DO NOT INVEST with SCOTT CARSON (We Close Notes) or Inverse Asset

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DO NOT INVEST with SCOTT CARSON (We Close Notes) or Inverse Asset

Gerry Cohen
Investor · Sanford, NC · Member since 2016 · 19 posts · 96 votes

I have been reluctant to broadcast this information to the note investment community, hoping not to "hang out my dirty laundry" with colleagues or the note investment community. However, it is time to speak out and address this reckless and unethical behavior of SCOTT CARSON! It must be STOPPED!

After attending SCOTT CARSON's (We Close Notes) seminars, Master Mind programs, and listening to his podcasts, I decided to invest as a passive investor (joint venture partner) with SCOTT CARSON (Inverse Asset Fund) to acquire a number of defaulted real estate notes. SCOTT CARSON and (Inverse Asset Fund) acting as the lead investment manager to secure the notes and properly disposition. Not so dissimilar from most note joint ventures agreements.

Once funds transferred the joint venture immediately transformed into a bad movie! SCOTT CARSON never followed up, never shared information on the status of the investment (notes) nor paid out interest income per the agreement. After more than 24 months, following the terms of the agreement I gave SCOTT CARSON (Inverse Asset Fund) the appropriate notice to dissolve the joint venture, return principal and interest owed to me. I am still waiting for proper disposition and return of principal.

Naively, I thought SCOTT CARSON (Inverse Asset Fund) would do the "right thing" and meet his obligation if treated like a professional. No such luck!

After several attempts to address this obligation directly through legal counsel, I instructed my attorney to secure a judgment against SCOTT CARSON and Inverse Asset Fund, If you take the time to research Travis County, Texas county records you should see my approved judgement as well as other judgments awarded to other passive investors. 

This is not how the "note investment business" works! In closing DO NOT INVEST with SCOTT CARSON (We Close Notes) and Inverse Asset Fund. 

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Adam Adams
Investor · Small Town, TX · Member since 2016 · 110 posts · 252 votes
7y

@Jay Hinrichs A lot of us learned from Scott. I can say that I probably wouldn't have started buying notes without his class. A few months into it, I started hearing the stories like Gerry's. We've revamped our business and did away with a lot of the things he taught us.

@Patrick Desjardins - There are a lot of similar stories. Most of them from his students. If you run a background check, you'll see some nasty stuff. And some of the guys he promotes are just as bad. I invested with one of his buddies. After I gave him my money, I learned that he was a disbarred attorney. He was suspended for mishandling client funds and disbarred for practicing while suspended. I was lucky and got my money back, but I know several folks that are in a bind because of him and will probably lose their investment.

Since I got involved with those two fellows, I always tell everyone who writes me or calls me to do a background check before giving anyone any money. There are a lot of services online that will do it for $10-$40. It's a cash business which means no one is screening these folks like they should. If it were a commercial deal with leverage involved, not one bank would give them a loan. Spend $10 on due diligence before giving someone $10,000.

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  • Jason S.
    Corpus Christi, TX · Member since 2017 · 4 posts · 1 vote
    7y

    Here you go. Save everyone the guesswork. I had a run-in with Jay a few years ago and he tried to bully me. Said he would ensure I would not stay in the business too long if I did not pay him $500 bucks for an introduction for a special servicing company he helped start. Here are the details on the disbarred status: http://members.calbar.ca.gov/fal/Licensee/Detail/134221

    1Reply
  • Jim Ingersoll
    Real Estate Investor · Richmond, VA · Member since 2009 · 43 posts · 6 votes
    7y

    I am speaking at Quest Expo next week and Scott is not speaking at this event.   #duediligence is critical.

    2Reply
  • Roger DeReu
    Specialist · Member since 2018 · 12 posts · 5 votes
    7y

    Regarding Quest Expo, Scott mentioned he was going to hang out for maybe one day this year and then head home; no speaking or booth as I recall

    0Reply
  • Chris Mayes
    Investor · Austin, TX · Member since 2014 · 4 posts · 4 votes
    7y

    I chose not to work with Scott Carson after doing my due diligence. In 2017 his operating entities had lapsed with the state of Texas. He continued to do business using these entities, and said it was a paperwork mixup with the state. He did eventually have them reinstated by the state of Texas.

    Any attorney doing discovery during that period should know the ramifications. (piercing the veil, sole proprietor dba)

    There were major issues in his JV agreement that my attorney surfaced as well, but he dismissed them saying nobody else had an issue with it. I figured if he couldn't be bothered to get his paperwork right, then it wasn't really a good fit for me.

    3Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Chris Mayes:

    I chose not to work with Scott Carson after doing my due diligence. In 2017 his operating entities had lapsed with the state of Texas. He continued to do business using these entities, and said it was a paperwork mixup with the state. He did eventually have them reinstated by the state of Texas.

    Any attorney doing discovery during that period should know the ramifications. 

     this is pretty common I know I have 12 LLCs in 10 plus states we miss renewals occasionally as well.. Not defending just saying this is not that uncommon.. although these are his core business so you would think they would get more attention.

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  • Chris Mayes
    Investor · Austin, TX · Member since 2014 · 4 posts · 4 votes
    7y

    The period in question was likely around 1 year, and is uncommon to continue to collect investor funds in an entity that doesn't/didn't exist at that moment.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Chris Mayes:

    The period in question was likely around 1 year, and is uncommon to continue to collect investor funds in an entity that doesn't/didn't exist at that moment.

    WEll the risk is on him.. if the entity was not in good standing the people sueing will have a direct B line to him personally he will not be afforded any LLC protection.. that's the major risk..

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  • Adam Adams
    Investor · Small Town, TX · Member since 2016 · 110 posts · 252 votes
    7y

    He knew about them being defunct. I bought a note from him for West Cleveland. Turns out Cuyahoga county wants to see the status of all parties involved when recording the deeds. That's when I found out his business was out. In Texas, you just get online and plug in some numbers and you are done with staying up to date. It's even free. I do it every year, so it's not that hard. Months later, he still wasn't up to snuff and I still couldn't record the deed. We finally found out that the Secretary of State was behind the comptroller by about a year and I found a record I could use with Cuyahoga County. I eventually got the deed recorded without his assistance.

    Later on that year, or the next, one of his students reserved the name We Close Notes since Scott had let it dissolve. They were too nice and gave it back to him. I wish they kept it so we could watch him have to rebrand.

    @Chris Mayes Is that the current status of his companies? If so, he's let them lapse again because he did get them squared away a year or so ago.

    1Reply
  • Christopher Winkler
    Specialist · Dallas, TX · Member since 2014 · 900 posts · 392 votes
    7y
    Originally posted by @Bob E.:

    I got comped on a three day seminary's back in 2014 that Scott held in Phoenix.  During the class he had a "star student" that he held up as an example.  One of the attendees looked up the student and found that he was a disbarred attorney.  That was enough to set off my warning sensor.  I wish I could remember that students name, would love to by them dinner, they probably saved me a lot fo money.

    Its Jay "Jay Bird" Tenenbaum, who only goes to Carson's fake masterminds to find victims, just like a lot of other "speakers." Lost his license for continuing to practice after being suspended for not paying money to his clients, just like Stormy's attorney what's his name... 

    1Reply
  • Christopher Winkler
    Specialist · Dallas, TX · Member since 2014 · 900 posts · 392 votes
    7y
    Originally posted by @Jason S.:

    Here you go. Save everyone the guesswork. I had a run-in with Jay a few years ago and he tried to bully me. Said he would ensure I would not stay in the business too long if I did not pay him $500 bucks for an introduction for a special servicing company he helped start. Here are the details on the disbarred status: http://members.calbar.ca.gov/fal/Licensee/Detail/134221
     

     WOW! Jay is not only a thief, he is a little (literally) bully. Another investor referred to them as the Note Mafia...

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y

    @Adam Adams

    Wow that’s surprising as it seems like Laughlin Associates is frequently on Scott’s podcast and they promote “protecting your corporate veil”. Sounds odd they would let one of their promoters and clients have this happen to them.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Chris Seveney:

    @Adam Adams

    Wow that’s surprising as it seems like Laughlin Associates is frequently on Scott’s podcast and they promote “protecting your corporate veil”. Sounds odd they would let one of their promoters and clients have this happen to them.

    Chris depends on who the registered agent is.. its still up to the owner of the LLC to pay the renewal or do it on line.. your law firm generally does not do that for you unless your going to pay them.

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  • Corey Thompson
    Member since 2019 · 28 posts · 39 votes
    7y

    I tagged Scott in my fb group.  He promised to respond, but still hasn't.  The good news is that post led me to this amazing thread.  This is crazy to me.  Can't believe this is how people do business.

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y

    @Corey Thompson

    The last thing I saw before he blocked me from his social media profiles was he was going to be in Orlando this week at podcast movement festival.

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  • Corey Thompson
    Member since 2019 · 28 posts · 39 votes
    7y

    I've spoke at several of the same events as Scott.  If i ever met him, I don't recall.  But several sites are buzzing about this.  The strange part is how he didn't respond to the lawsuits...  That's just plain silly.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Corey Thompson:

    I've spoke at several of the same events as Scott.  If i ever met him, I don't recall.  But several sites are buzzing about this.  The strange part is how he didn't respond to the lawsuits...  That's just plain silly.

     sometimes folks thing they are judgement proof so they simply don't care.  I have not read them but if he lost ones for fraud then you can get rid of them with a BK. 

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  • Waleska Iglesias
    Member since 2017 · 4 posts · 4 votes
    7y

    You will do well to steer clear of people he Carson promotes. Attorney that was disbarred in California moves to AZ and continues to take people money. I got scammed by these guys to. Currently in a law suit trying to recover my money

    3Reply
  • Bob Davidson
    San Francisco, CA · Member since 2018 · 4 posts · 5 votes
    7y

    As to recovering money in a lawsuit, LLC's being lapsed, and why someone would not contest a lawsuit in court. The answer is actually very simple. He did't answer the lawsuits because he knew he didn't need to spend the attorney fees. He doesn't care about default judgments or if his LLCs are pierced because in reality people who do these kinds of actions always, and I mean always, have their assets very well hidden. It's very expensive to hire someone to search for assets just as it's very expensive to try to collect. Collection services usually want 50% of what they collect. And, you have to collect your own judgment. The courts and state/county authorities simple don't do that for you. And, if he has spent most of the money, the assets are depleted and you are further out of luck. Even filing the initial lawsuit is money you will probably never see again. Yes, you have the satisfaction of a judgment, but now try to collect. As I mentioned earlier, that is why the major companies I worked for never pursued anyone, even for million dollar frauds. We did look at the internal controls to add additional protections, just like people here have mentioned doing more intensive background checks. Crime pays and it pays very well.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Bob Davidson:

    As to recovering money in a lawsuit, LLC's being lapsed, and why someone would not contest a lawsuit in court. The answer is actually very simple. He did't answer the lawsuits because he knew he didn't need to spend the attorney fees. He doesn't care about default judgments or if his LLCs are pierced because in reality people who do these kinds of actions always, and I mean always, have their assets very well hidden. It's very expensive to hire someone to search for assets just as it's very expensive to try to collect. Collection services usually want 50% of what they collect. And, you have to collect your own judgment. The courts and state/county authorities simple don't do that for you. And, if he has spent most of the money, the assets are depleted and you are further out of luck. Even filing the initial lawsuit is money you will probably never see again. Yes, you have the satisfaction of a judgment, but now try to collect. As I mentioned earlier, that is why the major companies I worked for never pursued anyone, even for million dollar frauds. We did look at the internal controls to add additional protections, just like people here have mentioned doing more intensive background checks. Crime pays and it pays very well.

    its the IRS that could come into play here..  when they take money in and don't pay tax's on it.. which very few criminal types do that's tax evasion. money laundering etc.. so if these folks are out their dough and want some satisfaction.. filing complaints with the IRS  and sending in 1099 s to carson for money stolen may get his attention.. 

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  • Bob Davidson
    San Francisco, CA · Member since 2018 · 4 posts · 5 votes
    7y

    While I agree with Jay in theory, the reality is different.  As a recovering accountant, as well as former corporate investigator, reporting someone to the IRS only works if you provide substantial documentation as to the non-reported income.  They want an open and shut case to take to court. The IRS statistics are that only a very small percentage of whistle blower reports are actually investigated.  And, an investment in his fund can easily be reported by a good accountant as a loss.  Your loss is not necessarily income to him or his entities.  You don't know if he did or did not report it on his taxes. My guess is he did report it but also reported significant expenses. More bad news. The IRS will only investigate whistle blower reports if the amount is very significant. The last I saw was it had to be over $2 million because the amount of taxes on that number is low.  It's the  amount of potential non-payment of taxes, not your investment that's key. Also, they have drastically reduced their audits the past several years due to significant manpower cuts. Again, crime pays.

    2Reply
  • Christopher Winkler
    Specialist · Dallas, TX · Member since 2014 · 900 posts · 392 votes
    7y
    Originally posted by @Corey Thompson:

    I tagged Scott in my fb group.  He promised to respond, but still hasn't.  The good news is that post led me to this amazing thread.  This is crazy to me.  Can't believe this is how people do business.

    No, this is how criminals do business... 

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Bob Davidson:

    While I agree with Jay in theory, the reality is different.  As a recovering accountant, as well as former corporate investigator, reporting someone to the IRS only works if you provide substantial documentation as to the non-reported income.  They want an open and shut case to take to court. The IRS statistics are that only a very small percentage of whistle blower reports are actually investigated.  And, an investment in his fund can easily be reported by a good accountant as a loss.  Your loss is not necessarily income to him or his entities.  You don't know if he did or did not report it on his taxes. My guess is he did report it but also reported significant expenses. More bad news. The IRS will only investigate whistle blower reports if the amount is very significant. The last I saw was it had to be over $2 million because the amount of taxes on that number is low.  It's the  amount of potential non-payment of taxes, not your investment that's key. Also, they have drastically reduced their audits the past several years due to significant manpower cuts. Again, crime pays.

    its does happen though I had a sit down with an IRS criminal investigator on a developer here in Oregon they are about to indict.. but your right this is about a 5 million dollar deal with many losing 300 to 500k each.. from what I see here is small investors with small sums ie 20 to 50k each  and I agree those numbers are usually lost in this scenario.. best thing for them is social media like they are doing.

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  • Erin Lamb
    Member since 2019 · 15 posts · 10 votes
    7y

    I am so glad that this has finally all surfaced.  I have spent many days sitting on Bigger Pockets, wondering what to say and if it would only make things worse.  But since it's all out....

    I called the District Attorney, like a lot of people have said.  They sent me to the police department, who sent me to my local police department.  Can anyone tell me how to get past the person that answers that phone?  Who do I ask for?   Do you have a name and/or extension?

    I have also contacted an investigative reporter.  

    1Reply
  • Corey Thompson
    Member since 2019 · 28 posts · 39 votes
    7y

    @Erin Lamb look up candies dirt out of Dallas.  I'm about to tag scott to get his to respond to this thread.  I'll also tag the lead reporter for candies dirt.  Our fb group sent two contractors to jail last year.  so its worth a shot.

    0Reply
  • Derek Scott
    Columbia, SC · Member since 2018 · 16 posts · 14 votes
    7y

    His book on Amazon still has great reviews...

    0Reply
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