Mortgage Fund ’08 2010 Year End “Newsletter”, Doom & Gloom Edition

For those keeping score, Kelly Ng wins.  Jim Weissenborn loses.  Kelly (the good son?) did everyone a favor by getting the end of the year newsletter out “early”.

Unfortunately, we’re the real losers based upon Kelly’s bullshit-laced tome.

You might as well sit down, pour a cocktail, practice your breathing or do some yoga, because this is not pretty.  Despite our favorite Cal Volleyball Coach’s strong effort to make everyone think everything is hunky-dory, it ain’t, people.  In fact, MF ’08, as everyone already presumed, is just about as screwed as RE Loans and RE Reno.  If you want to keep reading, this story and the link to the letter continues after the jump.

Here are some gems from Kelly’s update:

“Walter and I are devastated by what happened to you”

“The value of [your] investment at this time is unknown”

[We are] “attempting to address the immediate and long-term needs of the Fund”

“Essentially we are now dealing with a portfolio of non-performing loans”

“The majority of the loans are secured by land or partially developed property”

“…the properties securing our loans are located in areas where demand and values have plummeted”

“We are attempting to avoid the quick ‘fire sale’ of loan assets at the current depressed prices”

“All loan proceeds will be utilized to protect the portfolio assets and operate the Fund”

“We have engaged Focus Realty Services of Lafayette, California…adding them to our team gives us the breadth and depth to deal with the many problems facing us in these very challenging times”

“The total unpaid principal balance (“UPB”) of the Funds’ portfolio is approximately $74,000,000 consisting of 15 loans”

Unimproved land = 91% of the portfolio

A noteworthy event, according to Kelly, was the replacement of Bar-K as the loan servicer.  Welcome Lend, Inc. (owned and operated by Walter & Kelly).

“We have implemented cost reduction in our operation”

The Dishnica Company has also been engaged.  They get another piece of our pie.  Welcome back, Rick!

“Third party permitted expenses will continue to be paid by the Fund in accordance with the Operating Agreement”

The CA Dept. of Corporations has supposedly concluded their investigation and found no wrongdoing.

“During 2011, we do not believe that the Fund will be able to make any distributions to the noteholders”



10 thoughts on “Mortgage Fund ’08 2010 Year End “Newsletter”, Doom & Gloom Edition

  1. Why did I listened to Bruce and put money in Mortgage Fund. Now that money is gone too. What am I supposed to do? Will someone please help me?

    • There are two small first steps.

      One, join CPA and investor Jeffrey Olsen’s effort to hire an attorney to file an action for an accounting. He hosted a meeting last Saturday in Lafayette and a majority of investors at the meeting promised to make small cash contributions to set up a trust account for the legal fees. The e-mail address for this project is:

      He will hire a competent business attorney to prosecute the case. I will provide clues to help them look in the right places. This accounting will uncover the fraud within Mortgage Fund ’08.

      Two, join my efforts to have a criminal fraud investigation for the purpose of obtaining an IRS section 165 deduction for all investors. I discussed this approach at the meeting on Saturday and explained that for many, but not all, investors there is a 95% write-off if the investor represents he/she will not file a civil action, or a 75% write-off if the investor wants to pursue a civil action. For many investors, but not all, abandoning a civil action and taking the 95% deduction (3 years back and 20 years forward) will be the best and most straightforward path to a recovery of the lost investment. To help with this effort, write a one-page letter to Senator Boxer or Feinstein, and/or the Contra Costa County District Attorney. The letter should include the points that I provided in an earlier post on this blog.

      • I will join an action to advocate a criminal fraud investigation to pursue a 165 deduction for all investors.
        Bill Gallogly

    • The Liquidating Trustee has filed two lawsuits. The first against Kelly Ng concerns the transfer of $370,000 from MF ’08 to Kelly Ng’s Pensco account, his IRA account, and the reverse transfer of $695,000 from the Pensco account to buy part of a note held by MF ’08. The Complaint alleges that the reverse transfer was made to fund distributions to MF ’08 investors to conceal that MF ’08 was insolvent. The case is an adversary proceeding, No. 12-04099.

      Kelly Ng has filed a motion to dismiss the complaint. The hearing is set for July 26, 2012.

      The second case is against Wells Fargo Capital. The complaint was filed on June 26. A proof of service has not been filed. The case is also an adversary proceeding, No. 12-04137. There is a status conference set for October 2, 2012.

      • Thank you Mr. Brower. Is there anything that we need to do as investors of MF08? I really appreciate you taking the time out to update us.

        • At this point, your Liquidating Trustee has represented the MF ’08 investors and achieved good results. She negotiated a $5,000,000 (approx.) up front payment from R.E. Loans and preserved the full $66,000,000 claim, while getting a seat on the R.E. Loans Liquidating Trust Committee as part of the deal. She is not wasting money holding on to property that was, and is, worthless. Although I disagree with the allegations in the complaint against Wells Fargo because some of those allegations are false and not provable, I think that is a problem that can be fixed. So, on balance, I believe there is nothing for the investors to do right now.

          There is one thing that is counterproductive. MF ’08 investors are periodically asked to pester the FBI with e-mails and phone calls. These e-mails and phone calls can only diminish the time necessary for the proper prosecution of the criminal complaint. You might contact the person who is encouraging these e-mails and phone calls and ask him to stop.

          • Do you know how to reach this person? Perhaps they don’t understand that their actions are counter productive.

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