CALL THE FBI

Ask for Christina Boules at (510) 808-2600, (415) 553-7400 or (510) 451-9782.


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16 thoughts on “CALL THE FBI

  1. On behalf of investors James and Maureen Crew, attorneys Timothy M. Hyden and Jack Leavitt would appreciate receiving whatever information you can share about Bar-K and RE Loans. We’ll be happy to reciprocate. Many thanks.
    All best, Jack L

  2. Although the December 2009 letter is a good place to start,
    interpretation of the information in the letter is not straight-
    forward. For example, the letter states that one investor, Dr.
    Paul Cianci, withdrew nearly $1 million after notice that the
    fund managers learned they were in violation of the rules and
    regulations of the SEC, with the claim that this was one of the
    preferred distributions and the implication that Dr. Cianci was
    one of the preferred investors. Not so. The withdrawal was on
    April 16, 2007, and all of the money was sent to the IRS as
    payment of 2006 taxes Dr. Cianci owed from the sale of a
    business. In addition, Dr. Cianci was neither a family member
    of the any of the managers nor one of their friends.

    There are other examples of valid non-preferential withdrawals
    that are mentioned in the letter.

    In summary, the letter correctly reports distributions that did
    occur (the information came from a computer printout of the
    account distributions), but the attorney did not know the “why”
    in the transaction.

    The second document worth reading is the 2-page, 2-sided letter
    report sent to your clients by DSI a few months after DSI had served
    notice of default for all noteholders. This letter summarizes an April
    2009 meeting at the Bar-K offices in Lafayette. The meeting included
    representatives of DSI, their attorney from Cooley Godward, investors
    who were members of an ad hoc steering committee, and the fund
    managers.

    The original letter, received only by the investor-members of the ad hoc
    steering committee, contained two additional sentences and two exhibits.
    Those two sentences were deleted and the two exhibits removed before
    all of the other investors received the letter report. Your client had no way
    of knowing about these alterations. One of the exhibits, Exhibit 2, had four
    pages, one page of which was a secret internal distribution of about one-half
    of the Wells Fargo Foothill line of credit to the managers.

    The DSI letter and Exhibit 2 is critical, I think, to a full understanding of the
    December 2009 letter from the attorney. They should be read together.

    • Perhaps it would be helpful at this point to summarize the two documents.

      After receiving word that they were in violation of the rules and
      regulations of the SEC in March 2007, the fund managers distributed
      all of the cash on hand. This made the fund illiquid to the tune of
      minus $20 million, the unfunded construction draws.

      The fund managers took out a $50 million line of credit from Wells Fargo
      Foothill. They used one-half of the first draw on the line of credit to pay
      the construction draws and secretly took the other-half. As a result, the
      line of credit did not solve the liquidity problem.

      The fund managers then created a new fund, Mortgage Fund ’08 and actively
      promoted investments in the new fund. In order to restore liquidity to R.E.
      Loans, the fund managers secretly took the first $40 million invested in Mortgage
      Fund ’08 and transferred it to R.E. Loans. “New” money from Mortgage Fund ’08
      went to “old” investors in R.E. Loans.

      The fund managers, in their capacity as “old” investors in R.E. Loans, took some
      of the “new” money and as managers of the “new” fund they took a fee for
      transferring the “new” money to the “old” investors.

      The Mortgage Fund ’08/R.E. Loans scheme unravelled when it was discovered by
      Wells Fargo Foothill and they ultimately shut down R.E. Loans. Anyone who did not
      withdraw his or her R.E. Loans’ investment before the shutdown gets little or nothing
      because there is not enough value in the collateral to cover the line of credit and the
      noteholders’ investments.

    • I will send it. If you post it, you should explain the following:

      Exhibit 2 has 5 pages. Four of the pages went to Wells Fargo
      Foothill. One is a cover letter and three are Exhibit “A” to the
      cover letter. Exhibit “A” is clearly identified by a footer at the
      bottom of each of the three pages. The fifth page is on plain
      paper. That page reveals the internal distribution of one-half
      of the first draw, not disclosed to Wells Fargo Foothill because
      it violated the terms of the line of credit, including, in part,
      money given to the dummy, “Walter Ng Investors.”

      The five pages in Exhibit 2 are attached in somewhat of a random
      order with the cover letter attached as the last page of Exhibit 2
      and the plain paper secret distribution as the first page.

      Perhaps you can print out those five pages and post them in the
      correct order so that your readers can see that the plain paper page
      did not go to Wells Fargo Foothill.

      You might also post the DSI letter that your brother received so that
      your readers can see DSI’s deletion of any mention of Exhibit 1 and
      Exhibit 2.

  3. Robert,

    What did you mean when you stated in your second posting, “… and secretly took the other-half.”(Meaning I believe half of the $50K Foothill loan)

    How was the $40million 08 Fund money transfered to RE Loans.
    It appears that the 08 Fund investments are different loans and properties than those held by RE Loans.

    You stated, “The fund managers, in their capacity as “old” investors in R.E. Loans, took some
    of the “new” money and as managers of the “new” fund…” Is this the list of payments detailed in the “Did the Park Money” section of the February blog?

    Thank you for all your good work.

    • Equitatus, you are correct. My initial statement was ambiguous. I should have stated, “took the other half of the first draw and kept its distribution secret.” The distribution was kept secret from Wells Fargo Foothill at the time of the draw in 2007 and then kept secret from the investors in the managers’ June 19,
      2009, letter to the investors. Perhaps you should also post that letter on your blog to let your readers compare Exhibit 2 and the managers’ representation to the investors about the first draw.

      Concerning your second question:

      At the top of page four of the attorney’s December 2009 letter, posted on your blog, the attorney states that the managers “devised a scheme to transfer nearly $40 million from Mortgage Fund ’08 to RE Loans between December 4, 2007 and March 3, 2008.” (Second full paragraph.) The managers documented this scheme by using a pre-existing R.E. Loans account to record each of the transfers. From that account record, I calculate the transfer from December 3, 2007 to March 3, 2008, to be $41,045,253.16, plus or minus. I do not know why the attorney picked December 4 as his start date. It seems to me the transfers started on December 3, 2007. From this record, I believe it is fair to conclude that any disbursement to any R.E. Loans’ investor, that is, a semi-annual payment, a quarterly payment, a monthly payment, or a preferred investor payment, during that timeframe and thereafter, was made with money that had been invested in Mortgage Fund ’08. So when the fund managers took money out of R.E. Loans for themselves during that timeframe and thereafter, they knew it was money that had been invested in Mortgage Fund ’08. Some of those transfers are on the list you mention, which was previously posted on this blog.

      • So, with Walter filing for Bankruptcy and the supporting operating income statements (Exhibit A, B, C), the FBI should and the BK judge should have more than what they need to come to a conclusion on the breach of fiduciary duties and alleged fraud conducted by the Bar-K entities and its managers.

        It would be a foolish thought to assume that these filings (Exhibits) have not been massaged since 2008 and before. If the Ngs have been able to hoodwink 3000+ investors for a long time, they have also got the access to funds to hire the top counsel to help chart their exit strategy. The exit strategy is playing out with Debts being higher than Assets – what does that do to a balance sheet and the lingering investors? Hopefully,they will not get away with it and draw upon stashed investor funds – for this and to protect the investors, we can only hope that the judicial system and Govt entities involved (FBI) don’t turn a deaf ear.

  4. Do you have a list of who received preferential disbursements in 2007&8? Can you give out those names and amounts I.e. Daughter of friend of Bruce Horwitz and others?

  5. Bay Area,s version of Madoff scheme. We should stop complaining and have a trustee appointed that will put RE Loans in bankruptcy and go after their personal assets. We need an article in the Chronicle. We need to have our state Attorney General to get into action. The secretary of state of California should also be notified.

  6. I invested almost my entire life savings with Bar K. I had a friend who was invested with them for 22 years and he trusted them 100%. They promised they would never borrow to lend to any one. They promised they only made loans to people with good credit and those that had a down payment of 30% or more. The promised never to loan funds on land to builders. They broke every promise. I am financially devestated.
    I am still trying to understand why they borrowed and loaned out 65 million dollars on a credit line and I am legally bound to pay it back out of my life’s savings. I am 68 years old and am getting about $1,200 a month from social security. I took a reverse mortgage on my home and took in a boarder to pay my monthly bills. I currently have about 200K to last for the rest of my life.
    I figure they took in millions on the 65 mil they loaned out, and I just read they won a law suit for over 3 mil. What are they expected to do with that money by law, if anything? Do they owe anything to me and the rest of their investers? They had almost 500K of my hard earned funds.
    J Sykes

  7. I am an 85 year old man. I, like many others, had invested my hard earned money to this, what I call a Ponzi scam, trusting he likes Of Bruce Horwitz. I have less money to live on, of what is left of my life, because I trusted these people.Its a shame, and a crime to humanity, to have the people scam seniors and the like, out of their money.

  8. These guys are sure pretty quiet….hope they can get their case going before the financial side gets too far settled. Maybe if it will lead to the recent prison time for Mr. Stanford of 110 years for his Ponzi schemes.

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