Barney Ng

This blog has received a lot of feedback on the Barney issue, both positive and negative.  We took a hard-line stance that this blog should remain civil – as civil as possible given the highly charged, emotional nature of the state of our union.  Long story short, we not only appreciate the feedback many have provided, but we are willing to rethink the hard-line stance on the Barney discussion.

As such, please utilize this space to discuss Barney’s role in this fiasco.

Is he innocent?

Should he be given a hall pass because he may likely be aiding the investigation if not the legal battles being waged?

Do you even care as long as some of the other conspirators are brought to justice?

We’ve all invested a lot of time, a lot of money and a lot of heartache into the Bar-K scandal.  It’s ugly and it’s likely only going to get uglier before it (hopefully) gets any better.

Use this thread as a place to discuss Barney’s role in our plight.  Civil discussion only shall be permitted and John Robie shall be the arbiter.

Fire away….

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26 thoughts on “Barney Ng

    • I have had many conversations and done quite a bit of research and I agree with the FBI and the SEC that Barney is not part of the fraudulent team of RELoans fund managers – namely Kelly Ng, Walter Ng and Bruce Horwitz – who Ponzi-schemed us out of our life savings.

  1. I don’t care how much Barney helps the investigation I want his ugly butt in prison for the rest of his (hopefully short) worthless life.

  2. For years they (family and employees) represented a united front between all the funds, company names and such. It didn’t matter. Everything was going great and everyone was making lots of money. Their track record and returns were impressive and most everyone trusted them. Why wouldn’t they? They worked hard, they kept promises, they were accessible and many did well. This wasn’t a fly by night company. It had a reputation.

    As investors it is easy to lump them all together. That’s how they represented it, but is that what was really going on? Maybe everyone did have knowledge between all the funds, but what if they didn’t?

    Barney may have played an integral part but he was in the background chasing deals. Any one who spoke to him knows he preferred the chase of the deal over the daily chores of the business. Those of you who spoke to him, know he was not a people person.

    Does he have a part in all of this? Of course. The only question now is why is he the only one who takes investors call?. Why is he willing to forgo family loyalty that was so important in the past? Why is he willing to come forward and disclose vital information to the authorities? Would a guilty man be that open and accessible? As stated before, he walked in without a lawyer. Wouldn’t a man hunting a deal to safe his own skin be lawyered up with the best of the best? His father, brother and Bruce all lawyered up, costing large amounts of money, at investors expense. They refuse to talk and have cut ties and pleaded the fifth.

    There is much about this that does not make sense. The family ran a clean operation for years and were always united. You all trusted Walter and Bruce. Then something went seriously wrong and now a united family is divided and everything is a mess. Yes, people were protected by Walter and Kelly, but why were so many in the family not protected?

    So many questions and nobody is talking, except for a man that many don’t know. Blaming them is natural, but maybe we are missing an opportunity to understand what really has happened. Barney may have his own agenda, but why is he not lining up with the family? That’s what families do.

    Loyalty was a huge thing in that family. You all knew that for years. They were loyal to each other and to all the investors. A son doesn’t go against his respected father unless there are serious problems.

    We all have ideas and are full of speculation. Some minds are made up and others are undecided. If only one man is talking who came from the inside, don’t you think it might be wise to ask him what happened before deciding if he is guilty? So many questions that should be asked.

  3. While this post doesn’t exactly follow the subject for this thread, it straddles this one and the prior thread entitled “SEC Sues Walter, Kelly and Bruce.”
    —————————–
    At first I thought I’d ignore Robert Brower’s post from March 7 but several re-reads just made that impossible. Once upon a time I had nothing but the highest regard for his efforts and his commentary. For much of what he writes, I still do. But his characterizations of Judge Efremsky’s ruling against us in the Barney Ng involuntary bankruptcy case are off-target (unless he has me and my wife in his cross-hairs for some reason), mean-spirited and misleading. Waiting a few days to respond hasn’t lessened my disgust with what Brower has written about me so I’d like to give my interpretation of events. My apologies for the length of this post but it’s complicated.

    Our involvement in the Involuntary bankruptcies started when a lawyer/bankruptcy expert for Developmental Specialists Inc, (the collateral agent for the RE Loans Noteholders) contacted us in December 2011 to suggest filing involuntary bankruptcies for Kelly and Barney Ng and Bruce Horwitz. DSI’s motive was simple: to collect about $163,000 owed by REL for services rendered. Our motives were simple, too: we truly believed that they ought to be in bankruptcy in order to freeze their assets for the REL investors and to perhaps enable the Bankruptcy Court in Dallas to transfer the REL case to Oakland in the interest of justice so all investors could participate in the bankruptcy proceedings, not just Wells Fargo, which manipulated the bankruptcy court with its placement of our worthless promissory notes in its bank vault in Texas.

    It would have been nice if the Creditor’s Committee had been doing something to protect the investors, but by December 2011, the majority members of the REL Creditors committee were, in my opinion, doing nothing except looking out for themselves and other favored investors. It seemed to us that the only one out there offering help for all 1400 investors was DSI so we thought our interests were aligned.

    Before filing the involuntary action we sought the counsel of another bankruptcy attorney (who had been recommended by the DSI attorney) because neither my wife nor Sue Farley knew anything about bankruptcy law. We relied on him for advice and he never suggested that we might not be in compliance with the Bankruptcy Code nor did he caution us that these bankruptcies were not slam dunk proceedings.

    When Judge Efremsky stated in open court that he did not like the fact that these bankruptcies had been filed, we attempted to dismiss them because we could see the writing on the wall. Kelly and Bruce agreed to dismissals, but Barney would not. Instead, he decided to go on a counter-offensive against us and the other petitioning creditors, all of whom were represented by attorney Robert Cross who supposedly is a bankruptcy expert. Instead of protecting us and bringing the matter to a rapid close, Cross failed to file an answer even after the Court ordered him respond to Barney’s cross complaint that accused us of filing “to coerce, pressure, force or extort money and/or property from [Barney].” He also failed to comply with Court deadlines that led to the imposition of the sanctions that Brower mentioned.

    The damages that Brower refers to in the amount of $148,372.15 were fees awarded to Barney’s attorney, James Tiemstra. In a nutshell, Tiemstra was legally entitled to some fees because the judge ruled that our case did not meet the criteria for an involuntary bankruptcy. After we were hit with the default judgment it opened the floodgates for Tiemstra to run up his fees in hopes of gaining a windfall for Barney.

    Brower failed to mention that the judge ruled that Barney suffered NO actual damages (he asked for $800K) – unlike the RE Loans noteholders. In effect, because our lawyer’s screw-ups led to the default, Tiemstra’s fees substantially increased. Barney asked for $1.5 million in punitive damages but was awarded a total of $20,000. The judge awarded the punitive damages because he decided that we never should have filed the case in the first place and in retrospect we obviously shouldn’t have. In effect, Tiemstra got himself over $150K to get Barney $20K, plus whatever he got from the third petitioning creditor Keaton in a settlement prior to the judgment. Somehow Brower calculated that Barney put $300K in his pocket. He must have learned the amount of the Keaton confidential settlement from Barney himself since that number was never mentioned in court, nor have we been informed of it. The desire to win lawsuits certainly can make for strange bedfellows.

    Shamelessly, Brower somehow manages to mischaracterize our technically improper filing of an involuntary bankruptcy with our credibility to those investigating the RE Loans fraud. One has absolutely nothing to do with the other and Brower knows this. And since Brower seems to know everything about everybody, he absolutely knows that the judge ordered the judgment sealed because both parties asked that it be sealed.

    What we attempted to do was solely for the benefit of the more than 1400 people victimized by the RE Loans fiasco and the perpetrators of what we and many others believe were crimes committed by the Ngs and Horwitz. Any recovery that we could have received, or any assets that we could have protected, would have been divided among ALL the investors. So in addition to the money we lost from our REL investments, we paid over $150,000 for our efforts to hold the REL principals accountable for all our money. To my knowledge, Brower has filed two lawsuits against every B-4 partner but Barney and solely for the benefit of his clients. His disparaging comments are inaccurate, offensive and deserving of a rebuttal.

  4. Hi,
    I have been out of the loop for awhile. Can someone please update me?
    Do we have any handle on whether we can expect any money back from RE Loans?
    And did we receive anything regarding tax implications that needs to be filed?

    Thank you, I appreciate the feedback.

    • Andrea,

      For your question, this answer assumes that the investor is only in R.E. Loans. This is my understanding of the process.

      First, the debtor, R.E. Loans, sells property in the portfolio to pay down the Wells Fargo Capital line of credit and the additional money that Wells Fargo Capital advanced to run the bankruptcy case in Dallas.

      Second, after the entire Wells Fargo debt is paid, the Liquidating Trustee sells whatever is left in the portfolio and pays the claim of Development Specialists Inc., and then pays the $5,000,000 claim of the unsecured creditors. The bulk of the $5,000,000 payment goes to Mortgage Fund ’08 to settle its claim.

      Third, all the professionals are paid.

      Fourth, somewhere in this mix, the money recovered in third-party litigation, which has not been filed, will be added to the pot.

      Finally, the investors split up the remainder on a fractional basis. The endgame estimate from the Liquidating Trustee is 6.7% of your investment, at best. I have previously estimated 0%.

      The letter that all R.E. Loans investors should have received this week, a functional K-1, pegs the current capital loss at 87%. As I explained in another post, this figure will go up or down, most likely up if my 0% estimate is correct.

      Then, there is the potential recovery in the Alameda Count Superior Court consolidated class actions with Andy Friedman at the helm. In those cases, the plaintiff’s class certification motion is due on April 15, with opposition and reply to follow. It is too soon to predict the outcome in these cases.

      Mortgage Fund ’08 investors have more arrows in the quiver.

  5. Everyone’s focus seems to be on Barney….why isn’t anyone discussing Bruce’s culpability? Many of us got involved in RELoans because we believed in Bruce Horwitz’ integrity. Now…here we are… Approaching retirement minus a lot of money and/or income

  6. I am wondering what Robert Brower means by Mortgage Fund 08 investors have more arrows in the quiver…sorry for not understanding.

    • Confused – From a simplistic perspective, MF ’08 investors have an SEC fraud suit they can leverage. They also have less overall dollars invested. Brower can perhaps let us know his take.

        • Andrea,

          In the R.E. Loans bankruptcy, the Committee voted against suing Wells Fargo for its role in the failure of the R.E. Loans fund. The Committee did this, I believe, because they needed Wells Fargo to advance the money to fund the bankruptcy case and they could not find another source of money. At this point, the Liquidating Trustee for R.E. Loans and the Committee have not filed any lawsuit against any third party. So there is no fraud suit.

          On the other hand, the Committee in Mortgage Fund ’08 did not need any outside money to fund the case. Consequently, the Liquidating Trustee for Mortgage Fund ’08 filed a lawsuit in bankruptcy court against Wells Fargo. Wells Fargo made a motion to dismiss the case based upon the allegations in the Complaint. Judge Efremsky granted the motion to dismiss, but he gave leave to amend the Complaint. When he issued his decision, Judge Efremsky dictated a laundry list of facts that he wanted to see in an amended complaint. One important item on his list was: “What did Wells Fargo know, and when did they know it.”

          The attorney for the Liquidating Trustee filed the amended complaint in compliance with Judge Efremsky’s order. Wells Fargo made another motion to dismiss.

          The hearing on that motion is this Thursday morning at 11:00 a.m. If you are a Mortgage Fund ’08 investor and you want to support your Liquidating Trustee and her attorney, be there.

          • Hi Robert,
            Thank you for explaining. I must admit my jaw is dropping and I’m hoping that there is a piece I don’t understand. It sounds, if RELoans gave up the possibility of suing for fraud, that:
            a the only outcome with any hope is selling any remaining assets and hoping there’s a positive dollar outcome to be shared from that.
            b. going back to the IRS with amended returns to recoup paid income taxes on funds never available and never received is now nor never an option
            c. any other avenues of recouping are no longer options.

            I so hope Robert that there are pieces missing that supports hope for better outcomes than above.

            Again, thanks so much for being there.
            Adrea

  7. Is Barney guilty or innocent? We don’t know. There are probably a handful of investors that have talked with him, let alone say they know him. We will find out soon. At least Barney is talking. Reportedly he is talking and without a lawyer holding his hand and whispering into his ear. If Barney’s story is slanted to benefit him, the authorities will ultimately figure it out.

    Are Walter, Bruce and Kelly guilty or innocent? They are each 100%, without a doubt GUILTY. We know it, they know it and their high paid criminal attorneys know it. That is why they are silent and “taking the fifth” on all questions. Walter, Bruce and Kelly have each lied many of us on countless occasions, on visits to the office, in letters, on phone calls and at annual dinners. “Everything is going great!”, “We have 5 or 6 properties that are not performing. Not a worry because we can sell them quickly and for a big profit.” or “Illiquidity is a temporary problem. We should have it fixed in next 3-6 months.” (Kelly’s favorite) Sound familiar to anyone? The SEC figured it out and hopefully the FBI will too.

    P.S. bkurtin – I am sorry to hear your story. It sounds like you got bad advice from DSI attorney, William McGrane. His courtroom tactics did not go over very well. I am not a lawyer, but I don’t think I would have trusted McGrane to wash the windows on my car. Then again, like you, myself and my family believed the Ngs and Horwitz were honest, loyal people that would protect out investment at all costs. We lost over $700K.

  8. I’m not so sure that this was a clean operation from the beginning. I wouldn’t be surprised if Walter skimmed money from the partnerships back in the day but investors got what was advertised, so who cared? Then came the next generation. According to Barney’s resumé, he transformed a small, family-run hard money lender into a major private lending mortgage fund. RE Loans provided opportunities for him to do bigger and bigger deals. Perhaps I am naïve, but I don’t see how you go from being 100% honest to being perpetrators of what has been characterized as the largest mortgage fraud in California history.

    While some may believe that Barney was out chasing deals and had nothing to do with the fraud on investors, I ask a question: Who do you think was purchasing the overvalued properties and pocketing the inflated commissions and servicing fees? In 2003, the portfolio’s loan receivables were $201,000,000 with 63.9% of the loans for commercial and single family residences. Land/construction loans amounted to 36.1%. By 2007, the loan receivables had climbed to $742,000,000 with only 18.6% of loans in commercial and single family properties. Raw land /construction loans had skyrocketed to 80.7% of the portfolio.

    Would the portfolio be so worthless if it wasn’t mostly land? Was Barney thinking about the investors when lending on vacant land in the middle of nowhere? Couldn’t he find a property that had a building on it that generated any income? Remember, Barney, though not licensed, also appraised the properties so there was no oversight on his gambles. Did Daddy Walter and brother Kelly and Bruce ever say no to a loan that Barney presented to REL? I don’t think so. Walter was rhetorically asked that question at one of his early bankruptcy hearings and as I recall he responded with a litany of Barney’s academic achievements. Yep – Barney was the smartest guy in the room. I think that his big commissions and his 1% servicing fees on the $500,000,000 in loans took precedence over the sound underwriting standards that an independent, licensed appraiser would have used for the welfare of the investors. Good loans or bad, Barney still collected. How’s that for a major conflict of interest!

    Besides his other loan activities, Barney negotiated the $65,000,000 line of credit for B-4 Partners with Wells Fargo to give the appearance of liquidity to purposely mislead the REL investors and to provide himself with a $2,000,000 commission. As a member of B-4, he had to have known that there was no provision in the yearly Offering Circulars filed with the California Department of Corporations for borrowing money so the 2006 submission was fraudulent. Anyone as brilliant as Barney had to have known that by entering the line of credit he would subordinate the investors’ interests to those of Wells Fargo, especially since Wells Fargo insisted on the subordination as a condition of the loan. To me that seems like a breach of his fiduciary duty to us.

    I could go on and on. If your eyes are closed it’s easy to believe Barney. Otherwise it’s impossible to accept his claims of innocence. I think he believes that he is smarter than everyone else and that he can talk his way out of it. Unfortunately for him, neither the California Department of Corporations or Real Estate have believed him even after he testified before their administrative law judges. Both departments found that in the REL and MF’08 offerings, he had failed to disclose that in 2001 he had violated the handling of our trust funds and that he was never a certified appraiser despite his claims to the contrary. It is unbelievable that the SEC didn’t pick up this during its investigation of REL. Did anyone at the SEC even bother to check the state’s database?

    Barney has done a great job of convincing many that he is blameless for the evaporation of our money; that he was jetting around the country, studiously valuing deals and all the incompetents were in Lafayette approving every sketchy loan that he sent them. Sure, the economy had lots to do with the diminished valuation of the portfolio. But not everything. Maybe the true believers would like to buy some of his swampland in Florida that was mortgaged for $46.94M by REL. At last count there were nine Florida state court actions against him and in 2010 the Florida Department of Environmental Protection placed a lien against the property when it filed a civil suit seeking civil penalties, costs, physical stabilization, wetlands restoration and wetland monitoring for the property. If its still available you can probably get it for less than pennies on the dollar, unless of course, Barney is doing the appraisal.

    • Thank you for this detailing. If the authorities actually have the information, and the investors who believe he’s innocent read it, then it would seem impossible to me that they could exonerate him.

      That said, does he or any of them have insurance to target? Apparently RE Loans has no
      recourse against Wells. Is there anything pending against anyone, advisors, auditors, etc?

      I’d really like to know what can RE Loans investors expect ?

      Thanks,

    • One of the problems with the latest analysis provided by Monagesque is the use of “It was Barney’s fault” as a “fact” to fill in any gaps in the story line. The analysis reads and sounds very good as long as you do not know all of the facts. As an example, I will give some operative facts left out of Monagesque’s analysis.

      To avoid a throwdown with Bert Kurtin, Monagesque’s loyal defender, I will pick a “Barney neutral” example. I believe that this omission from Monagesque’s analysis was not intentional. I doubt very few people, if any, know what follows.

      This concerns a sentence in the fourth paragraph of Monagesque’s post that states: “As a member of B-4, he [Barney Ng] had to have known that there was no provision in the yearly Offering Circulars filed with the California Department of Corporations for borrowing money so the 2006 submission was fraudulent.”

      First, you need to understand that R.E. Loans had to get a permit every year from the Department of Corporations. This required the submission of a permit application every year before the pending permit expired. You do not have to take a test and pass an eye examination every year for your driver’s license, but R.E. Loans had to apply for a new license, a permit, every year.

      The permit applications are not particularly interesting until we get to the application in November 2006 for the 2007 permit. The November 2006 permit application was hand delivered to the Department of Corporations office in San Francisco on November 13, 2006, at 1:48 p.m. The application was signed by Bruce Horwitz, in his capacity as manager of B-4 Partners, which was the manager of R.E. Loans.

      Exhibit F to the application was the new Offering Circular for 2007. This Offering Circular had very dramatic changes from all the previous ones. There were 219 changes in all. The proposed Offering Circular included provisions that authorized the managers (Walter Ng and Bruce Horwitz) to “leverage the portfolio.” That means, they could borrow money and use the loan portfolio as collateral.

      The new Offering Circular presented a significant and substantive change in R.E. Loans business. It should not have been approved by the Department of Corporations.

      The Department of Corporations issued the permit on November 14, 2006, without regard to the substantive changes in the Offering Circular. There is no evidence that the application and the new Offering Circular were ever read by anyone at the Department of Corporations. It was rubber stamped, approved.

      Walter Ng and Bruce Horwitz decided not to print the new Offering Circular. It was never printed, never published. No investor ever saw it.

      However, to close escrow on the $50,000,000 line of credit in July 2007, Wells Fargo Foothill made a laundry list of items that R.E. Loans and B-4 Partners had to supply. The list was titled “Schedule of Documents/Closing Checklist.” It is nine pages long. At the bottom of page 7, Wells Fargo Foothill wanted a copy of the “Fund’s last Offering Circular.” The “Status” of that request was as follows: “Received draft Offering Circular dated December [____], 2006.” Writing added to the printed document, in red ink, states: “Last Version.”

      The word “draft” and the incomplete date “December [____], 2006” should have put Wells Fargo Foothill on notice that something was very wrong. How could a company have an unpublished, draft, undated Offering Circular as its last version?

      I can see how these facts make the Department of Corporations look bad and how these facts put Wells Fargo Foothill on the hook, in the boat, on the filet board, battered, breaded, in the frying pan, and onto Andy Friedman’s plate.

      This post merely illustrates my view that it is not a good idea to omit operative facts. Monagesque’s sentence quoted above, assigning guilt to Barney Ng for a “fraudulent” Offering Circular, omits facts that, when considered as a whole, paint a completely different picture than “It was Barney’s fault.”

      In that regard, Monagesque’s latest post and analysis reminds me of the day I foolishly bought a jigsaw puzzle at a thrift store – many of the pieces were missing.

      • I am looking for a speaker who will discuss this topic with a group of retired men. Can you help me, Robert?

      • Don’t buy this response and disappointed. He knew everything that was going on from the beginning. He spoke to his father every day. He also knew the documents were submitted to Wells that way because he made the negotiations with Wells on behalf of the mortgage pool. He needed the line to fund the borrower loans he negotiated so he helped push it through. And yes, many pieces are missing from the puzzle. KNOWLEDGE is a big piece.
        You probably will remove this post.

  9. Bernie Madoff investors are getting a settlement as of January 2017. Are there any more lawsuits to be settled on our behalf?

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