1031 Tax Group Okun Swindle “Mantra”: “The plaintiffs’ money has ‘disappeared’ and recovery is unlikely”

Reuters.com published this deansguide article July 9, 2008

What has become an all to familiar phrase in the Ed Okun 1031 Tax Group (IXG) ponzi scandal, seems to be the dreaded mantra: “The plaintiffs’ money has disappeared and recovery is unlikely.Those were the words recorded in court hearings in Colorado this past month in regards to the embezzlement of funds through the Ed Okun held IXG exchange in Denver.

Exhibit 1: Sergio S. Alvarez v. Daniel E. McCabe

In “Sergio S. Alvarez v. Daniel E. McCabe et al, eight former clients are suing all three McCabes and Simring (Richard) for losses totaling more than $4.5 million” according to the latest from the Denver Business Journal’s Renee McGaw.

Eight clients were in the midst of their tax deferred exchanges with cash assets between $280,629-$1.9 million dollars lost when the 1031 Tax Group filed bankruptcy

Exhibit 2: Ward Enterprises LLC v. Daniel E. McCabe

The Plaintiff (Wade LLC) wired $3,300,000 in proceeds from a real estate transaction to IXG’s account held at the United Western Bank in Denver. Proceeds were for the purpose of performing a 1031 exchange

In the meantime IXG had been sold to Okun and his 1031 Tax Group-something Ward LLC did not know at the time. Consequently Ward expected it’s millions to be deposited in a separate, stand alone, account. Unfortunately for Ward, their monies were “pooled with other exchangers’ money and later moved out of United Western Bank”, according to allegations of the Ward suit.

The Beat Goes On

As usual nobody is taking responsibility for these illegal transactions. The McCabes are stating that they are innocent and victims of Okun’s dirty dealing. So the beat goes on, victim’s monies disappear and nobody is left holding the bag–except the victims


5 thoughts on “1031 Tax Group Okun Swindle “Mantra”: “The plaintiffs’ money has ‘disappeared’ and recovery is unlikely”

  1. In the last paragraph of the July 9th blog, the writer unintentionally tips their hand by indirectly demonstrating a lack of knowledge concerning the circumstances of these unfortunate events. The blogger writes “As usual nobody is taking responsibility for these illegal transactions. The McCabes are stating that they are innocent and victims of Okun’s dirty dealing. So the beat goes on, victim’s monies disappear and nobody is left holding the bag–except the victims.” The blogger, through misunderstandings of the intricacies of this case, is mixing the civil case that has been brought against the McCabes with the federal, criminal charges that have been brought against Ed Okun.

    The blogger cites two civil cases brought against the McCabes by former exchangers (Sergio S. Alvarez v. Daniel E. McCabe and Ward Enterprises LLC v. Daniel E. McCabe). Indeed, these two suits have been filed against the McCabes, but these two suits are civil actions brought in civil courts. Ed Okun has been charged in a federal court, with numerous criminal infractions. Not only is this a different jurisdiction, but the accusations connected with this case are different from those brought against the McCabes. In fact, the charges brought against Ed Okun are not only stating that he has broken civil statutes, but that he has also conducted illegal activity that will warrant significant jail time. The truth of the matter is that Ed Okun has only avoided additional Civil charges (similar to those brought against the McCabes but in higher numbers) by declaring bankruptcy. By declaring bankruptcy, Okun has moved all of his stolen and legitimate assets into federal jurisdiction. It is the function of the federal bankruptcy court to liquidate Okun’s assets and pay off his creditors. Those creditors include the 1031 exchange clients, but also include many other legitimate creditors. The nature of the Federal Bankruptcy Court mandates that all creditors are reimbursed as much as possible, regardless of the nature of how the debt was accumulated. By moving into federal bankruptcy court, there is nothing that jilted clients can do to recover damages from Okun, as all of his assets are under the protection of the Federal Bankruptcy Court. The problem is, Okun used all of the stolen money to purchase his numerous multi-million dollar mansions, his fifteen $200,000 plus exotic automobiles, his automobile racing team, his wife’s expensive jewelry, his yacht and who knows what else. When all of these items are liquidated by the Federal Bankruptcy Court, there is little chance that there will be enough funds to pay off clients as most of those exotic purchases are highly depreciating assets that are worth far less now than when they were purchased.

    It is a sad story indeed. Ed Okun systematically stole money from his 1031 exchange clients to support his luxurious lifestyle. He deceived those clients, but he also deceived a number of 1031 exchange companies that he purchased. The McCabes are only one of a number of 1031 exchange companies that Ed Okun deceived. However, to suggest, as the blogger did, that the McCabes take responsibility for Okun’s illegal activities is absurd. The blogger is trying to equate and connect the McCabe’s civil lawsuits for amounts less than $10,000,000.00 with Ed Okun’s criminal charges and his theft of $150,000,000.00. The blogger also ignores the fact that it was the McCabes who, upon learning of Ed Okun’s shenanigans, blew the whistle on him. If it weren’t for the McCabes, Ed Okun would have stolen millions more of client’s money. And the blogger suggests that the McCabes should be left holding the bag for Okun’s thievery? Why should the McCabes hold the bag for the illegal activities of another? I wonder if the blogger would be willing to hold the bag for illegal activities conducted by his internet provider. The blogger fails to understand the actual technical machinations of the American court system. The blogger also assumes that because some civil case has been brought against the McCabes, they must be guilty. There is only one actor who should be left holding the bag for his illegal activities, and that is Ed Okun.

  2. ” “We believe that the McCabes misused and mishandled funds that were under their control” Quote from Denver Attorney Jeffrey Cohen in the Denver Business Jornal. See my article for reference : https://deansguide.wordpress.com/2008/06/21/newsflash-denver-okun-victims-sue-former-ixg-founders/

    Tell me why would an attorney make this type of statement? So he could be sued for liable? So he could open himself up for possible retribution in the media?

    Explain why nobody has challenged and asked the question: How did the McCabes “misuse and mishandle funds” that were under their control?

    Well written argument. It would lend more credibility if you came out from the shadows of your moniker “An Okun Victim” and into the light. If you have an ax to grind then do it transparently–don’t hide like a little girl.

    I published this because the most pertinent point you made was that Okun is the point man on all of this and that he is the cause.

    I am and was fully aware that the McCabes “blew the whistle” on Okun’s request for funds. That was never a secret.

    If you check into my background, I can’t check into yours, you will see that I have written 60 articles with 15 published by Reuters.com, FoxBusiness.com, and Nielsen.com. As a freelance contributor to syndication, I understand the players and the play.

    So the question here is WHO are YOU? And why should we listen? And what is your motivation to defend the McCabes IF YOU ARE A OKUN VICTIM?

    Answer those questions are don’t bother wasting our time

  3. Pingback: Ed Okun or Michael Okun: What’s With The Okun Name And Scandal? « DeansGuide

  4. One need not be a criminal to be held accountable for negligent or reckless behavior. I’ll give the McCabes the benefit of the doubt on the question of whether or not they had criminal intent when they sold thier business to Mr. Okun for what has been reported to be an obscene amount. However, I have a hard time justifying anyone’s making excuses for thier stupidity in not making a clean break from the business as most of the other former owners did or at least making sure that their former clients who had relied upon the McCabe’s good reputation were aware of the changes in control that had taken place (this is now an ethical requirement of their industry organization, the Federation of Excange Accomodators). In fact, at least one closing took place resulting in a multi-million dollar deposit being made into the IXG administered escrow account AFTER the McCabe’s had notified the bank and the account had been frozen – truly a trap door for the unfortunate client. And why is it that the McCabes couldn’t find the time to immediately notify their clients once they smelled a rat? Should the McCabes have suspected something was wrong from the get go when they received an offer to purchase their business for a price that was far and above what a similiar professional practice would be valued at? Who is more culpable, the McCabes or their clients who might have been able to protect themselves through proper due diligence regarding their choice of qualified intermediary and/or advance review of the exchange documents? Should the McCabes be allowed to walk away with lots of money still in the bank while their former clients bear signifignat losses? I think these are all questions for a jury to decide. Thanks for jumping on this Dean!

  5. Dear Anon but didn’t want to be,

    Thank you for your kind words of encouragement. I have no answers. I am flabergasted, stunned, and quite incredulous over the lack of teeth, law, or restrictions in the 1031 industry. In my opinion it should be frozen like the assets of exchangers in the now LandAmerica debacle–to be continued once either Obama or the IRS fix the entire industry.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s