In 2006, US-born Brisbane resident Richard Laansma was told about an opportunity to buy shares in a Las Vegas condo. Two promoters were travelling around the Australian capital cities, presenting seminars that offered investors the chance to buy into the $2 million property in multiples of $25,000. A well-known and internationally respected property guru had also lent his name to the project, adding credibility.
Mr Laansma attended a seminar and decided on the night that he would sign up. He was confident that the numbers stacked up, because he had invested in over 50 properties in his lifetime and had the added benefit of living in the US for most of his adulthood.
The goal of the project was to purchase an apartment building in Las Vegas and convert it to a strata title for individual sale. Nearly 100 other investors signed on to the deal Australia-wide.
Soon after the money was accepted, the investors received a group email from the promoters saying that they no longer had faith in the Las Vegas market and were now looking at putting up money for a developer to build houses in California.
The investors had a mixed response to this, but came around to the idea over a six-month period and supported the new plan. However, the promoters changed their minds once more and said they were going to return everyone’s money. Then, at the last minute, an email was sent out saying the promoters had found another property in California and needed to know immediately whether the investors were in or out. Before anyone had a chance to respond, they were told everyone had been signed up.
“A lot of people became upset at that point, because they didn’t authorise it,” says Mr Laansma. “I had a look and said okay, the numbers still look good. I was also still riding on the reputation of [the property guru].”
Once the money was invested, people began asking for documents proving their ownership of the property and detailing costs, yield, dividends and renters, but the two promoters stopped communicating with the investors.
People wrote to the property guru, who replied that he had delegated his interests in the business to a partner in the US that no one had yet heard of. Mr Laansma contacted the new partner to ask for details of the property and some proof of ownership for the investors. The partner told him that if he wanted any information, he would have to sue.
Mr Laansma used his status as a US citizen to do some investigating and eventually found out that the property had been purchased on behalf of a company, of which the new business partner was sole proprietor, director and general manager. None of the investors’ names were included on any contracts or documents and their money was now in the hands of a man they had never heard of on the other side of the world.
“In my opinion, he stole our money, put his name on our property and is now under no obligation apart from the threat of lawsuit to pay any of us back,” says Mr Laansma. “I thought about suing, but didn’t want to put in all my money to try and recover a $25,000 investment. Others lost more but didn’t want to pay for a US attorney because they didn’t have the money.”
According to Mr Laansma, many of the investors were mum and dad types who had borrowed against their mortgages to fund the project. They had now lost large sums of money and were powerless to do anything about it. A marriage even ended after one woman invested in the scam without telling her husband, who subsequently left her to pay off the bill herself.
To make matters even worse, it was revealed that a seismic fault ran through the property, seriously devaluing it. Once the global financial crisis had taken effect, the property became virtually unsellable and is now languishing with no growth or yield. The money is well and truly gone.
“I may not get my money back, but I want to make sure other people don’t fall into the same trap,” says Mr Laansma. “A lot of people are promoting American real estate right now and you’ve got to have your eyes wide open.”
Mr Laansma says that the last time he checked, the same promoters and guru are still offering Las Vegas investment opportunities in Australia.
Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker