How to Protect Your Real Estate Deals from Fraud – Expert Tips from Crossroads Investigations
In this Raise Capital Legally podcast episode, host Krisha Young interviews attorney Kim Lisa Taylor and Mark Hurwitz, founder of Crossroads Investigations, about protecting real‑estate syndication and fund‑raising deals from fraud. The conversation covers the wide range of fraud schemes that target investors—partner theft, wire‑transfer impersonation, fake deals, and Ponzi‑style misuse of funds—and explains how bad actors operate. Mark describes investigative tools such as skip‑tracing, asset and bank‑account searches, background and bad‑actor checks, and international research, emphasizing the importance of early due‑diligence. Kim outlines legal obligations, including the Corporate Transparency Act (CTA) reporting, sanctions/SDN screening, and the need for thorough documentation (IDs, subscription agreements, signed disclosures). Practical prevention tactics are discussed: two‑factor authentication, verifying email domains and phone calls for wire requests, setting up Google Alerts, and maintaining clear written communications. The panel also addresses handling fraud when it occurs—documenting evidence, involving appropriate law‑enforcement agencies, sending demand letters, and leveraging state securities regulators. They explore the double‑edged impact of AI on fraud detection versus fraud creation, and provide cost estimates for various investigative services. Throughout, the hosts stress a proactive, transparent approach to protect investors, partners, and reputations.
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Hello and welcome to the Raise Capital Legally podcast and YouTube channel, your go-to source for insights on raising capital the right way. We dive into topics that matter most to real estate syndicators and fund managers with live Q&A opportunities before we wrap up. I'm Krisha Young, your co-host, Business Development Director for the firm, and joining me is attorney Kim Lisa Taylor, the founder of syndicationattorneys.com. Now, before we get started, please note that audio and video from this event will be on our podcast platform, YouTube channel, and website and social media, and will be made available to the public. You can go ahead and ask questions at the end of the broadcast by raising your hand or typing it in the Q&A. Information discussed during this event is of a general educational nature and should not be construed as legal advice. So today our topic is Protecting Your Investment: How Crossroads Investigations Can Help Real Estate Investors Guard against fraud. In the high-stakes world of real estate investment partnerships, fraud is an unfortunate reality that can wreak havoc on your finances and reputation. Whether you're a passive investor, a co-GP, a syndicator, or fund manager, safeguarding your investment against fraudulent activity is crucial. Join Kim Lisa Taylor and Krisha Young as we interview Mark Hurwitz, of Crossroads Investigations about his extensive experience in fraud prevention and resolution. Crossroads is uniquely positioned to help you navigate these challenges. Hello, Mark. Hi, Kim.
Hi.
How you doing?
Happy to be here. Thank you for having me.
Yeah, well, thank you for agreeing to come. Uh, you know, I've been getting your emails for years and years, and, uh, I, I never, I never want to unsubscribe because I always know that if I did that, then the next thing I would need is somebody With your expertise. So I figure, you know, it's always a good idea to have a good private investigator and a good criminal attorney that you can call on if you really need it, right?
You always have to have a guy, right? For one of the necessary categories that you need a guy.
Yeah. Yeah, right.
That's right. Yeah. And then, you know, you might need another kind of guy once you find out what actually happened to the money, but that's not a service any of us would like to really know about. So please Please tell us a little bit about your company and what you do.
Sure. Well, I own Crossroads Investigations. We're based in Miami. We're Florida-wide, although we do work all over the country and even overseas. I've had the company— I started it in 2008. I'm former CIA. I was there for several years. I was in the White House for 3 years before that in the West Wing. We do at Crossroads Everything under the sun when it comes to investigations. We do asset searches, background checks, employee screening, jury vetting, do surveillance, international research, employee and tenant screening. Nothing is off, off, off the books as far as, you know, what we can do. We find the hard to find. That's what we always say.
Oh, interesting.
Wow.
If we find the hard to find, I like that. I love this.
This is like so piquing my whole curiosity interest here. Like, let's get into it.
Alternative prayer. What are the most common types of fraud that you see in, you know, like real estate investments?
Yeah. You know, I, and I, I speak a lot around the state and I always start off by saying that Florida is a sunny place for shady people. But it's, you know, it's really true. It's not just Florida, obviously. There are a lot of bad actors out there. And unfortunately, we have clients who come to us after they've been taken advantage of. And they learn over time that you have to do— you have to invest in your due diligence ahead of time. You know, you have to, even as banks do know your customer, you have to know who you're working with. You have to know your business partner, your investor, your tenants, whoever it may be. So We see all types of fraud. We see people who will take money and disappear. Of course, we see people who are pretending to be other people on email and get wired, wired money. Let's see, we see I don't know.
I guess it will.
I guess we'll come up during the hour, but we see all kinds of fraud schemes that, you know, you can't even— you would never think of in your wildest imagination. Yeah.
What about, like, you know, fraud between partners? You know, maybe some people are syndicators, they're putting a deal together, and then within the management team, somebody, you know, runs off with some of the money and leaves the other guy holding the bag. Do you ever see anything like that?
Yeah, we do. And And the bad actors are getting better and better at putting in effort to disappear. You know, when we do, when we find people, it's called skip tracing. That's, you know, people who have skipped town, people who don't want to be found. And we find people all kinds of ways. We find them via their social media, their vehicle registrations, their utility records. you know, through other advanced means. But yes, we see business partners that will take money and, and run, basically. Or they'll say that they, they took the money and for another purpose and now it's gone. And that's when we start doing our bank account searches, which we do at Crossroads to find, you know, where is the money? And many times they will not put it in their own name. They'll shift it immediately to crypto. They'll set up an LLC in Delaware, Wyoming, or Nevada. Which, you know, allows for anonymity in creating those entities. There's a lot of thought that goes into this, but we do see that quite a bit. Business partners taking money, either disappearing or saying that the money is gone for, for whatever reason.
So I was involved in a case a long time ago where there was a way to hire a forensic accountant. And they talked about the triangle of fraud. Is that something that you guys hear?
No, tell me.
Oh, so it's interesting. So what they talked about is that there's this triangle of fraud where the first thing is that the person has to have access. They have to have access to the money in some way or get access to the money fraudulently by pretending to be somebody else or, you know, telling you, oh, there's a problem with your account, you know, whatever. They get access to the money, but it could be somebody in your own organization that, that has access to the money. And, and then they have have an unshareable need. Okay, so they can't go to the boss and say, oh gosh, I really need to borrow, you know, $2,500. Is there a way I could do that? Uh, they, they, because they have access to the money, they think that they're going to borrow the money. And, uh, so they just borrow thinking, you know, in the, you know, their, the goodness of their heart, oh, I'm just gonna borrow it. I only need it for a few days. I'm gonna pay it back. And then nobody catches that. So then— Do it again, and then they realize, oh, this is kind of easy, and they start doing a lot. And pretty soon, then they realize, oh, there's no way I can pay this back. So then they start to justify why they're entitled to the money. Oh, they don't pay me enough anyway. I do so much more for this company. I do more than everybody else. I'm entitled to more. And so, and then you get to, of course, then somebody discovers that the funds are missing and figures out, oh no, this person has been taking it. There's been, and then you start looking back, and you. you see that this has been a pattern over months and months. And in the actual case that I was involved in, someone was going to the ATM, uh, every week, 2, 3 times a week, and withdrawing $300, you know, or whatever they could, you know, $500 here, $300 there. And there was absolutely no, you know, plausible reason on earth that, you know, I couldn't understand why anybody would need that kind of cash, you know, unless you're dealing drugs or something like that, right? Um, you know, why do you need it? But, but also then, you know, what it really turned out was this person was about $15,000 short on their, you know, monthly, you know, need. And so they decided that the company would be a good bank account for that. And so they started doing things like, you know, having the company pay for their $5,000 a month, you know, American Express bill and, you know, saying that it was a company expense. And, you know, there's all kinds of stuff that was happening. And of course, the other partners in the firm just, you know, were Just so they couldn't believe that anything like that would happen. So they really just didn't kind of watch for it. And it did, you know, and then, you know, the person was like, well, you know, then I just do this as a cash advance against my check. And then I, you know, and then I pay it back and then I pay it back. And, you know, it's just not a good idea. So what I always tell people, if you notice it, first of all, I say don't have 2 unrelated people Who are in control of the bank account for a syndicate or a fund, or 2 related people. Don't have 2 related people doing it. Okay? Make sure they're unrelated and make sure that you're both watching each other. And then the first time you see anything that's out of the ordinary, question it, because the best deterrent is knowing somebody is watching you.
Yeah. Right.
No, you make some very, very good points that I want to follow up on.
Yeah.
Regarding the unrelated part, we do see that quite a bit, that our clients will come to us and say, we think these 2 people are related and we didn't think they were. And can you find the connection? And they, you know, they try to hide it, but maybe it's their neighbors, or maybe their relatives are friends, or maybe they had a company together 10 years ago. Or, you know, or maybe their social media friends. So that's, that's one thing that's important for, for doing your due diligence research in that regard. Regarding the individual who has the credit card bills, when we recruit spies in CIA, we do it because we're looking for vulnerabilities. Vulnerabilities motivate people to do things they wouldn't otherwise do. So a great example of this is when you're screening, for example, for a nanny, and they're gonna have access to the things in your house.
Hmm.
You know, it costs so little to do a credit check, and you want to know, does this person— or, you know, an accountant in your office, or anyone, or an investor, anyone who's got access to money, to the checks, to— you need to know, are they vulnerable? Do they have Are all their credit cards in collection? You may still decide to go forward, but you have to go forward with eyes wide open.
Yeah, that makes sense. I mean, and I think about that even, you know, just letting somebody into my house. I can't tell you how many times I've been, you know, in my office working and the housekeepers are here and, you know, and it's different people every single time they come because it comes through a service. And, and then I, you know, realize, crap, my purse is just like laying out there, you know, somewhere. You know, that, that's just such a, you know, you got to think about stuff like that. I actually had, uh, somebody, um, I guess in a hotel, uh, it was a Best Western Hotel in Fresno, downtown Fresno of all places. And, uh, the person took my credit card, the clerk took my credit card and kind of went behind a wall and then came back. And, uh, you know, within a couple of days somebody had spent $3,000 at Costco and then, you know, $500 at the department store and stuff like that. And so. That was exactly when it happened. So it can happen anywhere. You've got to, you got to be cautious. Luckily, I mean—
Can I ask a little question in here just for our audience? Can we define what bad actor means? Because this is— it's a unique kind of term, and I think it might be helpful to kind of like define what that is.
You know, in my mind, a bad actor is someone who has Dishonest intentions, um, or ulterior motives. They're, they're not being genuine with you as to who they are or what their motives are, what their intentions are.
And we do like bad actor checks as well when we bring on, bring on new clients too, to help prevent this kind of stuff, right, Kim?
Yeah, so one of the things that we've done, and, and kind of in because we had a kind of a scary situation where, uh, you know, I've been involved in a couple of situations where there was, you know, somebody who was, uh, you know, wanting to raise the money, but oh no, I can't be in management, you know, I've got this or that going on, I have bad credit. So, you know, this guy's going to be the one in management, and he's gonna, he's gonna be the front guy. But then this other guy is actually the person who's raising the money and doing all the stuff. And, uh, you know, lo and behold, you know, he ended up going to jail, um, you know, going to prison for something unrelated to this. But, uh, you know, that was, you know, really vulnerable for those investors that were dealing with them. And we didn't want to be able to have anybody be put in that situation. So we decided that we would do background checks and bad actor checks for every one of our clients and all the people that they want to name in management of their syndicate. And one of the reasons we decided to go that way was because we wanted to make sure that they're protected from each other. Because they don't necessarily, like you said, know each other very well. And, you know, they just met at a conference and they seem like nice people and they hung out for lunch or dinner, you know, and had a couple of phone calls. And now you're going to be in business with them in this multimillion-dollar business and you don't know. And so what we've found is because we have that requirement, we think people disqualify themselves.
Mm-hmm.
They will say, oh gee, I can't do this deal because— and it really is because, oh, they want to do a background check and they're going to find out I'm a criminal.
You know, it's a really good point, and it's something that I advise my clients on a lot. We do a few different types of background checks, and depending on the purpose, you either need consent or you don't need consent. But I think it is a— especially in this type of scenario, it's a good idea to tell the candidate, we're going to run a background check on you. Is there anything you want to tell us upfront that's going to come up you want to get ahead of.
Yeah.
And we've seen all kinds of responses. No, don't run a background check on me. Or no, I've changed my mind. I'm not interested anymore. Or they, they lie. Of course, they, they don't bring up a conviction. Or amazingly, they bring up something that for whatever reason the systems did not pick up. They volunteer information that we wouldn't have seen otherwise. So it's a very, very good vetting tool for honesty. Whether or not you need consent or not, I think it's a good thing to ask upfront.
I agree wholeheartedly that that's— it's very critical that just people understand, look, this is, you know, the attorneys we're using are going to do this. So if you want to be involved, this is what you're going to have to do. And, you know, we have people that sometimes call us and, you know, kind of, hey, can I have a private conversation with you? And we'll talk to them about it and they'll say, hey, this or that happened in my past. Sometimes it's an issue, sometimes it's not. You know, because the, the, you know, it's, if it's not a financial crime, right, not something that deals with investors, if it's, you know, you had a conviction in college for, you know, possession of marijuana or something like that, that's not going to keep you from being able to raise capital for real estate or for a small business. But, you know, depending on how recently it happened, it may be something that you have to disclose just because of the fact that You're required when you're selling securities to disclose all the material facts that investors need to make informed consent. And one of those things is things about you, you know, not just the deal, but it's about you. So what is there? Is there something in your past that might change an investor's decision about investing with you? And if there is, you tell them about it. And if they decide, I don't want to invest with somebody who's declared bankruptcy or who's had this or that, it's okay. That's their decision and you need to respect it. And, but other people, I don't care. I've been through a divorce. I went through bankruptcy. I understand exactly what happened to you. That doesn't bother me. You know, they'll invest anyway, and then they can't complain about it later. You know, so if you tell them upfront, but yeah, that's critical that you ask, you tell them it's happening.
And I agree with you. The context is very important. We've seen, I'll give you a great example. We saw a sexual predator assignments to a subject. And when we dug deeper and we talked to him and we looked up the records, it was when he was 16 dating a 15-year-old and the girl's father pressed charges. And now this sticks with him for the rest of his life. Another example of— you mentioned bankruptcy. Is it one bankruptcy or is it bankruptcy every 10 years? Is there, you know, when it comes to criminal, is it Is it 1 DUI or is it 3 DUIs? Is there a trend? Right. So you have to look at it holistically like that.
Yeah, it is critical because, you know, as another example of that, back in 2008, 2010, when the last recession was, uh, you know, there were people, a lot of people that had to give back property to the bank. And, uh, you know, so at that point, it was kind of a, you know, get out of jail free card for that because as so many people did it that everybody was just numb to it. It's like, oh yeah, I know so many people that happened to, I don't care, you know, and they were able to continue on. But as long as you disclose that stuff and tell people, hey, here's what happened, this is what I did, you know, the main thing is, were any investors harmed? And if investors were harmed, you are obligated to disclose, or if you have any kind of regulatory issues with, you know, cease and desist orders from securities regulators or bank fraud or mail fraud or anything like that, you know, then you've got issues. with that. And those things have to be disclosed, even if it's outside of a window that would prohibit you from being involved in one of these deals. If somebody can find it on the internet and learn about it later, they can use it to get out of the deal. And they not only themselves, but they can unwind the deal for everybody. So all of a sudden it becomes a big deal. So, wow, that's amazing. So what are— what do you recommend that people do to prevent fraud?
Well, just to touch on what you just mentioned, as far as the lookback window, I think that's really important to consider because some background reports, for example, employment and tenant screening, only go back 7 years. But for investing, you can go back as far as records will allow. So you have to make sure you're using the correct type of background reports so you're not missing those types of things. So in regards to your questions, what to do to prevent fraud, I think we've, we've covered the most important part is to background check. You know, that is essential. And then it goes into other things to protect yourself. For example, I use 2-factor authentication for everything. You know, you, every account that I have, every financial account, social media account, communication account. Everything I use either text or Google Authenticator for. There is no one getting into these accounts. So that, that's, that's one. Another is when you get an email asking for money, first thing you do is check the email address, not just the name, but the corresponding email address to make sure it corresponds to what you are aware of, what you, what you know that email address is. But Even if, even if it does look good, nothing beats a phone call to confirm the, the financial transfer request.
Yeah, that is so, so true. Um, I, I've noticed that, you know, I'll get a text and it's, uh, you know, or an email that says, you know, oh, this is Apple and your, you know, your iCloud account is being suspended, you know. So it's a trusted company and, or, you know, Intuit, you know, QuickBooks, this is your QuickBooks account and you need to do this right away. And then I'll look at the email it's from and it's like somebody You know, a very long name and, uh, uh, you know, at Hotmail.
Right, exactly.
No, that's not coming from Apple, and Verizon doesn't use Hotmail. Yeah, no, Yahoo, right?
Yeah, right. Happens all the time. It's amazing. But you know, it's a numbers game. They, you know, they may send out a million of those. They only need one or two, you know. So that's the thing.
Yeah.
It's funny, but it's tragic because a lot of people do get caught up in it. And I mean, there's times when I'll look at something and I'm like, is this— I'll ask my husband, do you think this is legit? And he's like, no. You know, it's like, yeah, for a while I was getting the ones saying that I was— a warrant had been issued for my arrest for IRS fraud and they were coming for me. Yeah, I kept waiting for that. They didn't have—
There's, there's another thing your clients may want to consider is setting up Google Alerts on the people that they're investing with. Because just because they background check someone in the past, you know, they may get arrested for fraud next week. And you may not be aware of that. People who are, you know, critical in your life, I think it's important to set up Google Alerts, either their names in quotes Or their names plus, uh, and then parentheses, scam, fraud, arrest, you know, uh, um, conviction, things like that.
Wow. Okay. I hadn't thought about that, but that's, that's a really good, uh, prevention tool. So, and it's really, you know, you gotta do this early on in the relationship because the longer you get into the relationship, the harder it is to say, oh yeah, I've known you for 2 years, but I'm gonna do a background check on you before I do this, you know, deal with you. So, you know, it's very awkward. Yeah, you really, you really kind of needed to make it a policy or, you know, happy to do that, but everybody I invest with, I always do this. Is that okay? And we consent for that. And if they say sure, then, then fine. But also, I think be careful if they want to provide you with their report because that report could have been doctored, right?
It is so easy. I mean, you know, these reports are PDF reports. So, you know, they can be easily manipulated. So I agree with you, you know, 1,000%. You have to provide— you have to get the report. You should not believe or trust the candidate to give you their own report that they got from God knows where, that they, you know, deleted something or erased something or, yeah, or redacted something. Yeah, absolutely. Good point.
Yeah. Okay.
I also think that even if you are in like a relationship with somebody for 2 years or whatever and you're coming online to to doing this that you should still do it. You know, it's like, okay, I've just become aware that like we should have done this at the beginning. And you know what I mean? Like, I think it's still okay to do that because otherwise you're burying your head in the sand. Like, you, when you know something, can't unknow something, right? And so for your own protection and due diligence, I don't think that it would be unfair to say, okay, listen, like, I think we, we missed the mark here. We should have done some background checks. We didn't. We're gonna make this a policy going forward. And so now, starting now, Everybody needs to have this done. I don't think that— I think that would be okay, a good, good business practice.
Yeah, I think you nailed it, Krisha, that, that, you know, if you— there's many reasons why you want to background check a person later on. It's a new policy, you know, a new institution is coming online or coming into the deal, and they're requiring it. There's any number of reasons that you could give somebody to justify doing a background check at any time without making it, you know, an awkward situation.
Yeah, yeah. And they're requiring it. We use that, uh, yeah, when somebody called us from prison and wanted to do a securities offering. And finally I just said, uh, our E&O insurance won't allow us to represent you because they kept calling back.
My God.
No, we don't want to do that. Uh, crazy. Um, so what about, uh, non-US persons? Are you able to do background checks on people that are from outside? Because we get people all the time. I can't tell you how many people have come to me over the years and said, oh, I have someone who has $50 million. It's always $50 million from Saudi Arabia or from China or from Russia or, you know, somewhere that's a little suspect and they want to invest with me. And, you know, how do you make sure if those people are real, which I doubt any of them are, but how do you tell?
It's a really good question. So the first thing you want to do, of course, is check the US federal databases to make sure they're not on any watch lists. There's a— we have a way to check 60 federal databases all at once. It's a name-only check. We use fuzzy spelling because, you know, names can be spelled different ways from the original name. So that's step 1. Step 2 is you have to use someone in-country to do the investigation. And I'll give you an example. Here in Florida, Our division of corporations is called Sunbiz. And when you go to Sunbiz to check on my company, Crossroads Investigations, it's not going to come up. Our company is Crossroads SDI Inc. Our registered fictitious name is Crossroads Investigations. It's a separate search in Sunbiz. If you're in Romania or China or Argentina, you're not going to know to look for the separate search down lower on the page and what a fictitious name even is. So I think having boots on the ground is critical for international investigations. It's why I spend so much time cultivating our network of agents overseas. The more information that we have, the better. A copy of a passport is great. The person's national identification number, you know, which is akin to our Social Security number, date of birth. We need all that. There are a lot of times, depending on the country, we need to know their last known address so we know which province or which region or state to check. And then we use our agents on the ground. And unlike the U.S. or some Western countries, most countries, these are manual records checks. Someone has to go somewhere and check records. Or even, you know, even for example, in Cuba, you have to pay someone to go check those records. So boots on the ground is critical, but it absolutely can be done in almost any country to background check somebody. It may not be as robust as some of our checks that we can do here in the US, but at least it's a criminal check.
Well, and what are the risks? Let's say for someone who's raising capital and they get some people from, you know, somewhere outside the US who want to invest and they don't know them very well. What are their risks if they take that money?
Well, that, that goes down to why you need to check the sanctions list, because you don't want to have the State Department calling or knocking and saying, hey, you're doing business with someone who's designated terrorists or on our specially designated list for any reason. It could be for money laundering. They could have an Interpol warrant out for them. So that's critical. And I think, you know, beyond the criminal, you need to check a litigation search. Are they— have they been sued in their country, in their home country? Have they— you know, you need to get a sense of this person because many times, especially here in South Florida, we have a lot of people who are new here from overseas. So there's not much records, there's not much track history. Their track history is in their home country. So as much, much as we can dig, it's, it's critical.
Yeah.
So just from the context of a securities offering, you have an obligation. The Department of Treasury maintains a list of specially designated nationals and also sanctioned countries. And you, as an American citizen or legal resident, are not allowed to do business with those people. Anybody who's on that list. And the last time I looked at the SDN list, it was over 500 pages long. Yeah. So, and it includes, you know, if I can do the list, drug kingpins, weapons of mass destruction proliferators, terrorist organizations, you know. So if you do business with any of those people, then you're committing a crime. a crime. And you can be held accountable for that. I met an attorney one time at a conference, and she was in Florida. And she said, oh, I have several clients who are in prison for accepting money from South America. And it was, you know, it was a money laundering operation. So you've got to be extremely careful if you're a syndicator, you know, you're trying to raise money, or you're really You know, you're under a gun. You've got a lot of short period of time. You need to raise this money. But if you don't know the people that are investing with you, it doesn't matter if they're, you know, not from the US or are from the US. If you don't know them, you could be, you know, opening up a whole can of worms. And just because somebody is here in the US and speaks perfect English doesn't mean they're a citizen or not on that list.
That's right. And that, yeah, the SDN list can be searched by anybody. Like you said, Department of Treasury, Office of Foreign Asset Control. Easy to find online. It's updated frequently. But a few caveats. One is, as I mentioned, if you look for a name and it's spelled differently, it may not come up. And another is the government may come to you and you need to show them that you tried.
Yes.
So what we do for our clients is prepare a memo, a short memo, saying that this is what we searched. This is the names that we searched so that they can provide the government that they at least as a CYA that, you know, here's a third party that did it and tried. Because just saying to the government, oh, I went to the website and nothing came up, that's not going to fly. How would— why would they believe you?
Yeah. And I always suggest that you print out the page when nothing comes up so that they can see this is the name that you looked at. And then, you know, if you're— and always get an ID. You know, because of the Corporate Transparency Act, which of course we, you know, is up and down, we don't know if it's going to be required or not for us to do our beneficial ownership reports with FinCEN. But because of that, you really do need to get a copy of everyone's ID, their date of birth, their address at the time they make the investment. And you do that through their subscription agreement. Those fields are there, but the onus is on you to make sure that they actually filled them out. out. You know, don't accept a partially filled out subscription agreement. Send it back. Hey, you've got to complete this. If they don't, and then you want a copy of their ID, so make sure you're getting that as well. And, you know, right now the Corporate Transparency Act is back in effect. It's been going on a roller coaster ride up and down with different court rulings as to whether or not you had to report. But right now it is back in effect, and the filing deadline is March 21st, 2025. There is some pending legislation that may push that out to the end of the year or other legislation that's being proposed that may, you know, try to abolish it, but for the moment it's in effect and you've got less than a month to do those filings. And it applies to anybody in control of an entity and also anybody with 25% or more of the interests. So for our syndicators, that is, and then you're, there are some exemptions, but they don't apply to any of our clients that are raising money for Real estate. So, um, all right, how about if you're doing due diligence, uh, you know, like on a deal? Do you ever see that where people like make up investments and then, uh, you know, people, you know, try to get people to invest in it and the thing doesn't exist?
Oh yeah, we've seen it all. Um, yes, um, we— and, and there's a number of ways to check that. If it's an actual property, we may send someone out in the field. It could be anywhere, you know, anywhere in the world. We Have someone go out and look and, and ask around and poke around, do interviews in the area. Certainly, and we do a lot of deep dive due diligence. We do dossiers on people, companies. We see how maybe companies or people are related. Our analyst is former CIA as well, and she puts together these amazing papers. And you have to do that deep dive. Of course, you may. Yeah, I think it's a really good point. Is the deal real? Yeah.
You know, and how, you know, just because you can look at— and, you know, we do have Google, so that's at least one tool. It's— but maybe not definitive. But, you know, I remember going somewhere one time and I can't remember what it was for, but when I got there, it was a vacant lot. That was not a real thing. So, yeah, you've got to be careful about that. But at least, you know, you can look on Google, you can see, hey, if you're investing in this apartment complex, is it the real thing and does it exist? And, you know, maybe even talk to some local realtors yourself and say, does this, you know, what's the deal with this property? And they'll tell you, right? If you're investing in a property and you can ask them, hey, what do you know about this property? I'm thinking about investing in it. You know, they'll tell you, oh my gosh, don't do that. That's a terrible place. Police won't even go, right? You know, so you might want to know, you know, or, and talk to the local police. You know, that's certainly something that our clients are doing. Or should be doing when they're buying something is to, you know, check with the local police. Hey, what's the reputation here? How often do you go out? Do you go out? You know, is it one of those places you won't go? So what, what should an investor do if they suspect fraud?
Oh, okay. So one thing, of course, is to have everything documented. The communications, as much as they can be in email instead of phone calls, so you have some records of the communication, that's critical. Knowing, you know, which law enforcement agency that needs to get involved, it's complicated. It could be the state attorney's office, it could be the U.S. attorney's office, it could be the FBI, you know, the Federal Trade Commission if there's a scam involved. So there are, you know, it's a myriad of things. You may want to have a lawyer Guide you into, you know, reporting in the correct channels.
Yeah, I think that that is absolutely true. I know that I was involved in a case. Again, luckily this wasn't a client, but there was somebody who was misappropriating some funds, shall we say, and had done it multiple times with multiple different people. This was out in Los Angeles County, and there was There was probably a couple hundred thousand dollars involved that we were aware of at the time. And I thought, well, I wonder if they can report this to the district attorney in Los Angeles. And Los Angeles at the time had a statement posted on their website that said, we don't investigate white-collar crimes of less than $300,000 loss, which is a license to steal up to $299,000. You know, it's like, hey, get out of jail free card because we're not going to do anything about it. And, you know, so this person was, you know, under investigation by the FBI for a long period of time and now is spending time enjoying federal prison, but not until he'd stolen about $15 million was what they had reported. And, you know, it took a long, long, you know, several many years from when I was involved with this person to know to them actually getting Arrested and going to jail.
Yeah, that makes a lot of sense. I've heard anecdotally the FBI field office down here in Florida, South Florida, is so overwhelmed that the threshold is well into the 7 figures before they'll pay attention.
Wow. And, you know, I've seen— I've kind of noticed that myself, just anecdotally, that the SEC, you know, seems to get involved when it's, you know, the crime is over $15 million, which, you know, and then when I read the complaints about these, these financial crimes, you know, because I get a weekly bulletin from the SEC on the new enforcement actions, and the complaints always read very much the same. So-and-so set up a company, they raised this many millions of dollars from these types of people, and often it's a targeted group, and they use the money to, for extravagant vacations, expensive cars, new, you know, expensive homes and, you know, private jets, you know. So all this stuff, and it's always kind of the same. And a lot of times the way they get caught is they start posting it on social media. Yeah, here's my brand new house and here's my brand new Lambo, you know, the private jet. And, you know, and the investors, you know, are seeing that and going, wait a minute, I'm not getting paid. What's going on here?
Ego always gets in the way.
Yeah, right.
I know, it's like completely unthinkable that they, they do that. Um, so yeah, it's, it's disheartening.
Uh, but that's the word I was going to use— disheartening.
It is heartbreaking to see people that do that. But I think they do get into that triangle of fraud. They first think, oh, this is a good idea. I mean, I still like to come from the position that nobody sets out to commit fraud, but I'm sure that's untrue, unfortunately. But I think a lot of people don't set out to commit fraud. They set out to do something that they do believe is honorable and they do think will be profitable, and then it isn't. And then they get impatient because they're not, you know, living the lifestyle that they imagined for themselves. And so they start to do it and, you know, doing it on investor dollars. And then it becomes a big Ponzi scheme where they've got to raise more money from people to pay back the people before that are starting to bother them and, you know, wanting to complain. So it just becomes a never-ending cycle. So it doesn't end well. You know, it's just, it's not worth it. You know, the ruination of your reputation, your livelihood, you know, all of those things, your relationships. And this person that ended up going to jail after the FBI investigation, you know, there was a divorce. There was, you know, all the homes and all the expensive things were lost. You know, so, you know, it just, it just doesn't pay. You know, you can make a reasonable amount of money in the world of syndication and real estate syndication and funds, but you do have to be very, very mindful of your investors' money and, you know, and take care of it better than your own. And you always have to put their interests ahead of your own. So, well, what about All the new technology, you know, all this AI, is this going to make it easier for people to detect fraud? Is it going to make it easier for fraudsters to commit fraud? What do you think?
I think that's going to be a double-edged sword. You know, think about this, this video that came out last week with these actors with the Kanye shirts and how real it looked. And people thought that this was a— I mean, it was a very real AI video. Looking video. And AI can, can, I think, enhance, be used to enhance fraud, no doubt, to enhance a legitimacy of a person, of a company. But I, I think AI can also be used to help with your research, with your due diligence. But nothing beats the looking to actual data sources. Yeah, but it's, it's, it's the next frontier, isn't it?
It really is. And, uh, yeah, at some point there will be AI that combats AI, right?
Uh, yeah, fact-check everything. Yeah, don't believe anything you see anymore.
Yeah, trust but verify. Look at everything skeptically and, uh, you know, and protect your, your, your family, right? Because there's a lot of people who are maybe older. They're not into the AI. They, you know, kind of still believe what they hear or what they read, you know, if it's on some public channel. And, you know, you've got to protect your, your family as well. I mean, we had instances with my mother-in-law where, you know, somebody was, you know, defrauding her and, you know, buying, using her credit card to buy books from Sri Lanka. And it's like, you know, She's never been out of the United States. Why would she be? You know, and the credit card company response was, well, you know, does she know somebody there? Maybe she's, you know, it's like—
Yeah, quite a bit of the elderly being targeted in scams for all types of things from— and they can be approached via email that, you know, like we talked about, we of our generation, we can see it. We all— that's a Hotmail. That's, you know, that's That's definitely fraud right away. But the elderly may not see that, or they may get a phone call or a text and believe it to be real.
Yeah. Well, and they're also lonely. So somebody will call, and they'll talk to them, and they'll be nice, and they'll feel good about talking to those people. The other thing that I remember reading— Krishna is from Canada. So I remember reading maybe a year or so ago that Canada had created some laws Regarding date fraud, right? So the online dating fraud is like one of the fastest growing fraud areas. So, okay, so just switching subjects here. Do you— what would you recommend for somebody who is, you know, in the dating world and, you know, maybe met somebody new and, you know, how do you— what would your background check on that?
Catfishing, I think it's called, right?
Yeah. I mean, is there something— do you guys ever get involved in those kinds of cases where You broke up for a second.
Sorry, I— yeah, I missed it.
Dating fraud, like the online—
Yeah, yeah. Yes, we do, we do see that quite a bit for, uh, of course, people who, um, background check their romantic partners, but also their parents' romantic partners. Even more importantly, I think we see that a lot too, of background checking these people. Have they been In many relationships? Have they taken over properties of people that they've been with? Have they, you know, going back to, have they been litigated against before? That's all part of it. But yeah, the catfishing is really, really hard. We get calls all the time of people that they've met someone online, but they've never met them in person.
Hmm.
And they're asking for money. And honestly, we don't even take their money. We just tell them, no, that's not a real romantic interest, that's, that's just stop engaging with them. I mean, that's never a real thing. That's never, that's never, never gonna be a real thing.
A real person is not going to ask you for money. Yeah. Uh, yeah. So yeah, don't, don't give money to romantic partners you meet online and don't invest with the Nigerian prince.
Right.
Yeah.
There you go.
Unless you do a really good background check and they're legit a Nigerian prince, then you're okay.
Right. I feel bad for Nigerian princes.
Right.
They're getting a bad rap.
The real Nigerian prince is, you know, he's just sitting there going, what?
I, I like legit have money that I want to invest.
Nobody will take his money. Uh, okay, so, um, tell us, um, do we have any questions? If anybody has any questions, we'd love them. But before we do that, maybe just tell them about, uh, our books, how they can get those, and then, uh, we'll have Mark give his contact Yeah, absolutely.
I mean, you know, what, what is it that we do? We, we are a law firm and, you know, we help people, um, you know, with offering documents and making it nice and legal for you to go out there and raise capital and do it in the right way. And we've written 2 books. We have, um, this one here, um, uh, this is for people who are new to raising capital, uh, with the laws and the structure and strategies, um, to help you secure funding and figure out, um, what you need to do in the first instance. And then this book here is more of a desktop reference, a little bit thicker here, um, that goes into more detail about once you have a deal, how to structure it and assign duties and so on and so forth. Both of these books are available on Amazon. If you search up Kim Lisa Taylor in amazon.com, you'll find, um, links to be able to purchase hard copies, get a Kindle copy. And our second book is also available on Audible, but you could also get a free copy if you text the words Syndicate, S-Y-N-D-I-C-A-T-E, to 844-796-3428. That's texting the word syndicate to 844-796-3428. Or you can head on over to our website, syndicationattorneys.com, and find our other amazing resources like articles, past podcasts, and our books as well. And schedule a consult with one of us if you are interested in finding out more about how to raise capital legally.
Very good. Thank you. Thank you, Krishna. So, Mark, um, how can people get— reach you? What's the best way for them to engage with your firm and, uh, learn more about you?
Yeah, the very best, as you see here on my wallpaper, is our website, xinvestigations.com, and our email is info@xinvestigations.com. And that goes to my team of case managers, and that is the quickest way to get a hold of us, uh, and, and start the conversation.
That's fantastic. Um, and I know that you've got, uh, you know, some different products that you offer that are, you know, really not overly expensive. I, I think that if I was, uh, planning to invest in somebody that I didn't know and, and hadn't known to be in this business for a long time, uh, you might consider, you know, hiring you guys to do a deep background check and, you know, spending a few hundred dollars on that just to give yourself some peace of You know, if you're nervous about the investment, why not invest in a little bit of due diligence upfront? This has been a really fascinating conversation, but I'd love to hear from our guests. Do we have any questions?
We do.
Yeah, Mark, thank you.
What—
this is from Stoney. What info from a person do you need to do a background check? I use a service that would like an SSN, but they will do a basic check with only the full name and home address.
Right. The full name and home address is average. That's not the best way. The SSN is the unique identifier for the subject. At least a date of birth would be better than an address. We like for— if someone's not giving you their SSN, that's a red flag. If it's a— if there's a lot of money involved, you know, they're already hiding something. So why won't they give it to you? We, you know, there's a— they can give it to you over the phone if they want to. Um, but I, I think the SSN is the proper way to run a background check.
Well, my only caution there though is if you are getting somebody's Social Security number, you really shouldn't have them email it to you. Um, I don't know if text is any better.
Over the phone call, phone's fine, or at least the last 4 of the SSN and their name and their zip code is, you know, that would be, that would probably be sufficient depending on the type of report that's being run.
Okay. And be careful though. But if you do get that information, try not to store it electronically on Dropbox, some, you know, database that could be hacked or could be, you know, because once you have that information, you're kind of obligated to protect it.
That's right.
You know, I actually met somebody who had a business and had a bookkeeper who was doing a fantastic job with his books, international business. And she died, but she had those books open on her computer. And the people that came to clean out her house had access to everything. And they hacked it, they used it, they opened accounts, they stole money. And he was having a nightmare just trying to get, you know, to get, to get that taken care of. So, you know, maybe the policy there is that, you know, if it's on your home computer, you close it out every night. You don't leave it open. You don't leave it accessible to other people. But you've got to have some kind of a policy at least to try to protect yourself.
I would add that when we, when we produce our reports, we mask the That was what we call PII, personal identifying information. So we mask the social, the full date of birth, the driver's license number. You know, we don't produce that for people. And also for like our employment tenant screening, we'll give them a link for the candidates to fill out their own information on a secure link, which the landlord or the employer or we cannot even see.
Yeah, and we do the same for our background checks. They go directly to our provider, and we we have them house that information. We don't keep that information. We don't see it. We don't we don't see it at all. And when we get the report back, it's masked. So they're they're interacting directly with that third party who has the job of safeguarding that information. Be cautious about that. All right, who else do we have for questions?
Anonymous attendee. Hmm, mysterious. What can a limited partner do if the general partner does not want to do things promised when raising capital? For example, when the GP fails to give the LP quarterly updates, does not pay distributions as promised, and does not respond to email or phone call inquiries?
That is very frustrating, and we do have clients who have experienced that. You know, one thing that we have done One is to do a door knock, which is, you know, in a non-intimidating way, but to say, you know, we've been hired by so-and-so to do a wellness check. They've not heard from you, for example. Or we'll give them a letter from our clients that we ask them to sign for. If they will, it's just a little indication that our client and we know where they are, that they're not going to get away with it, that we're paying attention to their obfuscation. So that that is one method. Another method may be to have an attorney draft a letter, a demand letter. Yeah, that you know that will also get someone's attention.
Yeah, and you know, you as the, you know, if you feel like you're concerned about something that's going on, your best place to complain, if you want to complain to a regulator, is not to the SEC. It is to complain to your state regulator. So a lot of people don't realize that in investments, every single state has its own securities division. So kind of like their own mini version of the Securities and Exchange Commission. I actually had the privilege over the last couple days at a continuing legal education to hang out with and meet the president of the North American Securities Administrators Association. And so she, you know, is the head of the organization that all of the state securities agencies— there's actually 68 territories that are part of it, Canada and its territories, the U.S. And its territories and also Mexico, who are all, you know, trying to combat the, you know, securities fraud and talk about things related to investor protection and things like that. So the state where you live, your securities division is going to be far more active and far more likely to help investigate an issue that is small issues. You know, they've got the budget to do, to investigate the small things versus the federal government and certain states are, you know, the state organizations, some of them are just too overwhelmed and they can't. But you may have some better luck with your local securities division or legal, even your local district attorney. But just realize that once you lay that hammer down, you're unlikely to see anything from that person because they're going to clam up, use all the money for their defense. And you know you're not going to get probably any of that back. But if you're trying to stop them from harming other people, and you think they're they're in real harm, you have the ability to do that. Your attorney, however, cannot do that for you because as attorneys, we cannot make a complaint to a securities regulator on your behalf because we're not allowed to threaten criminal prosecution in a civil matter. In order to gain an advantage in civil matters, but you can always do it yourself. So that is an option, but just realize that's kind of the the last option. So you might want to start with an attorney who drafts a demand letter. See if you get a response. But always, the other thing you can do is have an attorney review your offering documents and see if there's a way to band the investors together and get them to. trust that person as a manager so that the investment can be salvaged. So there may be a way to do that. So that's also an option. So, all right, what other questions do we have?
Joe asked, well, we touched on this, but we didn't give numbers. Can Mark share an approximate cost for performing a background check of a real estate-sponsored GP located in the United States?
Sure. So what we call a Phase Comprehensive background report is $500. It shows things like nationwide criminal history, regardless of conviction, judgments, foreclosures, liens, bankruptcy, bankruptcies, evictions, businesses, UCC filings. It's a good thumbnail sketch on a person. We can do a phase 2 deep dive. that our CIA researcher, former CIA researcher does. That starts at 3— that's $350 an hour on someone basic. It may be 4 hours on someone who's been involved in a lot of businesses and lived in a lot of different states. You know, it could be 20 to 40 hours. But we look at that first report first to look for red flags. And it also guides us to give an accurate estimate of how long, how much hours that Phase 2 would take for a deeper dive reputation check.
Okay, pretty reasonable, I think. Hopefully you wouldn't have to do the hourly, right?
Yeah, and we have— we also do employment and tenant screening. That starts at $75, um, and, and you can add credit for $50, and you can add driving for $50.
So, okay.
And you said tenant screening is part of Yeah. Tenant screening, that's a good one. We have a lot of clients that are doing multifamily and they need to know that the people are worthy. So, okay. I'm just going to put into the chat for anybody that is able to see this, Krisha is a great resource. If you want to know more about what we do, reach out to Krisha. Krisha also has Her own mindset practice, and so she can coach you through mental blocks that might keep you from achieving your your goals, your real estate investing goals. So if you'd like to talk to her, you're welcome to reach out direct or go to our website, and you can schedule a call there. So I think Stony asked one question. I think we answered this one, Stony. What about a foreign person who doesn't have an SSN? And then I think you said there's an international ID or something that—
Yeah, well, the cost for that depends on the country. Yeah, it can vary widely. Yeah.
Yeah.
Okay, excellent. So anything else that we missed that you'd like to add?
Well, it's been a wonderful conversation. Thank you so much for having me.
Yeah, it's fascinating. Uh, so, uh, yeah, thank you so much for coming. Thank you all for listening. And we look forward to seeing you all on a future podcast.
Yeah. Thank you, everybody. Thank you, Mark. Thank you, Kim.
Bye-bye.
Bye.
