Has A New Ed Okun Arrived On The 1031 Exchange Scene: Vesta Strategies LLC Staggers From Wall St. Journal Story

In another apparent blatant rip off of 1031 exchange investor funds, Vesta Strategies of San Jose, California “has closed its doors, leaving investors scrambling to recover millions and pointing to flaws in the largely unregulated industry” according to the Wall Street Journal report “Behind the Boom and Bust of Real- Estate Player Vesta.”

Do we have another Ed Okun 1031 Tax Group on our hands?

The Founders

Chicago businessman John Terzakis and partner Robert Estupinian were the principles at Vesta Strategies. They founded Vesta in 2004 amid a firestorm of legal problems

History

According to WSJ’s Kris Hudson’s report:

“Mr. Terzakis had a history of failed real-estate deals and soured relationships — information Mr. Terzakis isn’t required to disclose to potential clients. Now the two men are accusing each other in separate lawsuits of diverting millions of dollars from Vesta for personal use.”

The Losses Sound Familiar

Christina Pappas a California investor, a familiar story to the “Trainwreck Victims of Ed Okun”, is out $2.5 million she handed to Vesta in April 2008 from the “sale of a property.”

When Ms. Pappas found a replacement property, another building, to purchase within the IRS’s 180 day exchange period, she requested her funds be wired in order to close the deal. To her utter horror, but familiar to the people following this industry, Ms. Pappas maintains that the “Vesta representative failed to wire her money to complete the property exchange by the June 16 closing, and still hasn’t done so”

The Numbers

According to WSJ story, Mr. Estupinian was quoted as saying that “Vesta Strategies held $10 million to $30 million in client money at any one time.” Okun like no, but no small sum of money in any case

Vesta Infighting And Meltdown

In a scene worthy of Ed Okun, the two principles Terzakis and Estupinian ended up in court with Terzakis initiating the legal action.

Mr. Terzakis allegations included

1. Estupinian misappropriated several million dollars of Vesta’s money for his family’s use

2. $96,000 salary for Mr. Estupinian’s wife, who allegedly did little work for the company

3. Expenditures on a $1.3 million house

4. A $160,308 oceanfront apartment in Long Beach

5. $50,000 for a pair of dogs-doesn’t everyone have $50,000 twin dogs?

6. $42,795 in tuition toward Mr. Estupinian’s doctorate degree-education is expensive

The Countersuit by Mr. Estupinian

1. Embezzlement of about $25 million and the following quote by Mr. Estupinian:

“Beginning as far back as 2000, John Terzakis has been treating the client funds as his own personal piggy bank in order to fund his many personal business and development projects”

Final Final

If this does not sound like the Okun case it certainly sounds like a close facsimile to it. The bottom line for Ms.Pappas and fellow investors serviced by Vesta Strategies could be the same fate suffered by Okun victims: no return on investment, IRS nightmare tax bill, and the prospects of a lost retirement fund spent in a lavish lifestyle befitting a crook

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Realtor’s Sales Nightmare #1: Top 10 Cities With The Worst Traffic

FoxBusiness.com published my article April 17, 2008

Commute? What commute? A recent list of the “Top 10 Cities With The Worst Traffic” conditions were presented over at Tom’s therealestatebloggers.com with some surprising results:

1. Washington D.C.
2. Atlanta
3. Los Angeles
4. San Francisco
5. Houston
6. New York
7. Riverside-San Bernardino, CA
8. Chicago
9. Dallas
10. Boston

My vote for the worst traffic, and I have driven LA morning rush hour dodging gunfire and limos, is found on the Japanese Subway system. Such an ironic twist on a formal, custom filled culture.

MK Restaurant Chicago: What Does Quagmire and a Former Beauty Queen Have In Common?

quagmire.jpg

Editor’s Note: This post was written in 2007. We have not visited MK restaurant since that time and they may have greatly improved their service and polices. Please give them a chance and take this review with a grain of salt. We are hoping that they have improved and are now reaping the benefits of growth through experience.

I recently visited my parents in Oak Brook a suburb 22 miles west of downtown Chicago. I came to Chicago because I had not seen my parents in months and I wished to introduce them to my new love interest. During our five day jaunt, I planned one day and evening in Chicago. With Priceline’s help, we snagged a 4 Star luxury hotel suite for less than half the original price at the Westin River North. The room was fantastic and the location was next to the river, the House of Blues, and Harry Carey’s.

Our big treat was a trip to Restaurant MK (Michael Kornick) not far from our new digs. In 2002 I ate at MK and loved every bite and gulp. Fantastic food, huge portions, a electric room and crowd to match. The place oozed New York “It.” Everything was pure pleasure. Then it happened.

Like “Family Guy’s” Quagmire or a former beauty queen past her beautiful stage in life, MK has become clueless to it’s decline. The food still remains a solid bet as it is both tasty and plentiful. But there have been major changes that prevent me from recommending it to anyone.

1. The Staff has the attitude that they are “doing you a favor” by allowing you to dine at THEIR place.

2. The Sommelier constructed his wine list as if Quagmire took over his brain. Too many white wines on the list were from Red winery specialists. Likewise there were red wines on the list from white wine producers who make poor red wines. Add to this weird mix, the fact that there is no value section at all unless you think that a $35 per bottle corkage fee is value? Like a 3rd World country, this list has it’s downtrodden poor and it’s super rich. Consequently unless you are willing to spend $60+ per bottle, very few selections are worthy of the food.

3. The Service and Attitude was both over the top and under the table. The waiter acted like a snooty society snob. He had NO clue about wine or wine etiquette. No restaurant should ever assume that it is their right to pour the wine. They should ask if the patrons would like to control the wine or if the waiter should pour away. At MK they get pissy if you tell them hands off the bottle. The other etiquette breach? They took our bottle off the table and then expected us to wait for our server to go find it to then pour it. That is a terrible idea and one I quickly squashed. The whole issue made for an uncomfortable experience.

At the end of the night, I tipped but it killed me. I was kind of wishing I could pull a dine and dash like the good ole high school days when the local bowling alley guy was too hammered to chase us. But this time I would have been the bowling alley guy and I would have never made it out of my seat.

If you are looking for great food in Chicago try Charlie Trotter’s, Greek Town, most any Steak House, or something eclectic. Just save yourself, and that Brinks roll, and avoid MK for now. Maybe in the future they will wake up to the fact that their beauty is gone and it costs dearly to be a Quagmire!