Ed Okun Victim Cautions LandAmerica Victims, Challenges Government, Admonishes 1031 Exchange Industry

Note of Disclaimer: The following comment, story, and opinion(s) are that of the commenter Elizabeth Callanan and not that of deansguide or the author of deansguide Dean Guadagni. Those of you who have read this blog in the past know where I stand. I am a victim’s advocate and simply creating a place for victims or industry pro’s to communicate.

The following are opinions, experiences and stories of the trials and tribulations of the 1031 exchange industry from long time contributor and commenter Elizabeth Callanan one of the 350 “Trainwreck Victims” of the Ed Okun 1031 Tax Group Ponzi scheme. This is a warning, it is a plea, and it is her argument for the complete overhaul of the 1031 exchange industry–or it’s outright Abolishment.

Note: Not all of the 1031 exchange companies are bad, fradulent, or subversive. There are well respected, honest, and worthwhile 1031 exchange companies doing business.

——————————————-

To Daniel Lowe and the other victims of the LandAmerica debacle,

You have my most heartfelt empathy.
Having been myself a victim of Ed Okun’s embezzlement of exchangers funds on deposit with the 1031 Tax Group, I truly feel your pain. I’m not an attorney, an accountant, and have no expertise apart from what comes of painful firsthand experience. It was in the hopes of warning other potential exchanger/victims that I started posting on Dean’s List and elsewhere.

At the end of the day, though, I agree totally with Yaco Tiamo, who has posted here. The entire 1031 industry is superfluous and that aspect of the IRS’ 1031 regulations should be expunged. It is a wildly unregulated industry that answers to no government oversight at any level (apart from some half-hearted oversight incorporated in a couple of recently enacted regs by a handful of states (Nevada, California?) and, as evidenced, by the recent spate of embezzlements or gross mismanagement puts all exchangers at great risk for no good reason. Doing a 1031 isn’t brain surgery. The forms are pretty standard and the process pretty simple, really.

Since the IRS has shown no interest in overseeing, licensing, demanding accountability from, providing meaningful insurance for (as the SEC does) or otherwise regulating the industry it created, it should kill it – NOW!

As to the LandAmerica victims, my (personal, not professional!!) advice in terms of investing in legal help is two-fold and in both cases I would act only collectively (except for those whose funds were held in traceable segregated accounts, who will no doubt make a serious (and perhaps successful) run at retrieving those funds, I see little point in acting individually — certainly not in bankruptcy, a self-funding and self-perpetuating legal and financial train wreck for everyone involved except the court appointed functionaries. (If you want to see the extent to which such a process can drag on ad nauseam with many billable hours just check out the history of the 1031 Tax Group case on either of these sites: http://www.committeeinfo.com/1031/index.htm (the official website for our Creditors Committee) or http://trustee1031taxgroup.com/component/option,com_frontpage/Itemid,1/ (the Trustee’s website).)

However, I WOULD hire a legal firm (on contingency if you can – since, by definition, you no longer have any money!) to:

1) GET YOUR CASE OUT OF BANKRUPTCY COURT!! That is a deep dark hole that will suck up every dime of funding available until there’s nothing but dust left. In the 19 months since Ed Okun put the 1031 Tax Group into “bankruptcy” (it was a criminal embezzlement plain and simple now being tried in a US Federal Court in Richmond which was known at the time the bankruptcy was filed in May 07 — the Feds having raided the offices in April 07 — and should never have been accepted as a legitimate bankruptcy to start with!) all of the various court-appointed functionaries have claimed MORE THAN $30 MILLION IN SO-CALLED “ADMINISTRATIVE FEES” and victims have received not one penny of their escrow funds. In fact, in an amazingly brazen and twisted miscarriage of justice, the Bankruptcy Court authorized attorneys for the so-Called “Debtors” (ironically the Dreier firm whose owner embezzled millions in escrow funds himself) to pursue a legal action to retrieve the only escrow funds that Okun himself had not been able to steal and the settlement cozily agreed to by the attorneys on both sides (and approved by the Court) provided for payment as well to the attorneys DEFENDING the bank where those funds were on deposit — the end result of which is that the costs of BOTH SIDES of that court case will be paid by Okun’s victims. (So, to our point of view we were mugged first by Okun and then by the Bankruptcy Court!) The only way to get that Bankruptcy action derailed is to get the Committee itself on board (not easy since the Committee’s attorneys will understandably vehemently argue against the prospect of losing their cash cow), but I’d consider that a first priority.

2) Get a class action going to pursue all the parties involved, including especially LandAmerica to force them to use the proceeds from the sale of its other two arms to repay the exchange funds it squandered on worthless investments.

I sincerely hope you are more successful than we’ve been to date in retrieving even a dime of our life savings. The key is acting collectively and getting a junkyard dog of an attorney who is willing to work on a contingency (which means you’ll get 25% less than you otherwise might, but most of Okun’s victims would happily settle for that today!). Unfortunately in bankruptcy there is absolutely NO incentive for settling anything quickly. It’s all about billable hours — for attorneys, for management companies, for accounting firms, and all the other hangers-on who can get their licks in. If I were you, I’d follow the lead of the creditors in the Southwest Exchange Case – which happened just a few months prior to our’s and in which there’s been a settlement of $92 million of the $97 million lost (minus the contingency and other costs incurred by the attorney) while WE HAVE NOTHING and dismal prospects ahead.

You’ve gotten off to a better start than we did, it appears. You have a website (noted above by one of your fellow victims), your Committee seems to communicate with you (our’s has maintained a nearly absolute silence and shares NO information whatsoever for reasons none of us can fathom), and I understand you’re collectively discussing a civil class action which I encourage you to pursue.

Good luck to you all — sincerely.

LandAmerica Exchange Services Victim: “Any Class Action Lawsuits Yet?”

Reuters.com published this deansguide article 12-12-08

Another deansguide readers, in the growing line of LandAmerica exchange victims, has spoken out. The message from Cathy is loud and clear. How do victims, who have lost their entire or majority life savings, pay for legal assistance in pursuing their “stolen” monies?

The Conundrum

1. Spend Money: pursue “lost” life savings by using what little money you have left or going into debt to attempt to pay for legal representation.

2. Chalk It Up: chalk it up to experience. Do not pursue recovery by spending money. Hope for the best but do not chase your money with more money. Allow LandAmerica to skate free of charge.

3. Legal Action: hope for a class action lawsuit where no investor’s money is required to possibly recover lost monies.

Cathy’s Comment

“I, too, have a big chunk of change stuck in LES. Now, I know I have to file my proof of claim, but who can afford a lawyer, now? Are there any class action lawsuits going on yet against LES? Hate to give what little I have left to an attorney.

thanks for anything.”
Cathy

A Look Back In Time: Why Did The US Government Not Charge Ed Okun With RICO Violations?

IBS published this deansguide article June 17, 2008 for the Greensboro Winston-Salem, North Carolina NBC affiliate

Editor’s Correction: The RICO lawsuit filed by Anita Hunter against Ed Okun was actually filed in May of 2007 not May of 2008 as originally reported. Apologies to all parties involved. In May of 2007, I was just beginning to report on the Ed Okun 1031 Advance connection and the overall scheme of his 1031 Tax Group actions. I missed this very noteworthy item as my focus had not shifted to the 1031 scandals rocking our country until later on in the summer of 2007

The fact of the matter still remains that Ms. Hunter is the only victim to attempt this action to our knowledge.

Ed Okun was sued in May 2007 by victim Anita Hunter under the Racketeering Influenced and Corrupt Organization Act aka RICO. RICO was the major weapon wielded by Rudy Guiliani in his fight with the Mob in New York.

Analysis: It looks like somebody was calling this crime exactly what it is and what it was during it’s commission–a conspiracy. With all of the government’s power, money, and time, it still took a Okun victim to drop the hammer with the one law he should have been charged with in the beginning-RICO.

RICO Act and the Department of Justice:

“It is unlawful for anyone employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt”

Justia.com Files

1. Plantiff Anita Hunter is suing Defendant Ed Okun, Okun Holdings, Inc., Investment Propertities of America, LLC and Richard B Simring
2. Cases Filed In: Northern California Federal District Court
3. Case: #5:2007cv02795
4. Filed: May 30, 2007 (correction)
5. Office: San Jose
6. County: Santa Clara County
7. Presiding Judge: Magistrate Richard Seeborg
8. Presiding Judge: Hon. James Ware
9. Referring Judge: Magistrate Richard Seeborg
10. Nature of Suit: RICO other statutes
11. Cause: 18:1962 Racketeering (RICO) Act
12. Jurisdiction: Federal Question
13. Jury Demanded By: Plaintiff

Okun Criminal Trial Date Set October 20, 2008: Is This The Final Act?

IBS affiliate Winston-Salem, North Carolina published this deansguide article May 23, 2008

Please Read My Story and Follow The Links. . .

Over the course of the past two years the 1031 Exchange industry has been hit with two devastating and perception crushing scandals: Donald McGhan’s Southwest Exchange and Ed Okun’s 1031 Tax Group (see my 40+ articles on this disaster at deansguide).

I have followed Ed Okun and chronicled the devastation he wrought on so many investors. Since the beginning of this series in April of 2007, I was contacted by and consulted with Forbes magazine editor Mike Maiello, contacted by the US Trustee for the victims Gerald McHale, left sinister messages by the man I dubbed “my mystery caller” from Miami who made incredible predictions many which came true, contacted by over 20 of Okun’s victims and employees, was admonished by an attorney representing JPS Capital (read bottom of story in link!!!) whose principles have a very sleazy past and I have had 4 articles published by major media sources.

It’s been a long and crazy ride. But we may have seen the end of Ed Okun. After his appeal for bail was denied on May 9th in the Eastern District of Virginia, having lived in VA I will verify that they don’t mess around in the South, for what the judge termed “facts that point to Mr. Okun being a flight risk”, the Ed Okun saga may be over-maybe.

The Final Chapter?

Once prominent and now disgraced 1031 Tax Group swindler Ed Okun’s criminal trial date was set for October 20, 2008 in accordance with Eastern District of Virginia Judge Payne’s ruling. The date was announced during Okun’s failed attempt to persuade the court to grant him bail at his May 9th Bail hearing.

In US Trustee Gerald McHale’s “Trustee Newsletter #6″, McHale reported that the final pieces of jewelry had been recovered and were being readied for auction. In April according to McHale “the sales of the vehicles, boats, planes and water-craft (“Toys”) netted approximately $1.6 million for the bankruptcy estate.”

A mere pittance of the monies stolen or squandered. More galling is the fact that this represents roughly 1% of the total monies Okun stole during his retirement account plundering days. It isn’t nearly enough to compensate the professionals who are now standing first in line, ahead of the victims, to be paid for services meant to recover stolen assets (the victim’s retirement funds in many cases) for restitution.

To make matters worse, the official word, to my knowledge, has not come down yet as to how the IRS is going to handle each individual case. Will these victims be held accountable for tax bills on the money they had stolen from them?

Judge Lauck’s “Specific Findings of Fact that Okun was a Flight Risk”: If This Is True-Hidden Assets Must Exist

Norman’s Cay Cocaine Kingpin Carlos Lehder’s hideout courtesy cache.boston.com/…/10/05/1191605832_7450.jpg

After rereading the US Trustee’s Newsletter #6 a phrase struck me even though I read it a number of times. At the end of the newsletter in the last paragraph from Gerald McHale US Trustee for the Ed Okun case “Trustee Newsletter #6″:

“Edward Okun’s bail hearing was held on May 9, 2008 and Judge Lauck in the Eastern District of Virginia, the location of the criminal proceeding, denied bond and made specific findings of fact that Okun was a flight risk.”

“. . . specific findings of fact that Okun was a flight risk.”

What Can We Assume About The Judge’s Statement?

1. Ed’s “crying poor” plan, with nary a dime to his name, was an elaborate ruse to lull the court into thinking he was unable to run

2. Ed’s new court appointed attorney, usually reserved for people without any money, could be considered part of this ruse in order to persuade the court to free him on bond

3. If Ed were broke then why was his Miami attorney Rosenberg, who does not work for free, in Virginia during the bond hearing-that according to the “mystery caller”?

4. If Judge Lauck has proof that Okun is a flight risk then it is not difficult to deduce that there must be stolen funds hidden somewhere off shore or otherwise–you can’t escape the US Government on the cheap!

5. If Okun is a flight risk with hidden funds, it only makes sense that he would need accomplices in order to execute an escape plan–is the “mystery caller” such an accomplice? Hidden assets are not only monies but people willing to help or harbor an individual

6. The Bahamas, where Okun had his ill advised cash infusion smuggled, has been a notorious fugitive hideout for centuries having harbored Medillin Cartel heavyweight Carlos Lehder and international embezzler Robert Vesco

Department of Justice Approves deansguide: One of Three Sites Approved To Provide Contact Information To Okun Victims

In a request from the Department of Justice, deansguide has been approved as one of 3 sites that will be allowed to present contact information, to the victims of Ed Okun’s 1031 Tax Group rip off. The reason this contact information is so important to victims is that the DOJ wants to make sure they have all of the victims accounted for in this nightmare.

If you were a victim of an Ed Okun 1031 exchange and If you want to attempt to collect any type of recovery this is the contact information you need:

Kim Ulmet Victim/Witness Specialist
United States Attorney’s Office
Toll Free (866) 287-5410
Email Kim at
USAVAE.VAR@usdoj.gov

Ed Okun’s 20 Question Legacy: Who, What, Why, How Don’t Begin To Cover It

Imagine you placed your life savings into a 1031 exchange with the idea of upgrading or investing in property that would support your retirement. Imagine that there are no laws or a legal arm of the government to oversee and regulate this investment vehicle but you were unaware of this fact because it seems so ludicrous to think that such an important investment tool would NOT have laws regulating it’s exchangers. Then imagine that a man named Ed Okun comes along and buys your 1031 exchange group for pennies on the dollar with the intention, and right, to liquidate your cash as a “candy store” slush fund that would support a life style any middle eastern oil sheik could appreciate.

Finally imagine that Okun abuses and uses the Bankruptcy Court laws in this country to buy time in order to extract every last dime of equity out of property purchased with your money. US Trustee’s newsletters give some insight to the madness.

20 Questions, 20 Different Answers

1. How can our legal system lack safeguards, laws to prevent 1031 swindles?
2. How can a industry 1031 exchange association FEA remain inconsequential and irrelevant to consumers and objectively regulate it’s own “paying” members?
3. How can insurance companies trumpet their coverage of 1031 deals when in reality coverages are woefully underwritten, alarmingly difficult to navigate, and for all practical purposes no deterrant at all?
4. Why are so many Qualified Intermediaries, under qualified and without government regulated background checks, allowed to run free in our financial world?
5. Why is our national media ignoring this story? Is it not sexy enough?
6. Why are there more background checks when applying to adopt a pit bull or pit bull mixed puppy at your local SPCA than there are in starting a 1031 exchange?
7. Why did Senator Mike Machado the chair for the Committee on Revenue and Taxation in California (responsible for 1031 issues) not know what a 1031 exchange transaction entails, did not know the lack of laws regulating 1031 exchanges, why did he not know of the rip offs that were going on in California and around the country?
8. Why is it that when laws and regulations are discussed in the 1031 exchange industry I receive any objections from QIs? And why is it that these objections always center around the “freedom” of doing business, keeping government out of big business, or keeping “Big Brother” out of our business?
9. Why is the US government ready to bail out irresponsible home owners and criminal mortgage, banking, and appraisal industries?
10. Why do the victims of the Ed Okun’s crimes have to pay for the administration costs of lawyers, investment firms, tax professionals, real estate services, and maintenance costs associated with attempting to recover their own monies?
11. Why isn’t the US government offering a “bail out” package to Ed Okun victims to defray the $16 million dollars worth of recovery costs accrued so far?
12. Why are Realtors, pawnshop owners, property management firms, law firms, investment firms, service providers, luxury product providers, and any other entity that “knew” Okun was paying with stolen monies not being held accountable in some way for their part in Okun’s expenditures?
13. Where does a broke 65 year old go to work to survive the loss of his-her entire net worth and the possibility of IRS troubles?
14. How many other Qualifed Intermediaries have stolen or disappeared with monies, never to be caught, that have not been publicized because the size of the embezzlement was not sexy enough for media sources to cover the story?
15. Why is Obama or Clinton not mentioning this industry as a place of change-a rallying cry for their campaigns of change?
16. When will national laws be instituted, similar to drug laws, that outline criminal penalties on a federal platform as a deterrent to would be criminals?
17. When will a National 1031 Exchange Commission or Commissioners office be created as the czar with the power to ride shotgun over the industry?
18. Will local, state, and federal governments coordinate efforts together to identify and eliminate suspect 1031 Exchangers currently doing business?
19. Are prosecutors in the Okun case going to make this an “example” case as a warning to potential 1031 exchange criminals?
20. Were there individuals or groups operating within the Okun “organization” that have hidden assets making them equally liable for the loss of the 1031 Tax Group monies?

Sir Arthur Conan Doyle, Aristotle, Perry Mason: What Lies Beneath The Surface of The 1031 Tax Group Case?

 

Sir Arthur Conan Doyle the brilliant Scottish born Physician and creator of Sherlock Holmes utilized “Deductive Reasoning” to solve the unsolvable. Aristotle, the great Greek philosopher, utilized logic to become one of the most important founding figures in Western Philosophy. Perry Mason, a fictional television attorney, was a brilliant tactician with foresight and instinct.

What can we learn from these three figures, fictional and real, when applied to the Ed Okun 1031 Tax Group case?

Holmes

Sherlock would utilize Deductive Reasoning by taking the information in the case and then work from the general to the specific aka “Top-Down” approach.

Sherlock would begin with a theory about Ed Okun and his role in the 1031 Tax Group case. He would then deduce the information down into a “hypothesis” which he could test. Sherlock would then task Watson with remembering “observations” about Mr. Okun that would further address the hypothesis.

At this point “we are able to test the data a confirmation (or not) of our original theory.”

Analysis: Holmes would deduce that it is quite possible that hidden accomplices or a unknown “mastermind” may be behind the 1031 Tax Group case. With Watson’s constant nodding approval, Holmes could easily posit that “there is more than meets the eye here ole boy.”

Aristotle

Known as one of the father’s of Western Philosophy and founder of deductive reasoning, Aristotle’s greatest asset is his grounded belief in logic.

Aristotle would collect the facts, like Sergeant Friday, and logically eliminate what could not be proven. Working methodically, Aristotle would comb the financial records for connections that might shed light on Holmes deductive findings–unknown forces behind Mr. Okun.

Mason

With his hammer, detective Paul Drake, and his feather, the beautiful Della, Perry Mason would use his instinct to decipher the Okun mess. Is there a patsy, beside the investors, amongst the violators? Is Okun the front man or fall guy?

If nobody else exists in the Okun mess and he is the sole violator then why are there not more monies left over? Did this one man actually spend every last dime, pinch every last nickel from over blown refinanced properties, and did it all land in his lap as a result?

Your guess is as good as mine. Suffice it to say that there are many unanswered questions that may never come out let alone be answered. Like the old radio show only “The Shadow” knows.

Okun Attorney To Miami Herald: “Ed Is Confident He Will Be Proven Innocent In A Court of Law”

 Reuters.com published this article March 20, 2008

“Miami businessman Okun arrested in fraud scheme” is the Miami Herald’s Dan Christensen’s wonderful, succinct description of the events of the Ed Okun saga as it unfolds. Although most of the article is a recapitulation of information, some of the following passages paint a picture of recent events.

According to Okun attorney Rosen: ”He (Okun) was arrested early this morning by federal agents who came to his house while he was having breakfast with his wife and two-year-old child.”

Analysis: Mr. Rosen’s description of Mr. Okun’s arrest in front of Mr. Okun’s child is an obvious attempt to seek sympathy in the court of public opinion.

What about the unknown number of children who are sitting with their parents around a breakfast table trying to figure out what to do to make ends meet in the everyday real world?

What we know:

1. “Okun is being held without bond at Miami’s Federal Detention Center, according to his Coral Gables lawyer Michael Rosen.”

2. “Okun told The Miami Herald in December that his actions have been misunderstood.”

3. “More than a dozen alleged victims live in Florida, and include retirees, businessmen and even a former Broward Sheriff’s detention deputy.

4. The Miami Herald claims that Rosen will attempt to seek bail for Mr. Okun in Virginia

Analysis: Having lived in Virginia for 7 years, being told by natives that it is the northern part of the south, and witnessing the staunch very real conservatism the state supported–good luck

5. The “Simone” Factor: “The indictment says Okun had an employee overnight $15,000 in cash to him while he was aboard ”The Simone” while staying at the Atlantis Marina on Paradise Island in Nassau in January 2007.

Okun Attempting To Terminate Asset Transfer Agreement According To 1031 Tax Group Victim: “Indentured Servitude” Never Looked This Lucrative

Due to the litigious nature of this entire mess I am presenting the following comment as a service to the victims of the 1031 Tax Group. This comment is the sole opinion of the commenter–deansguide has no responsibility nor supports or opposes this comment. If you have read this blog you know how I feel–

For a true look at “Indentured Servitude” please go to the soulsurvivor channel on youtube.com for the real story.

The following comment was a reaction to my February 8, 2008 article, “California Victims of 1031 Exchange Rip Offs And Industry Professionals: You Better Look At This SB 1007 And Make Your Voice Heard Or Forever Hold Your Peace”, by long time reader, and Okun victim, Beth Callanan. It is a surreal yet real life drama unfolding and what Beth has to say should be very interesting to all 1031 Tax Group victims of Okun. Read this entire post to understand the how corrupt Ed Okun appears to be in this case.

The highlights or low points depending upon your stomach for absolute idiocy:

1. Okun is trying to “terminate” the Asset Transfer Agreement signed by him and his wife. Reasons sited– The Okun’s believe that the US Trustee breeched the ATA by failing to negotiate a “living allowance” and forcing them to live in AND I QUOTE BETH HERE “indentured servitude.”

“BRAVO! AMEN!! Couldn’t have said it better!

Thank you,
Beth Callanan (aka “Okun Victim”)

By the way, your readers might be interested to know that Okun has had the temerity to submit a motion to the Bankruptcy Court to terminate the Asset Transfer Agreement signed by him and his wife in October. The ATA is a pathetically inadequate vehicle supposedly intended to result in “restitution” to those whose exchange funds he absconded with (inadequate since he had freighted all those “assets” with debt before transferring their skeletal remains to the Trustee!). The premise for his motion is that the Trustee has breached the terms of the Agreement by failing to prevent others from going after the assets he was allowed to keep (his two manses valued by him at more than $20 million and his Hummer and Lambourghini!) AND (and this is really the best part) because the Trustee has failed to negotiate a “living allowance” for Okun, spouse and spawn (I told you this was good) such that they are now forced to live a life of “indentured servitude” (I kid you not — verbatim from the motion!) — although the abject level of “servitude” to which the Okuns have been subjected apparently allows for the acquisition of yet another vehicle — specifically, a Porche he has not yet surrendered and has asked to purchase from the Trustee. Not only that, but his victims will all be thrilled to know that the brilliant financier whose empire was built Ponzi-style on funds taken illegally from others has offered the Trustee his services to help manage the financially dessicated wasteland of properties he has so generously transferred to the Trustee. Be still my heart!

There is a hearing on the motion in NYC on Monday (Feb 11) that I suspect will be very well attended since Judge Glenn has commanded that Okun, the lovely Simone and their attorney actually appear and be prepared to testify! Anyone wanting to read the actual text of this travesty should go to the Committee website at http://www.committeeinfo.com/1031/case_dev.htm , go to “court documents, scroll down to “Pending Motions” pour yourself a stiff drink grab a big box of hankies and begin reading everything in “3. Motion to Vacate Order Approving Transfer Agreement.” It’s a real tear jerker.”

Feb 8, 11:01 PM— California Victims of 1031 Exchange Rip Offs and Industry Professionals: You Better Look At This SB 1007 And Make Your Voice Heard Or Forever Hold Your Peace