matt138_IHB
New member
So the PO'd investors would like new management but probably need a majority. What is next step? Wait it out and follow the court showdown?
Seeking Advice - Point Center Financial Investment
- Thread starter matt138_IHB
- Start date
NEW -> Contingent Buyer Assistance Program
graphrix_IHB
New member
I know that there are not that many posts here besides matt138 and Nickel, but there are a lot of views. Everyone is looking, so please keep posting guys. The info you are posting is awesome, at least to this uber nerd who thought something was fishy back in April. I may join in on the fun, and look into this some more and give my opinion of some the values on the deals gone sour. Anyway, keep posting you guys, it's good stuff even if you don't have a lot of responses.
matt138_IHB
New member
Disclaimer - this was retyped by me and is not an exact representation and may include spelling errors and abbreviations but the meat of the article and all fancy adjectives have been included. Reader may experience warm & fuzzy sensation during and after reading. For continued sensation, re-read.
Investor Insight Spring 2009
A message from the president
Leading us to a Prosperous Future
RE Investors understand that the real estate market is cyclical, and always has been. There were RE downturns in the 70s,the 80s,and the 90s. Now we face the granddaddy of them all, the downturn of the new millennium. We successfully managed investor money through the earlier downturns, which served as excellent battle hardening for the incredible challenges we face today. We can't control the economy or the RE market anymore than we can control the weather. What we can do is lead us through the storm and manage the outcome.
As you know, PCF's primary focus has been on lending and loan servicing. Today our focus is primarily on the management of foreclosed RE, known in the industry as "Real Estate Owned" or "REO". Thousands of hours a month go into managing and preserving REOs on behalf of PCF's investors. There are a few individuals who think they can do a better job managing the portfolio themselves, and profit while changing horses in the middle of a raging river. I am personally grateful for the overwhelming majority of you who have expressed your continuing support. Implicit in that vote is your understanding that managing and maintaining REO properties, not just physically, but all the development entitlements as well, involves a tremendous amount of time and expense and comes at a time when cash flow into Point Center is at an all-time low for the size of the portfolio under management.
We are especially thankful to those of you who responded to the calls for additional cah requited for the maintenance and management of the REO properties you personally own. You understand that if the property is allowed to deteriorate or the entitlements lapse, the value may be reduced to a fraction of what it is today. Without you, we simply cound not finance the work and maintenance in progress. You are owners of real estate and there are certain responsibilities attached to that ownership. Money contributed to maintain the properties earns interest and is paid back first when the property is ultimately sold. Each request for funds identifies why the money is needed and where it will go, including the management fees that keep Point Center afloat. Many of you have inquired what services are provided by point center so we have included a separate article in this newletter to explain what we provide on your behalf. If you have received a request for additional funding and have not responded, pleases forward your contribution today.
It is in your best interest that we keep these properties until the market recovers. We receive calls from so-called "vulture funds" every day. These are private investors and Hedge Funds lokking the "pick the bones" of desperate property owners that are in dire need of immediate cash flow. These investores and capitalized Hedge Funds are buying RE for pennies on the dollar and holding until the RE market recovers. Point Center is determined to see future returns go to its investors, not vultures or Hedge Funds. That is why we are holding the majority of the assets rather than unloading them at wholesale.
FACT: 14 of Point Center's major competitors, representing over $4.5 billion in invested capital, are either bankrupt or in serious trouble. Point Center has considerably trimmed its expenses to the bone so that we can be here for the long haul. This market will turn around, and together with you, we plan to prosper again.
-dan harkey, president
Clean Bill of Health - Twice!
Clean bill of health #1:
Prompted by a small rogue group of investors, Point Center recently underwent and extensive eight week audit performed by its primary regulator, the DRE. Point Center is pleased to report that we received what was essentially a clean bill of health. There were no negative findings whatsoever with regards to our trust fund accounting. For the last thirty years, your money has been, and continues to be, properly handled and accounted for by PCF.
Clean bill of health #2:
Not satisfied with the positive outcome of the general audit, our small rogue group of investors took a second bite at the apple and directed the DRE at one specific loan that they believed was not underwritten and disclosed properly. Once again, after reviewing the documentary evidence in the PCF files, the DRE was satisfied and issued a letter saying that "further investigation is not warranted".
<span style="color: gray;">There is even a "good news" section but I refuse to type this fluff. Success stories include successfully foreclosing, forebearance agreements, Deeds in Lieu, stipulated bankruptcy and co-auction, loan modification, and ONE loan paid in full w/ interest before maturity - all the while saving investors thousands in extra costs. Gold star for Dan-o and crew!</span>
Point Center in the News
Media Report
The agenda of the media is very specific. They stir the pot and create sensation solely for the purpose of selling papers and increasing web traffic. Sensationalism and negativity are the food sources of the media. An guess who got thrown into the pot? Our very own PCF! Why, you ask? Or, how did a small private company get such attention? Both questions are easily answered with one word, POLITICS! As most of you already know Dan's wife, Diane Harkey, was recently elected to the California State Assembly. That success made Diane and Dan into public figures sesceptivle to teh media.
The lawsuit recently filed against PCF, Dan Harkey, and Diane Harkey has made headlines in more than one area of the media. From local tv news to newspapers to the blogs, PCF has definitely been in the limelight in a negative way. The plaintiff's are using Diane's political standing to get media attention. Their allegations are nothing but mere illusions of truth and have no real factual backing. The vast majority of investors who know us have paid very little attention to all the hoopla, and the public at large that tends to believe what they read will eventually be enlightened. To all our supportive investors: we greatly appreciate all your encouragement during these turbulent times.
There are a few quotes worth noting in the Organizational Overview section:
"In addition to managing investment requests, this department (Investor Relations) provides comprehensive information about our products so that our investors can make informed decisions."
"to protect the interest of investors"
"and ethical business practices"
I remember reading a "REAL-A-TOR" article posted on the IHB where the guy tears into Schiff. The person posting it added his/her commentary throughout the article and it was genius. I need that person here.
Investor Insight Spring 2009
A message from the president
Leading us to a Prosperous Future
RE Investors understand that the real estate market is cyclical, and always has been. There were RE downturns in the 70s,the 80s,and the 90s. Now we face the granddaddy of them all, the downturn of the new millennium. We successfully managed investor money through the earlier downturns, which served as excellent battle hardening for the incredible challenges we face today. We can't control the economy or the RE market anymore than we can control the weather. What we can do is lead us through the storm and manage the outcome.
As you know, PCF's primary focus has been on lending and loan servicing. Today our focus is primarily on the management of foreclosed RE, known in the industry as "Real Estate Owned" or "REO". Thousands of hours a month go into managing and preserving REOs on behalf of PCF's investors. There are a few individuals who think they can do a better job managing the portfolio themselves, and profit while changing horses in the middle of a raging river. I am personally grateful for the overwhelming majority of you who have expressed your continuing support. Implicit in that vote is your understanding that managing and maintaining REO properties, not just physically, but all the development entitlements as well, involves a tremendous amount of time and expense and comes at a time when cash flow into Point Center is at an all-time low for the size of the portfolio under management.
We are especially thankful to those of you who responded to the calls for additional cah requited for the maintenance and management of the REO properties you personally own. You understand that if the property is allowed to deteriorate or the entitlements lapse, the value may be reduced to a fraction of what it is today. Without you, we simply cound not finance the work and maintenance in progress. You are owners of real estate and there are certain responsibilities attached to that ownership. Money contributed to maintain the properties earns interest and is paid back first when the property is ultimately sold. Each request for funds identifies why the money is needed and where it will go, including the management fees that keep Point Center afloat. Many of you have inquired what services are provided by point center so we have included a separate article in this newletter to explain what we provide on your behalf. If you have received a request for additional funding and have not responded, pleases forward your contribution today.
It is in your best interest that we keep these properties until the market recovers. We receive calls from so-called "vulture funds" every day. These are private investors and Hedge Funds lokking the "pick the bones" of desperate property owners that are in dire need of immediate cash flow. These investores and capitalized Hedge Funds are buying RE for pennies on the dollar and holding until the RE market recovers. Point Center is determined to see future returns go to its investors, not vultures or Hedge Funds. That is why we are holding the majority of the assets rather than unloading them at wholesale.
FACT: 14 of Point Center's major competitors, representing over $4.5 billion in invested capital, are either bankrupt or in serious trouble. Point Center has considerably trimmed its expenses to the bone so that we can be here for the long haul. This market will turn around, and together with you, we plan to prosper again.
-dan harkey, president
Clean Bill of Health - Twice!
Clean bill of health #1:
Prompted by a small rogue group of investors, Point Center recently underwent and extensive eight week audit performed by its primary regulator, the DRE. Point Center is pleased to report that we received what was essentially a clean bill of health. There were no negative findings whatsoever with regards to our trust fund accounting. For the last thirty years, your money has been, and continues to be, properly handled and accounted for by PCF.
Clean bill of health #2:
Not satisfied with the positive outcome of the general audit, our small rogue group of investors took a second bite at the apple and directed the DRE at one specific loan that they believed was not underwritten and disclosed properly. Once again, after reviewing the documentary evidence in the PCF files, the DRE was satisfied and issued a letter saying that "further investigation is not warranted".
<span style="color: gray;">There is even a "good news" section but I refuse to type this fluff. Success stories include successfully foreclosing, forebearance agreements, Deeds in Lieu, stipulated bankruptcy and co-auction, loan modification, and ONE loan paid in full w/ interest before maturity - all the while saving investors thousands in extra costs. Gold star for Dan-o and crew!</span>
Point Center in the News
Media Report
The agenda of the media is very specific. They stir the pot and create sensation solely for the purpose of selling papers and increasing web traffic. Sensationalism and negativity are the food sources of the media. An guess who got thrown into the pot? Our very own PCF! Why, you ask? Or, how did a small private company get such attention? Both questions are easily answered with one word, POLITICS! As most of you already know Dan's wife, Diane Harkey, was recently elected to the California State Assembly. That success made Diane and Dan into public figures sesceptivle to teh media.
The lawsuit recently filed against PCF, Dan Harkey, and Diane Harkey has made headlines in more than one area of the media. From local tv news to newspapers to the blogs, PCF has definitely been in the limelight in a negative way. The plaintiff's are using Diane's political standing to get media attention. Their allegations are nothing but mere illusions of truth and have no real factual backing. The vast majority of investors who know us have paid very little attention to all the hoopla, and the public at large that tends to believe what they read will eventually be enlightened. To all our supportive investors: we greatly appreciate all your encouragement during these turbulent times.
There are a few quotes worth noting in the Organizational Overview section:
"In addition to managing investment requests, this department (Investor Relations) provides comprehensive information about our products so that our investors can make informed decisions."
"to protect the interest of investors"
"and ethical business practices"
I remember reading a "REAL-A-TOR" article posted on the IHB where the guy tears into Schiff. The person posting it added his/her commentary throughout the article and it was genius. I need that person here.
matt138_IHB
New member
What is the quickest way to post a new letter from Point Center? Is a pdf attachment a good idea? There is an LA times article 5/4/09 business section on Point Center and the new letter from Harkey is the rebuttal.
graphrix_IHB
New member
<a href="http://www.latimes.com/business/la-fi-hardmoney4-2009may04,0,111546.story">Here is the LA Times article</a>.
Try to post the PDF, if it doesn't work, then PM me, and I can hopefully figure something out. This guy needs to go down, he went Scarface on the Kool-Aid, and he needs to be brought to light.
BTW, it's nice to see IHB the fifth link when you do a google search for center point financial.
Try to post the PDF, if it doesn't work, then PM me, and I can hopefully figure something out. This guy needs to go down, he went Scarface on the Kool-Aid, and he needs to be brought to light.
BTW, it's nice to see IHB the fifth link when you do a google search for center point financial.
profette_IHB
New member
[quote author="graphrix" date=1242228369]<a href="http://www.latimes.com/business/la-fi-hardmoney4-2009may04,0,111546.story">Here is the LA Times article</a>.
Try to post the PDF, if it doesn't work, then PM me, and I can hopefully figure something out. This guy needs to go down, he went Scarface on the Kool-Aid, and he needs to be brought to light.
BTW, it's nice to see IHB the fifth link when you do a google search for center point financial.</blockquote>
This is a great thread. It demonstrates the sharp minds at IHB are the best financial/real estate consultants on the net.
Just ask the folks over at Brightwater in Huntington Beach... ;-P
Try to post the PDF, if it doesn't work, then PM me, and I can hopefully figure something out. This guy needs to go down, he went Scarface on the Kool-Aid, and he needs to be brought to light.
BTW, it's nice to see IHB the fifth link when you do a google search for center point financial.</blockquote>
This is a great thread. It demonstrates the sharp minds at IHB are the best financial/real estate consultants on the net.
Just ask the folks over at Brightwater in Huntington Beach... ;-P
zubs_IHB
New member
I just read that article in the LA Times. At the end of it one of the investor's who is 78 had to take a reverse mortgage on his home to stay solvent, but still has trust in Point Center. He believes he'll get everything back when realestate turns around. The dudes 78. He's gonna have to wait another 10 years before he sees a turnaround.
It seems Harkey really is not a bad guy in this. He got caught up drinking koolaid, and now he is in trouble. He acted like most of the major banks during the realestate boom. Basically he pooled private money (Hard Money Loan) to lend to developers that couldn't get regular bank loans. The flaw in his strategy was that he thought realestate only goes up so if a developer couldn't pay, he'd just take over the underlying asset. In fact, he still thinks that the realestate turn around is coming soon. The only problem is IHB has proven time and time again that 2006 peak prices will not come back for atleast another 10 years.
It seems Harkey really is not a bad guy in this. He got caught up drinking koolaid, and now he is in trouble. He acted like most of the major banks during the realestate boom. Basically he pooled private money (Hard Money Loan) to lend to developers that couldn't get regular bank loans. The flaw in his strategy was that he thought realestate only goes up so if a developer couldn't pay, he'd just take over the underlying asset. In fact, he still thinks that the realestate turn around is coming soon. The only problem is IHB has proven time and time again that 2006 peak prices will not come back for atleast another 10 years.
IrvineRenter_IHB
New member
[quote author="zubs" date=1242265466]In fact, he still thinks that the realestate turn around is coming soon. The only problem is IHB has proven time and time again that 2006 peak prices will not come back for atleast another 10 years.</blockquote>
It's worse than that. The market will not turn around until the highly leveraged like this guy are wiped out. Every highly leveraged owner must sell, it is only a matter of time. If there is any price appreciation, the over-leveraged will sell into the rally to get out from under the debts. That will in turn kill the rally. The over-leveraged cannot wait out the downturn because they are the ones that caused it.
It's worse than that. The market will not turn around until the highly leveraged like this guy are wiped out. Every highly leveraged owner must sell, it is only a matter of time. If there is any price appreciation, the over-leveraged will sell into the rally to get out from under the debts. That will in turn kill the rally. The over-leveraged cannot wait out the downturn because they are the ones that caused it.
Geotpf_IHB
New member
[quote author="cricky" date=1248135197]interesting.. im going to check this one out.. thanks a lot
</blockquote>
That's some random spam! (click the line for some link in French)
</blockquote>
That's some random spam! (click the line for some link in French)
IrvineRenter_IHB
New member
[quote author="Geotpf" date=1248138396][quote author="cricky" date=1248135197]interesting.. im going to check this one out.. thanks a lot
</blockquote>
That's some random spam! (click the line for some link in French)</blockquote>
The spammers are getting more creative.
</blockquote>
That's some random spam! (click the line for some link in French)</blockquote>
The spammers are getting more creative.
matt138_IHB
New member
The saga continues:
Dear Fellow Point Center Investors,
My name is Lloyd Charton. I am an investor with Point Center. Dan Harkey was my friend and neighbor. He remains my neighbor.
I retired in 2003 from nearly 30 years as a litigator, and soon thereafter Mr. Harkey asked me to invest money with him.
I found him to be very convincing and listened to him attentively. We had many discussions in my home and his, and attended social events including dinners and parties. He charmed my socks off.
He said he would be my loan manager and I could trust him to do all the due diligence necessary to protect my investment. He said he had a very experienced underwriting team. He described a "very safe, well diversified lending program for first trust deeds on commercial real estate."
Isn't this what he told you as well?
It turns out that a comprehensive, professional review of the underwriting and loan files reveals he did virtually no due diligence at all.
He called this program the 'National Financial Lending Pool' (or NFL), and said he had been doing this for 30 years. It turns out that Mr. Harkey began this business model in 2002 and seriously altered it in 2004 to a new model without the critical diversification clause. It began to fail very quickly and was so disastrous that by 2007 Mr. Harkey would not honor requests for redemption of shares.
Mr. Harkey has blamed the demise of his business on the economy. Not so. A large group of us have filed an action in Orange County Superior Court and in connection with the action have just conducted an extensive review of the NFL Pool, based on records dating back to 2004, and its 16 largest loans. We have spent hundreds of thousands of dollars of our own money and thousands of hours to uncover what happened at Point Center. All the investors need to know what really caused the huge losses.
We have used forensic accountants, underwriters, land development consultants and other experts. Although we requested to see the complete loan files, which we had every right to review, Mr. Harkey refused until he was sued. Mr. Harkey has sent letters saying he voluntarily produced these files upon request. Not so. We could not review these documents until we sued Point Center. Mr. Harkey seems to have little regard for the truth. Sadly, it's as simple as that.
Here is what we have unearthed in connection with the investigation and what we believe will be revealed in court.
It appears that over 80% of the money loaned by Point Center's NFL Pool since 2004, (at the height of our real estate boom) was never paid back by the borrowers.
Mr. Harkey used roll-over (sometimes called Ponzi-style lending) techniques to stall the inevitable collapse of his "scheme." He would take a loan the borrower could not pay back, increase the size of it by obtaining a new, much higher appraisal and bring in new money to replace the old.
It appears he used impounded payments from our invested funds to make distributions to us, essentially giving our own money back to us. As a result, we all thought the borrowers were doing fine. They were not.
Mr. Harkey did not diversify the lending on the 200 million dollars entrusted to him for the NFL Pool as promised. Instead, he plunged the vast majority into raw land development on residential housing.
By and large this highly speculative loan type was on desert raw land, which was not entitled and not permitted, or on other highly speculative ventures.
The borrowers had yet to go through the risky environmental impact reports and lengthy entitlement process. Virtually none of these projects have been paid off by borrowers or been completed as promised.
Mr. Harkey has viciously attacked me with fabrication and innuendo because I sent communications to other investors, and had the audacity to ask to review the loan files on his failed loan, which are the majority of the loans made (by dollars invested) with our money.
Mr. Harkey says I want to take over management. Not so. Again he fabricates this out of thin air. I have never asked to be anyone's manager and do not want that task.
Mr. Harkey became very rich by taking tens of millions of dollars for himself, or the entities he controls, as fees and commissions on these failed loans. Mr. Harkey has not been a very good fiduciary at all.
On the management side of things Mr. Harkey has set new records for keeping his investors in the dark while he does very little to improve the properties or report on their status. He has been sued in multiple jurisdictions for fraud, misrepresentation, racketeering, etc.
He continues to accrue huge management fees against our assets while doing little to help us.
He refuses to comply with standard reporting requirements for his investors. He doesn't tell us which properties have huge outstanding tax liabilities. He won't inform us of the status of the entitlement process on our large REO properties. We have been sued by borrowers and cities. He won't even tell us what the properties are worth in this market. He needs to be replaced.
You might consider not allowing him to bully you or deflect the real facts by blaming the whistleblower, which is, yes - me -I'm proud to say.
You can learn more by going to www.pointcenterinvestigation.com -and you can reply to this communication by sending me an email at pointcenterinvestigation@yahoo.com
You will not find non-related, personal attacks. You will find out what happened to your money.
Sincerely,
Lloyd Charton
Dear Fellow Point Center Investors,
My name is Lloyd Charton. I am an investor with Point Center. Dan Harkey was my friend and neighbor. He remains my neighbor.
I retired in 2003 from nearly 30 years as a litigator, and soon thereafter Mr. Harkey asked me to invest money with him.
I found him to be very convincing and listened to him attentively. We had many discussions in my home and his, and attended social events including dinners and parties. He charmed my socks off.
He said he would be my loan manager and I could trust him to do all the due diligence necessary to protect my investment. He said he had a very experienced underwriting team. He described a "very safe, well diversified lending program for first trust deeds on commercial real estate."
Isn't this what he told you as well?
It turns out that a comprehensive, professional review of the underwriting and loan files reveals he did virtually no due diligence at all.
He called this program the 'National Financial Lending Pool' (or NFL), and said he had been doing this for 30 years. It turns out that Mr. Harkey began this business model in 2002 and seriously altered it in 2004 to a new model without the critical diversification clause. It began to fail very quickly and was so disastrous that by 2007 Mr. Harkey would not honor requests for redemption of shares.
Mr. Harkey has blamed the demise of his business on the economy. Not so. A large group of us have filed an action in Orange County Superior Court and in connection with the action have just conducted an extensive review of the NFL Pool, based on records dating back to 2004, and its 16 largest loans. We have spent hundreds of thousands of dollars of our own money and thousands of hours to uncover what happened at Point Center. All the investors need to know what really caused the huge losses.
We have used forensic accountants, underwriters, land development consultants and other experts. Although we requested to see the complete loan files, which we had every right to review, Mr. Harkey refused until he was sued. Mr. Harkey has sent letters saying he voluntarily produced these files upon request. Not so. We could not review these documents until we sued Point Center. Mr. Harkey seems to have little regard for the truth. Sadly, it's as simple as that.
Here is what we have unearthed in connection with the investigation and what we believe will be revealed in court.
It appears that over 80% of the money loaned by Point Center's NFL Pool since 2004, (at the height of our real estate boom) was never paid back by the borrowers.
Mr. Harkey used roll-over (sometimes called Ponzi-style lending) techniques to stall the inevitable collapse of his "scheme." He would take a loan the borrower could not pay back, increase the size of it by obtaining a new, much higher appraisal and bring in new money to replace the old.
It appears he used impounded payments from our invested funds to make distributions to us, essentially giving our own money back to us. As a result, we all thought the borrowers were doing fine. They were not.
Mr. Harkey did not diversify the lending on the 200 million dollars entrusted to him for the NFL Pool as promised. Instead, he plunged the vast majority into raw land development on residential housing.
By and large this highly speculative loan type was on desert raw land, which was not entitled and not permitted, or on other highly speculative ventures.
The borrowers had yet to go through the risky environmental impact reports and lengthy entitlement process. Virtually none of these projects have been paid off by borrowers or been completed as promised.
Mr. Harkey has viciously attacked me with fabrication and innuendo because I sent communications to other investors, and had the audacity to ask to review the loan files on his failed loan, which are the majority of the loans made (by dollars invested) with our money.
Mr. Harkey says I want to take over management. Not so. Again he fabricates this out of thin air. I have never asked to be anyone's manager and do not want that task.
Mr. Harkey became very rich by taking tens of millions of dollars for himself, or the entities he controls, as fees and commissions on these failed loans. Mr. Harkey has not been a very good fiduciary at all.
On the management side of things Mr. Harkey has set new records for keeping his investors in the dark while he does very little to improve the properties or report on their status. He has been sued in multiple jurisdictions for fraud, misrepresentation, racketeering, etc.
He continues to accrue huge management fees against our assets while doing little to help us.
He refuses to comply with standard reporting requirements for his investors. He doesn't tell us which properties have huge outstanding tax liabilities. He won't inform us of the status of the entitlement process on our large REO properties. We have been sued by borrowers and cities. He won't even tell us what the properties are worth in this market. He needs to be replaced.
You might consider not allowing him to bully you or deflect the real facts by blaming the whistleblower, which is, yes - me -I'm proud to say.
You can learn more by going to www.pointcenterinvestigation.com -and you can reply to this communication by sending me an email at pointcenterinvestigation@yahoo.com
You will not find non-related, personal attacks. You will find out what happened to your money.
Sincerely,
Lloyd Charton