’s explanation was simple.I was her closest friend and she did not have any girlfriends at the time that would fit the bill. I was honored and I accepted her nomination. My only condition: no dresses! As it turned out, I was safe.

According to the wedding site Yourwedding101.com, these are some of the major tasks assigned to the Maid of Honor:

*Decorate reception site

*Pick up or receive wedding flowers; distribute bouquets, boutonnieres, and corsages

*Stand in the receiving line

*Participate in the wedding photos

The only tasks that a Man of Honor could not perform that a Maid or Matron of Honor could perform is that of fashion consultant: adjusting the dress, fitting the veil, and helping the bride get ready.

Consequently, the role that a traditional Maid of Honor would perform can be performed by a Man of Honor. What is most important is that both the bride and groom feel comfortable with the role reversal, the bride feels supported in exactly the same way as if she had chosen a bridesmaid, and the Man of Honor acts as a rock of support for his friend-the bride.

Federation of Exchange Accommodators Annouces Itinerary for 2007 Annual Conference: “Where’s the Beef?”

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The FEA the sole national trade organization in the 1031 Exchange industry has announced the itinerary for it’s Annual Conference held in Chicago Oct 4-7 according to PRPressNewswire.com. The conference is for Qualified Intermediaries and all 1031 Exchange industry professionals including legal and tax advisors. The theme of this year’s conference is “Preparing You to Go the Distance.” With the recent Ed Okun disaster and the Southwest failure fresh on consumer’s minds,”going the distance” appears to be the least of the problems facing the 1031 exchange industry.

The press release directs industry professionals to check with the FEA site for more information on the conference at: www.1031.org. The following is a description of the events at the conference and the benefits to attendees:

* Keynote speaker will be David Lereah, current Vice President of Move Inc and former chief economist of the National Association of REALTORS® (NAR) will deliver the Conference Keynote.

Conference attendees can expect to receive the following benefits:

  • The largest opportunity to network with individuals affiliated with the 1031 industry
  • Educational sessions on a variety of topics for both experienced and new QIs
  • Premier industry speakers
  • Pertinent updates on all the major issues impacting the industry, including regulatory initiatives in several states
  • Marketing workshop and “Exchange Basics” boot camp
  • Bi-annual CES® Exam

Why the issue of industry regulatory initiatives is not emphasized more or the theme for this year’s conference can only be answered by event organizers. Suffice it to say, consumers around the country would like answers to the Okun like disasters that have occurred recently. The only way the industry will fully rebound and thrive is if a “standard of ethics and laws” is enacted. A industry certification system and laws with teeth would greatly reduce the number of unscrupulous incidents and restore consumer confidence.

Hearst Mansion: “Nation’s Most Expensive Residential Listing-$165,000,000 and The Godfather Too!”

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Newspaper Magnate William Randolph Hearst’s Beverly Hills mansion was listed for sale on Monday for the record (American Residential property) price of $165,000,000. The mansion gained national fame as the digs for Hearst and Marion Davies. According to Jeff Hyland, author of “The Estates of Beverly Hills“, the compound sits on 6 1/2 acres and includes four houses, an apartment, a cottage for staff, 3 swimming pools, a disco, and a state of the art movie theater. Charles County Cafe has a fantastic picture of the grounds from ground level and an equally interesting article on this property!

According to the Los Angeles Times reporter Annette Haddad the seller is attorney Leonard M. Ross. Ultimate Homes Magazine publisher Rick Goodwin reports that “six U.S. residences have come on the market with nine-digit price tags in the past year.” The Hearst mansion price tag surpasses the asking price of $155,000,000 being sought by a group for their Montana based estate and the $135,000,000 price tag of an Aspen compound being sold by Saudi Arabian Prince Bandar bin Sultan.

And if this is not enough cache, the final coup de grace is the fact that this property was the setting for the movie mogal scene in the original Godfather movie. The beautiful grounds with reflecting pool, gardens, and swimming pools remain intact. The only thing missing is the horse’s head. . . as Michael Corleone said “Keep your friends close and your enemies closer.”

What Costs 3 Months Salary, Represents an Emotional Event, and Acts as a Warning to Other Males?

The wedding ring is a tried and true tradition which symbolizes the joining of two hearts into one love. It is a significant ritual and it represents one of the biggest days in your life. The wedding ring is the final piece and a perfect adornment to a relationship well worth a lifetime of commitment.

Although the above sentiments are shared by the happy couple, the male tends to have a few “other” thoughts on the significance of the wedding ring. Should the ring be an expensive diamond ring or should it be a more inexpensive purchase? According to suite101.com here are a few of the considerations that go into this important purchase:

  • For many women, a gorgeous ring will make them ecstatic. For the rest of her life, she can look down at her finger and remember how delighted she was to see that beautiful ring.
  • Many women will be very disappointed if they don’t get that beautiful ring. The marriage fairy tale is programmed into women’s brains from an early age, and part of the fairy tale is the diamond.
  • Romance aside, a diamond is a high quality and beautiful product that is difficult to damage. With proper care, the diamond ring will stay beautiful for a lifetime.
  • Quality diamond engagement rings can last for generations. The ring can become a family heirloom that your great grandson can use to propose to the girl of his dreams.
  • It’s tradition. For some people, tradition is very important, whether it’s the woman taking the husband’s name, the father walking the daughter down the aisle, or proposing with a diamond engagement ring. Failure to follow tradition may result in disapproval from family and friends.
  • The ring symbolizes an investment in your future together. Three months salary is a sacrifice that grooms are willing to make to symbolize a commitment they will not break.

And now the other side of the coin as described by suite101.com:

  • Three months salary is an awful lot of money. A newly married couple needs money things like a mortgage, car payments, student loans, and wedding expenses.
  • The De Beers Company, and diamond mining in general, has been plagued by scandal. Human rights groups have accused the industry of mining and purchasing diamonds under very questionable circumstances. If this concerns you, do some research into the diamond industry before you support it with three months of your salary.
  • Consumerism is out of control in the world today. The expectations of what we need to spend to be happy have been pumped up by marketers for years. Do you want the diamond industry and the bridal industry to tell you what you need to spend on your engagement ring?
  • Some brides prefer a stone that is unique and perhaps has personal significance. Couples are personalizing their weddings in all kinds of ways, from writing their own wedding vows to purchasing unique wedding favors, so why not buy a special ring? Other couples prefer to use an heirloom ring from their families.
  • Some couples reject the idea of an engagement ring altogether because they feel it promotes patriarchy and a sense of ownership of the woman.

All of the above points are valid and important to consider. Even more important, in my opinion, is for the man to “get a grip” on his main reason for buying that giant diamond ring-jealousy. Men’s insecurity never rings more true (pardon the pun) when they drop a 3 carrot giant diamond on their bride’s hand. To the woman it means: “God he must really love me!” To the man it does mean he loves his new wife. More significantly though it really says: “Don’t mess with this woman she is mine and she is married!” It is like marking territory-men understand this concept.

In my opinion, a couple should talk about what they want and expect from each other when it comes to wedding rings. They should agree on a price range, the 3 month formula is a jeweler’s evil plot, that fits their lifestyle and financial situation. Finally it is important that both people recognize their selfish (if selfishness exists in this situation) reasons for wanting “their way.”

Remember to listen to your partner, respect each other’s wishes, and have fun with this big decision!

The Name Game: “The Detail that Many Realtors Fail to Understand”

What’s in a name? When it comes to real estate names/brands for either a brokerage or Realtor, recognition can mean the difference between getting the deal or losing the deal.

Agents and brokers understand that to build a “name brand” persistence in marketing pays off. The successful Realtors and brokerages market and advertise 24-7-365. Newspaper and trade magazine advertisements, flyers and door hangers, sponsorships in local charities, and placards on super market baskets or dividers are just a few methods of creating and maintaining name recognition in a market.

These methods have worked successfully for many years in the real estate industry. The challenge now is to create the same name recognition in the online world of the internet and the burgeoning social network phenomenon. In this environment, an agent’s choice of name for his/her business is a critical decision. The following are examples of how a business name can be ineffective or effective in garnering recognition in the online world.

The example is Frank Soda’s company “Sunshine Realty and Marketing.” Frank is a fantastic agent with decades of experience in Marin County, California. This is Frank’s niche of expertise that he has earned through hard work, dedication to detail, and a consistent marketing effort.

In the first scenario, the challenge Frank faces in the online world is how people will search on Google for his business: “Sunshine Realty and Marketing.” Most people searching online will search using the tags “Sunshine Realty” failing to add the remainder of the name “and Marketing.” This is understandable and it is detrimental to Frank’s marketing efforts online.

In a Google search (July 9, 2007) using the phrase “Sunshine Realty” Frank’s business shows up on page 3 in the 29th position. The majority of Realtors placing on page 1 and ahead of Frank are Florida based agents. Consequently the name “Sunshine” is generic and popular which acts to lower Frank’s position on this Google search.

In the second scenario, the key to recognition for Frank online ( in the name game) is that people searching for him input the entire business name. Therefore “Sunshine Realty and Marketing” becomes very powerful. It is the “and Marketing” that differentiates and identifies Frank online. The proof is the following.

In a Google search (July 9, 2007) using “Sunshine Realty and Marketing“, Frank has the #1 and #2 positions on page 1 of Google. This is the strongest and most desirable position to be in on a Google search of your business name.

Consequently the name you choose for your real estate business can greatly effect your marketing efforts online. Try to choose a name that is descriptive rather than generic. If the name you wish to use is popular consider adding to that name. Your additional word(s) will help you differentiate your brand from others online.

The ultimate tool for your next generation online marketing effort is blogging!

Federation of Exchange Accommodators: “Professional Trade Organization Representing Qualified Intermediaries Misses the Mark?”

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The Federation of Exchange Accommodators is the only professional trade organization to represent Qualified Intermediaries; for those victims and interested parties following the Ed Okun 1031 Exchange disaster, does it not strike you odd that the word “Qualified” would be associated with this business? According to all my research, input from industry professionals, and stories from victims of recent 1031 disasters, there is no official qualifications needed to start a 1031 exchange company.

The FEA is missing a very valuable and vital function: political power. If the FEA were able to create a platform to force new laws and regulations, at the federal and local level, they could become the most important organization within the Qualified Intermediary industry. In addition they would be the driving force behind these changes creating “real enforceable” ethics and code standards for their industry. On top of these facts, FEA membership and “certification” would then become the “gold standard” or seal of approval for all new and existing Qualified Intermediaries.

Unfortunately political intervention through new laws and standards is not the main focus of the FEA. The following is a sample of the information the FEA produces for it’s members and the public. There are many solid pieces of information for both the industry “professional and consumer” alike.

The first piece of information of interest is the organizations “Code of Ethics” page. The FEA describes it’s standards, ie background checks for all officers of a 1031 exchange company applying for membership, and the ethical practices it expects it’s members to uphold. In April the FEA “suspended” the membership of Ed Okun’s 1031 Tax Group: why the FEA did not remove 1031 Tax Group’s membership all together could be debated.

A second page of interest on the site is the FAQ section. This page is rich in information for the investor looking to understand and apply the power of 1031 exchange savings. It is also a solid tool for QI’s to reference.

Finally the last page of interest should be their “Calender of Events” page. The FEA is holding it’s “Annual Meeting” October 5-6 at the Westin Hotel (Michigan Ave.) in Chicago. It would be of benefit to see a network of local chapters and their events throughout the year-if such a thing exists? The idea to have city, county, and state chapters supporting the FEA on a smaller scale would provide a voice to QI’s and the public alike. Now that would be a real benefit!

The Greatest Wine Industry Breakthrough in 25 years: “Resealable Glass Stopper Slays Cork Myth!”

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The dirtiest little secret, within the wine industry, long a terrible fact is the”corkage factor.” It has been estimated that up to 20% of the wines in circulation are contaminated rendering them undrinkable. The reason for this high rate of loss is the material used to seal a wine bottle: cork. Cork has long been the traditional material used in the wine industry. Cork is cheap and it is romantic in it’s opening. Cork also represents history within a industry steeped in tradition.

Unfortunately the worst case scenario is when a collector or wine fanatic saves aka “lays down” a bottle for 5+years. I have done just this with a bottle of Caymus Special Select Cabernet Sauvignon from the legendary 1994 Napa Valley vintage. At release this bottle retailed for $100. Currently this wine sells at retail for between $250 and $400 depending upon the source. Scarier yet is the fact that on one restaurant wine list a bottle of 1994 Caymus Special Select was selling for $650! Consequently this bottle is meant for my upcoming birthday. . . if tragedy strikes and this bottle is tainted, it would be a loss on 3 levels: time to age, cost at release, cost to replace present day. I could never afford to own a replacement!

All of this has changed with the introduction of Ed Sbragia’s “Resealable Glass Stopper.” Sbragia, the legendary wine making master for Berringer Vineyards for so many years, has introduced the “new cork” at his new winery Sbragia Family Vineyards in the Dry Creek Valley region of northern Sonoma County.

In a fun and interesting article written by Bill Daley, in”The Stew” Chicago Tribune’s wine and food blog, a brief history of alternative “stoppers” is explored. Daleys’ examination of the stoppers is both accurate and a good description of what to expect for those first timers.

Consequently a new era of taint free wines is a true possibility. Although Sbragia is not the first vintner to use glass resealable stoppers, he is the most prominent and powerful winery owner to promote them. This fact alone may create a shift in perception amongst winery owners and the public. Hopefully bottles, coddled and stored with loving care, saved for that special occasion will no longer bring with them the ultimate let down-another tainted disaster!