50 Things I Learned In 50 Years

What does it mean to turn 50 if you can’t share what you have learned with your friends? The following are 50 things, from business to life, I have learned, experienced, or watched in 50 years on this planet. If you have a list please let us hear it. The 50 things are categorized but not ranked~

Business

1. “Your word is your reputation”: say what you’ll do, do what you say
2. “Learning requires heart”: if you don’t want it, it won’t happen
3. “People want to buy they don’t want to be sold”: help people get what they want then you get what you want
4. “Preparation starts at home”: show up to work ready to go
5. “Don’t lie to yourself, it’s unbecoming”: if you don’t believe in your work, you will never succeed
6. “Writing is your publication platform”: learn to blog, express your ideas, create your public record the first jewel in the triple crown of building you as a brand
7. “Under promise and over deliver”: if you positively surprise people they will always react positively
8. “Telephone cold calling is the most underrated business strategy”: the science meets art of selling
9. “Multi Level Marketing is rarely a Win-Win situation”: me first with a huge helping of pie in the sky
10. “Technology is the life blood of business”: things change for the better
11. “Networking is a contact activity”: working the room is NOT networking
12. “Everyone should have a manual labor job in their background”: lessons in humility one jackhammer blast at a time
13. “Education is the great equalizer”: don’t squander your opportunity
14. “You make your own breaks”: capitalize when the moment arrives
15. “Overconfidence is a weakness”: check your ego at the door it might save your deal
16. “Mentoring is a two way street”: whether you are giving or receiving it is a win-win situation
17. “Dress for success”: if you look good you feel good
18. “Never underestimate your opponent”: it may come back to haunt you
19. “Public speaking is crucial to a career”: this is the 2nd jewel in the trip crown of building you as a brand
20. “Leadership is a skill you can develop”: this is the 3rd jewel in the trip crown of building you as a brand
21. “Listening is the skill”: this separates the stars from the pack
22. “Fear is contageous”: if you are fearful in any business situation it shows
23. “Give respect”: recognize excellence
24. “Expectations are dangerous”: if you have to ask you have never had to live up to them
25. “Winning isn’t everything”: it’s the only thing

Life

1. “Your family is your rock”: if you are blessed with a solid family you must never forget them
2. “Travel early and often”: experiencing other places at a young page accellerates personal growth
3. “Live somewhere else”: leave your hometown and live somewhere far away
4. “Learn to adapt”: if you can adapt you can survive
5. “Living overseas”: Athens, Greece is amazing
6. “Follow your dreams”: if you fear trying you will miss out
7. “College is irreplaceable”: personal growth that continues to show up years later
8. Working in the music business: scouting bands while in college a dream job
9. Basketball: playing in front of 5,000+ wishing I could make it a career
10. Room mates: in college at UC Davis 1980 the brother of King Huesen of Jordan
11. Training: one training session with 1980’s Professional Kickboxing Association light heavyweight champion Dennis Alexio
12. Robin Williams: partying with the legendary “Mork” without ever knowing it was him
13. My father: the greatest teacher of humility, graciousness, and toughness
14. My mother: my heart and the person who challenged me to be kind and positive
15. Saving a life: helping a friend make a new start
16. “Losing to learn”: losing teaches you about yourself, winning is not the same teacher
17. “Watching your childhood friend play in the NFL”: Monday night football at the ‘Stick and my friend is on the field as a starting wide receiver for the Atlanta Falcons
18. “Moderation is everything”: if you allow anything to control you, you haven’t learned a thing
19. Jet skiing in Greece: the greatest adventure in my life riding behind a 25 story cruise ship, inside the wake funnel, jumping through the wake 5 miles outside the Mykanos harbor
20. Regrets: being invited to tryout for my college basketball team by the coach and declining for nothing more than the fear of rejection
21. Redemption: learning from this fear and accepting every challenge and opportunity with open arms
22. “First Kisses”: Kim in 5th grade changed my view of girls forever
23. Wine: so much more than a drink. It’s a lifestyle, appreciation for history, part of my cultural background
24. “Friendship”: they last only when you participate, work at it, and give
25. “Humor”: nearly everything is better with a laugh

A Job Seeker’s Day In The World of Social Media

Chicago Sun-Times published this deansguide article 2-08-09

In my post “Job Seekers How Do You Organize Your Day?” I ask the reader to identify whether they were making 10 mistakes  in their job search. As a follow up to this article I want to outline a day in the life of a job seeker who utilizes social media for their job search efforts. No resumes are sent in the making of this day-just value.

Daily Structure for Job Seekers Utilizing Social Media

1. 8:00am Check email:

2. 8:30am Check Google Reader:  Job Seekers should have their feed reader filled with the following resources:

a.) Blogs authored by companies that are on your company target list
b.) Linkedin Q&A, where you can follow relevant information to your targeted niche
c.) Blogs authored by associations or networking blogs within your field of interest
d.) Twitter feeds from recruiters, career strategists, and your local job market news agencies

3. 9:30am Linkedin: Create a new message in the “What are you working on” tool on your home page. This tool provides exposure of your activities to your entire network:

deans-linkedin-twitter-box

4.  9:45am Linkedin: Ask or Answer a Question to demonstrate your expertise

5.  10:30am Blog:  Check your blog stats, answer any comments, monitor traffic for each blog article within the last week, check keyword and Referrers sections

6.  11:00am Write Article: Choose a subject from the research you performed in your Google Reader and email check.

7.  11:45am Lunch-Twitter: Broadcast your new article & mine for article resources

8.  12:45pm Social Media Networking: Deliver your value by leaving link(s) to your article(s) on your targeted company’s blog(s), mass media blogs, industry association sites, and influential blogs comment sections. Ex below Ryan Phillipenko left a link (in red) to his blog .

deans-comment-ex

9.  2:00pm Check Email-Twitter: Return all messages and reach out to one new contact

10. 2:30pm Research Networking: Look for offline networking meetings, events, meetups, tweetups, and charity events

11.  3:30pm Cold Calls: Call your network and offer your value. Offer to volunteer, provide free services, or offer any breaking news or resources that will help your networking partners

12.  4:00pm Twitter: Tweet your latest article, leave at least 5 new messages with valuable resource links, connect via conversation with at least 3 new people

13. 4:45pm Review Monster.com & Careerbuilder.com: stay connected to these sites

14. 5:15pm  Linkedin Answer Follow up: Look for follow up to questions that are niche specific to your job search.

15. 5:45pm  Read One Social Media Blog: Read at least one current article from social media experts Chris Brogan, Guy Kawasaki, Peter Kim, Pat Kitano, or InnerArchitect

Job Seekers and Entrepreneurs: Drive Your Competition Crazy

Reality Check

“If any of my competitors were drowning, I’d stick a hose in their mouth.” Ray Kroc

Harsh words no doubt but if you have ever read about McDonald’s founder Ray Kroc they fit his personality. Unlike Mr. Kroc’s take no prisoners attitude, Guy Kawasaki suggests that the best way drive your competition crazy is by “constantly innovating and serving your customers.”

If you are a entrepreneur or a job seeker go buy Guy Kawsaki’s latest book “Reality Check.” Begin on Chapter 66 with “The Art of Driving Your Competition Crazy” for the best practical advice on how to stand out, be memorable, and create your differentiating factor. Also check out the blog for more information. Although there are 8 important steps worth serious consideration, one stands out as the theme of Kawasaki’s advice: Focus on the Customer.

Focus on the Customer:  Entrepreneur

The irony here is that rather than trying to do something to your competitor(s), “the best way to drive your competition crazy is not to do anything to it.” The strategy to success is to focus on your customer by concentrating on great customer service, out-innovating the competition, and out-pricing them.

Focus on the Hiring Manager: Job Seeker

In the same respects there is an irony in this situation too. Instead of the job seeker attempting to out sell, out brag, or out maneuver his/her resume to be the best resume, the job seeker needs to concentrate on the hiring manager’s happiness.

This happiness can be achieved by creating value through a blog, a great Linkedin profile, and a social media broadcasting system. The goal for job seekers should be to remove the resume review process, time lost, costly hours wasted by a hiring manager who does not want to go through this process. By making a valuable case and delivering a message of value through target marketing, job seekers could completely remove this burden from the hiring manager.

Six Principles of Influence: Create Change That Benefits Your Customer

Influence is one of the most important factors in any business from the one-off entrepreneur to the largest global corporations. To understand the power of influence and persuasion, you must first understand the definition of influence.

The best definition is offered by one of the world’s leading experts on influence, persuasion, and negotiation Dr. Robert Cialdini as told in his interview for Guy Kawasaki’s great book “Reality Check.” Dr. Chialdini, a psychology professor at Arizona State University and Phd defines influence:

“Influence means creating change in some way. Change can be in an attitude, it can be in a perception, or a behavior. But in all instances, we can’t lay claim to influence until we can demonstrate that we’ve changed someone.”

Six Universal Principles of Influence

1. Reciprocation: People give back and treat you the same way you treat them

2. Scarcity: People are motivated to “seize the opportunities” of a limited offer that you provide to them if they realize the supply of this offer is rare or in dwindling availability

3. Authority: The greater your knowledge and credibility on a subject is the easier it is to persuade people

4. Commitment: People will feel the need and obligation to “comply with your request” if it is consistent with what they have publicly agreed (committed) to in your presence

5. Liking: The degree to which people know and like you is the main factor in their preference to say “yes” to you

6. Consensus: People love company in most decisions. If you give them evidence that others, just like them, have said yes to you, they then “will be likely” to say yes to you more often than not

Guy Kawasaki’s “Reality Check”: How Not to Choke

My Photo

Guy Kawasaki

In Guy Kawasaki’s wonderful book “Reality Check” we are treated to a two, that’s right 2, page chapter titled simply “How Not to Choke.” Choking may be the worst possible word to have attached to your career, athletic performance, and any moment that is meaningful in your life. To choke is to blow it by not having the nerve, losing your cool, blanking, freezing in the moment, or any number of horrific things a mind can do when it goes on lock down at the worst possible time. H3re are Guy’s ways to avoid choking.

Three Ways to Avoid Choking:

1. Avoid Negative People: stay away from negative people because what they say about you “can lead to you becoming what people say about you.”  Guy’s advice is to simply avoid them or “create product and serve them like hell.”

2. Invoke Positive Stereotypes: Positivity can “enhance performance.” Guy notes that Silicon Valley is a fantastic place for young people to start companies and that the “wunderkind” tag is a great example of a positive stereotype.

3. Frame or Reframe Yourself: Guy quotes Dr. George Lakoff  “you can control which groups identify with and the strength of that association.”

In essence the company you keep, the attitude you exude, and the perception you create are the most powerful ways to avoid choking in any situation. If you want more great advice, check out Guy’s favorite books. For even more great information, investigate Alltop.com Guy’s latest user content resource.

Real Time Airline Flight Tracking System: Holiday Time Management Tool

Do you have family and friends visiting you this Holiday Season? With the crush of travelers around this time of year, flight plans often get delayed or even canceled due to a number of issues. The ability to follow your family’s flight in real time, without the hassle of an airline 800 phone automated prompting system, can be a relief.

One of the greatest tools to follow your friends and  family’s airline travel progress is the Flight Tracker by myrateplan.com. This is a quick tool that tracks flights in real time providing a map of the plane’s location, departure times, any delay information, and estimiated time of arrival.

Time management around the holidays can be a challenge. With the Flight Tracking system, you can check one more task off your list.

Realtors Do You Understand the 5 Levels of Twitter Acceptance?

One of the best tools for measuring your commitment and understanding of the micro-blogging power Twitter.com comes from social media marketing superstar Rohit Bhargava the inventor of Social Media Optimization. In his article “The 5 Stages of Twitter Acceptance” Rohit has brilliantly and accurately outlined the evolution of many Twitter users. The graphic clearly highlights each stage and it acts as a measuring tool to those who have progressed forward in their acceptance.

The 5 Stages of Twitter Acceptance:

Imb_5stagesoftwitter_2
Courtesy RohitBhargava.typepad.com

My Acceptance Process for Each Level

1. Denial: One of my first blog posts of the summer of 2007 was to challenge Twitter’s validity as a tool-I instead described it ” Twitter becomes the equivilent of your well meaning but very nosy “Italian Grandmother.”

2. Presence: I simply went through the motions

3. Dumping: I inundated twitter with MY BLOG POSTS only a big no-no on any social networking site

4. Conversing: I reached the conversing stage 6 weeks ago as I really began to understand Twitter’s power 4 months ago. In this stage I knew I was progressing but I also knew something was missing-I was not a go-to objective source of information

5. Microblogging: I am now authentically building relationships 1×1, I am bringing in valuable information to the mix for other twitterers to ponder, and I am far more objective and willing to support the community

San Jose Mercury News Soliciting Twitter Users For Obama Inauguration Coverage

Courtesy San Jose Mercury News

In another example of mainstream media adopting a Web 2.0 social media tool for instant breaking news coverage, the San Jose Mercury news announced today that they are looking to partner with Twitterers who are attending the historic Obama inauguration ceremony. Twitter is one of the fastest growing social media sites; Twitter allows users to “broadcast” mini press release 140 character messages. It is a vital breaking news tool for both the mass media and the growing blogosphere. Thank you to Biz Stone, Co-founder of Twitter, for the tip that led to this article.

The Offer

The San Jose Mercury news offer is exposure for any Twitterer attending the inauguration:

1. Exposure Offer #1: According to the paper “You could have your tweets (messages) seen by thousands of Mercurynews.com readers.”

Tip: The “Merc” is asking for a short itinary of your plans for inauguration day. If I were attending, I send in my itinary and make sure it was compelling, interesting, and provided the most exposure for the newspaper.

2. Exposure Offer #2: If you are chosen to “work with” them your Tweets “could be published in the paper.”

Tip: The San Jose Mercury news is the driving force for business news, at the newspaper level, in Silicon Valley. In order for you to have your tweets chosen for publication, I would suggest this approach. Consider the most interesting factors at the inauguration and tweet about them. Identify the historical surroundings, describe the energy, compare it to MLK’s famous speech, be observant of any “celebrities” in the crowd, and provide any breaking news if you can catch it.

How to Qualify

1. Send your Twitter ID.

2. Write a “brief description inauguration day plans” to phockaday@mercurynews.com.

3. According to the Merc “We will take a look at your Twitter feed and determine if you qualify for our inauguration day coverage.

McKinsey Global Survey: Web 2.0 “Spurring Change” in Corporate Management and Organization

Web 2.0 tools are “spurring change” with corporate management and organization according to respected consulting giant McKinsey’s “Building the Web 2.0 Enterprise: McKinsey Global Survey Results.” The results of this report point to interesting trends that every corporation must analyze moving forward starting today. According to McKinsey “as Web 2.0 gains traction, it could transform the way companies organize and manage themselves, leading to what some have dubbed Enterprise 2.0.”

4 Reasons for Corporations to Consider Web 2.0 Tools:

1.  Interaction: 26% have reported Web 2.0 tools have “changed interactions with customers and suppliers”

2. Roles and Functions: 33% reported that new Web 2.0 technologies have “created new roles or functions inside their organizations”

3. Corporate Structure: 33% feel that Web 2.0 tools “are changing their corporate structure”

4.  Hiring and Talent Retention: 27% report Web 2.0 tools have changed the method that their company hires and retains employees.”

See Exhibit 6 “Spurring change”  for matrix

Okun Victim Speaks Out on LandAmerica: 1031 Exchanger’s Warning A Must Read

Due Diligence Warning: The following article is in it’s entirety a comment from a deansguide reader. I am neither an attorney or practicing investment professional. I support the victims of any 1031 exchange debacle yet the following are the opinions and thoughts of Beth Callanan solely and not necessarily supported in it’s entirety by dean guadagni or deansguide–but if you have read this blog you understand my thoughts on the 1031 industry. When considering any investment, always perform your due diligence first and protect yourself at all times.

Important Note: I assume and have seen some evidence that many 1031 exchange companies are viable, honest, and worthy companies. Not all 1031 exchangers or Qualified Intermediaries are suspect. Many people have built their life and reputation in this industry. It is the sleaze bags like Ed Okun that crush the good name of these other hard working business people.

*President elect Obama please pay attention while you are trying to fix Wall Street consider fixing this industry too.

My #1 Question: While reading this incredible comment sent to deansguide consider the one question I have asked but has never been answered. Why are many exchange companies allowed to invest exchanger monies when their sole purpose as a Qualified Intermediary is purportedly to simply execute the process of an exchange?

What is easily the longest, most detailed and greatest comment in the history of this blog, Beth Callanan one of the 350 Ed Okun 1031 Tax Group Victims, provides a MUST READ for any investor currently in a 1031 exchange or anyone consider this instrument.

What you are about to read will shock you, it will sadden you, it will anger you, and it will have your head shaking in disbelief. Normally I edit such long comments. But in this case I want to give Beth’s comment the full benefit. The only editing of this text was to underline, bold, or change font colors to bring out information.

———————————–

Beth Callanan’s comment:

“When will the IRS and the US Department of Justice (which, I understand, oversees bankruptcy courts) step up to the plate and rectify through regulation and reform the ongoing pillaging of innocent 1031 exchange victims first by unscrupulous 1031’s (or hilariously misnamed “qualified” intermediaries) and then by the bankruptcy courts wherein they all seek refuge once they have absconded with (Southwest Exchange, the 1031 Tax Group) or squandered (LandAmerica, the most recent case) the exchange funds entrusted to them? The following excerpts from documents filed in relation to the “bankruptcy” of LandAmerica’s 1031 are all too familiar and the fate of those exchangers all to painfully obvious to those of us who have already been there.

1031 Exchangers should beware:

1) Not to be lulled into assuming that the 1031 business of a corporation or entity whose other functions (title company, insurance, banking) are otherwise subject to federal regulation is also subject to regulation or oversight. Like LandAmerica, the corporate structure is such that the 1031 aspect is sufficiently separated to NOT be subject to such regulation.

2) Not to expect that any so-called “fidelity bonds” (endorsed by the FEA) presented to unsuspecting exchangers as assurance of the security of their funds in the event of “error or ommission” or criminal malfeasance, even where the face value greatly exceeds the amount of their exchange fund deposits, will be available to them to cover any loss of their funds since policies pay the 1031 (and become part of the “estate” in any bankruptcy), not the exchanger, and in any case the insurers will insist that the “per occurrence” terminology refers to the total loss of funds, not just their individual funds. (Since exchangers can’t possibly know the total amount of funds on deposit with the 1031, they can’t possibly know if the face value of coverage is adequate to cover them and, if the funds go to a bankruptcy estate, they can expect that the total will go to cover “administrative fees” of that court in any case.)

3) that even a segregated account may not protect them. While posters to this site have discussed the advisability of insisting that your exchange funds be deposited in a segregated (NEVER COMMINGLED!) account associated with your name and Tax ID number, and suggested that any transfers require the signature of your attorney or a bank officer (to implicate the bank in the liability for any improper transfers), as is clear from LandAmerica’s filings (and the bankruptcy court’s track record in the Okun 1031 embezzlement), the court may nevertheless insist that your exchange funds are property of the bankruptcy estate and thus available to pay its own “adminstrative fees.”)

4) that their funds are deposited in secure bank accounts and not invested at the discretion of the 1031 in any other money making scheme (the supposed benefit of which the exchanger will never see in any case).

5) even deposit in a banking institution is problematic since the FDIC coverage limit, were the bank to go under (an increasingly likely possibility in this economic climate), is $250,000 per depositor. If the 1031 is the “depositor” then any exchange funds in their name are clearly at risk since they’d be expected to have millions on deposit at any given time — and if the exchanger is considered the depositor anything over the FDIC limit is at risk. How does the FEA propose to protect exchangers given that scenario?

6) bankruptcy court will almost certainly guarantee the absolute loss of their funds. Rather than construing exchangers of 1031’s in bankruptcy as victims of negligence, malfeasance or criminal activity or their exchange funds as “held in trust” and therefore exempt from inclusion in debtors’ estates (as the exchange agreements in the case of Okun’s 1031 Tax Group explicitly stated), they have so far relegated exchangers to the status of “unsecured creditors” or investors and thus the last in line to receive any of the funds actually retrieved from the increasing number of 1031 failures.

The bankruptcy process is beyond broken and in need of reform. So far (18 months into it), the costs of Okun’s having put his 1031’s into bankruptcy are $24 million against which less than $2 million has been retrieved from the liquidation of his various “assets.” (The court will claim that it has “retrieved” $10 million, but nearly $8 million of that amount were exchange funds held by a bank in Colorado that Okun had not managed to steal – the costs of the court action to seize those being among the “admin fees” exchangers funds have already been used to partially offset adding the grossest insult to that injury!)

Excerpts from recently filed LandAmerica documents:
(anything in italics are my notes — boldfacing was added by me for emphasis)

From the affadavit of G. WILLIAM EVANS, CHIEF FINANCIAL OFFICER OF LANDAMERICA FINANCIAL GROUP, INC. AND VICE PRESIDENT
OF LANDAMERICA 1031 EXCHANGE SERVICES, INC., IN
SUPPORT OF CHAPTER 11 PETITIONS AND FIRST DAY PLEADINGS

Footnote page 10 (of 17):
3 LES expects that there may be competing claims made against and disputes regarding the Exchange Funds (especially those that have been commingled), including whether such funds constitute property of the estate. LES intends to seek a determination from the Court as to the appropriate characterization of such funds.

(Note to potential exchangers – be sure your funds are in SEGREGATED ACCOUNTS, and not allowed to be commingled, but also note that even those are segregated are not assured protection unless some signature other than the 1031 is required to transfer them — ideally a bank officer’s, so if they are moved improperly the bank’s assets are liable to cover your loss. However, in another cautionary development the outcome of which may put ALL exchange funds at risk, even those in traceable segregated accounts, LES in its bankruptcy petition has apparently already made the claim that even the segregated account funds are their property and not the property of the exchangers (see the Adversary Motion below.) )

(ii) Unregulated Operations (footnote “2″)

(Note: LES, LandAmerica’s 1031, “LES”, appears correctly under “Unregulated Operations”)

(Footnote “2″ reads as follows:
“2. Although not regulated by a State Department of Insurance, many of LandAmerica’s “unregulated” subsidiaries are in fact regulated by different types of State or Federal agencies.”)

Unfortunately, as we’ve all discovered, the 1031 industry is TOTALLY UNREGULATED by any federal government entity, least of all the IRS whose regulations created this monster, and hardly regulated by the few states (Nevada and California?) that have made even a feeble attempt to promulgate regulations that would demand licensing, accountability, transparency, criminal or civil penalties or other meaningful oversight.

9. In addition to underwriting title insurance, LFG subsidiaries provide, among other things, appraisals, home inspections, and warranties for residential real estate transactions and perform specialized services primarily to its national and regional mortgage lending customers, such as real estate tax processing, flood zone determinations, consumer mortgage credit reporting, default management services, and mortgage loan subservicing.

10. LES, one of the Debtors, is one of these subsidiaries. Prior to the Petition Date, LES operated as a “qualified intermediary” under section 1031 of the Internal Revenue Code (the “Tax Code”). Generally, the Tax Code imposes taxes when property is sold or transferred and a gain is realized. Pursuant to section 1031 of the Tax Code, if a taxpayer adheres to certain guidelines, then all or a portion of the gains from the disposition of business or investment property can be deferred or reinvested into a new replacement property. These deferred gains, as well as the gains from the new property, are not taxed unless and until the new property is transferred and fails to qualify for tax deferral. To qualify for such tax deferral, the taxpayer must structure the transaction as an exchange of one property for another of “like kind.” 1031 exchanges typically are facilitated by a qualified intermediary, like LES.

11. During the course of its operations, LES entered into agreements (“Exchange Agreements”) with its customers whereby it would acquire the net proceeds of the sales of relinquished properties (the “Exchange Funds”) in accordance with requirements of the Tax Code in order to facilitate a like-kind exchange. Pursuant to the Exchange Agreement, LES takes sole and exclusive possession, dominion, control and use of all Exchange Funds, including interest, if any, earned on the Exchange Funds until the earlier of the consummation of a like-kind exchange or such other date or event as provided in the Exchange Agreement (as applicable, the “Termination Date”). The Exchange Agreements further provide that a Customer shall have no right, title, or interest in or to the Exchange Funds or any earnings thereon and that a Customer shall have no right, power or option to demand, call for, receive, pledge, borrow or otherwise obtain the benefits of any Exchange Funds, including interest, if any, earned on the Exchange Funds except that the balance of Exchange Funds, if any, held by LES after applying such Exchange Funds in accordance with the Exchange Agreement shall be paid to the Customer on the applicable Termination Date. As of the Petition Date, the Exchange Funds maintained by LES included funds acquired from approximately 450 customers pursuant to separate Exchange Agreements. While not the norm, approximately 50 of the Exchange Agreements (each, a “Segregated Exchange Agreement”) required LES to segregate the applicable Exchange Funds (the “Segregated Exchange Funds”). The remaining approximately 400 Exchange Agreements have no segregation requirement.

Segregated accounts SHOULD be “the norm!”

400 new innocent exchangers are about to enter bankruptcy hell wherein they will find the lifesavings they entrusted to their 1031, to the extent they weren’t already squandered on bad investments by LES, dissipated over months/years of self-perpetuating litigation the real point of which appears to be to tally up billable hours and “administrative fees” of court appointed functionaries to the point that they quickly outstrip any potential recoupment of their exchange funds. Case in point: as of September 2008, nearly 18 months after the 1031 Tax Group (Ed Okun’s grand embezzlement scheme) filed for bankruptcy, his 350 victims have received nothing, the court has retrieved less than $2 million from liquidating Okun’s assets but has toted up and filed claims for $24 million in “administrative fees” and they stand first in line with their hands out before any of Okun’s (or LES’ )victims will receive a dime!)

(ii) LES

16. As of the Petition Date, approximately $138.6 million in Segregated Exchange Funds were maintained in segregated LES accounts. These funds equal or exceed the claims of customers that are a party to one or more Segregated Exchange Agreements. In addition, as of the Petition Date, LES maintained approximately $46 million backed by investments in government treasury bonds and approximately $201.7 million (par value) in auction rate securities. These assets, which represent Exchange Funds acquired from approximately 400 customers (the “Commingled Customers”), are commingled. In the aggregate, Commingled Customers hold claims equal to approximately $191.7 million against LES.

If I’m reading the foregoing accurately, 50 exchangers had deposited $138.6 million with LES in segregated accounts which miraculously LES still has on deposit so they may actually see their funds again if they don’t get sucked into bankruptcy court and that court doesn’t acquiece to LES’ claims that even the segregated accounts are their property, not the exchangers’, as claimed in LES’ bankruptcy petition. In the Okun case, the bankruptcy court actually authorized the attorneys for the Debtors to pursue the exchange funds still held by the Colorado Capital Bank arguing that those funds were the property of the 1031, not the exchangers — some of which have since been used to pay adminstrative fees of the bankruptcy proceeding! The cozy “settlement” negotiated by the debtors attorneys with those of the bank provided for the bank and its attorneys to receive more than $800,000 in fees and an additional quarter million to cover future cost that might arise — all of which will come out of exchangers’ own funds — effectively including the costs of both sides of that litigation! Only in bankruptcy court would this not seem a huge step “Through the Looking Glass”!).

Of the $191.7 million LES owes its other 400 exchangers whose funds were “commingled,, it seems to have on deposit only $46 million (about 24% of what it owes those exchangers) having effectively blown the balance ($145.7 million) on a get rich quick scheme for its own benefit (does anyone seriously believe this investment of exchanger funds was intended to benefit the exchangers as LES will no doubt try to argue? — aka the Okun argument, which his defense attorneys appear poised to make in criminal court — “I was trying to get my clients a better return on their exchange funds, Your Honor…!” — pulleez!) Since those investments effectively have no monetary value today (see their sad, sad tale below), the bankruptcy court functionaries will certainly file motions to seize the $46 million because it represents “commingled accounts” and is thus considered easy pickins with which to pay their administrative fees…

Page 8
Since 2002, LES invested a portion of the Exchange Funds transferred to it in investment grade securities rated A or stronger at the time of the investment, including auction rate securities (“ARS’s”) backed by federally guaranteed student loans. An ARS typically is a debt instrument with a long-term nominal maturity for which the interest rate is regularly reset through a dutch auction. Until earlier this year, banks pitched ARS’s to corporations and wealthy individuals as highly-liquid and safe alternatives to cash, and LES’s investment goals on the Exchange Funds were to maintain the full liquidity necessary to meet customer claims.

19. The ARS’s purchased by LES, which were sold to it by certain financial institutions, were highly liquid for many years. Unfortunately, as has been widely publicized, the ARS market froze earlier this year and LES has been unable to liquidate the ARS’s previously purchased at any price near their par value. Indeed, although the aggregate amount of the cash and par value of the ARS’s held by LES exceeds the value of all funds received from LES’s customers, LES’s inability to sell, or borrow against, these securities ultimately precipitated its decision to cease additional customer transactions and terminate operations.

The boldfaced lawyerly-crafted sentence above is one of my favorites — a carefully parsed deliberately obtuse way of saying “Through greed and stupidity, we lost nearly $147 million of exchangers’ funds entrusted to us.” (Not to mention “…and what we didn’t lose, we’re now claiming belongs to us”!)

The following is excerpted from an Adversary Motion filed by Lubexpress, a company, which apparently had $9 million in what it thought was a segregated exchange account with LES that it is trying to get returned (good luck to them…As a non-lawyer myself, but based on the judicial abuse to which we Okun bankruptcy victims have been subjected, seems to me other LES segregated account holders would be well advised to join this motion as a class to minimize their individual costs, lend strength and expedite their own claims. Time is of the essence, you poor things…!):

15. On the Petition Date, counsel for LES stated on the record at the first day hearing
that LES (i) does not intend to consummate the Section 1031 exchanges that are the subject of its executory exchange agreements, and (ii) believes that the funds it is holding in both segregated and commingled bank accounts constitute property of LES’s estate. Further, the Court has entered an order prohibiting LES from, among other things, transferring funds from such bank accounts. These events constitute a breach of the Exchange Agreement.

19. LES is holding the Funds in trust for the Plaintiffs. LES and the Plaintiffs had the
capacity and intent to enter a trust agreement and the Exchange Agreement constitutes such agreement. The relinquished properties first constituted the res of the trust, which were then substituted by the Funds. The Funds are segregated in the Accounts and are clearly identifiable. LES is the trustee and the Plaintiffs are the beneficiaries of the trust.

20. Under the Exchange Agreements, the Plaintiffs and LES affirmatively agreed that
the Funds would be held for the benefit of the Plaintiffs. Section 6(b) of the Exchange
Agreement states that “LES IS ENTERING THIS EXCHANGE AGREEMENT SOLELY FOR THE PURPOSE OF FACILITATING TAXPAYER’S EXCHANGE OF THE RELINQUISHED PROPERTY FOR THE REPLACEMENT PROPERTY.”

21. Section 6(d) of the Exchange Agreement states that “LES shall only be obligated
to act as an intermediary in accordance with the terms and conditions of th[e] Exchange Agreement and shall not be bound by any other contract or agreement, whether or not LES has knowledge of any such contract or agreement or of its terms or conditions.”

22. Section 3(a) of the Exchange Agreement sets forth the requirement that LES hold
the Funds in the Accounts associated with the Plaintiffs’ names and taxpayer identification numbers.

23. Section 3(b) of the Exchange Agreement provides that the Plaintiffs get the
benefit of the accrued interest and assume the responsibility to pay any income tax on the interest.

24. Nothing in the Exchange Agreement confers to LES any beneficial interest in, or
risks associated with ownership of, the properties or the Funds. Rather, the Exchange
Agreement requires LES to accept the relinquished properties, transfer them to the buyers, hold the proceeds for 180 days or less, accept title to the acquired properties, and then transfer them to the Plaintiffs.

25. Section 7 provides that LES’s compensation for this trustee service is limited to a
$1,200 plus reimbursement of expenses. In contrast, the Funds exceed $9 million.

26. By reason of the foregoing, the Plaintiffs seek a declaratory judgment under
section 541 of the Bankruptcy Code that LES is holding the Funds in trust for the Plaintiffs and are thus not property of LES’s estate.

If I had any money left with which to bet (no longer a temptation thanks to Ed Okun and the Bankruptcy Court of New York’s Eastern District), I’d lay odds that the bankruptcy court will deny the motion since by LES’ own admission, the lion’s share ($138.6 million) of the exchange funds it currently holds are in those segregated accounts (plus a pitiable 24% ($46 million) of what it owes the poor exchangers whose funds were “commingled.”) Since bankruptcy court is a self-financing enterprise, all the court appointed functionaries will fight valiantly to make sure that $138.6 million is construed as assets of the “estate” and available to pay their salaries and expenses over the next several years thus fully insulating them from the nation’s current economic woes while plunging the innocent exchangers, whose funds they rightfully are, into financial ruin.