Is SCOTT CARSON (WeCloseNotes/Inverse Asset) DEFRAUDING Investors

36 Replies

Like many others, I have had a negative experience Joint Venture investing with Scott Carson and his company Inverse Asset Fund LLC. I'll share my experience in the hopes that it will help others who are thinking of or currently invested with him. I decided to invest with Scott Carson after attending a few of his NoteCamp online courses and taking his Virtual Note Buying for Dummies course. I thought those programs provided pretty good value and that Scott seemed genuinely concerned with helping people get started in the Non Performing Note (NPN) space. I successfully invested in a couple of NPNs on my own using many of the people he recommended so it seemed that his method had potential to be successful. At the time I was busy with my main business working with tax foreclosed properties, and I didn't really have the time to do NPNs on the side, but it seemed like something I could expand into in the future so when Scott approached me with a JV (Joint Venture) proposition to passively invest in some CFDs he was buying it seemed like a great way to get some exposure to how these played out. In his initial email about the agreement he said:

“We will be providing monthly updates to our investors, along with quarterly payments (or larger chunks depending on if we sell the asset off). We will also be providing collateral files for you to review.”

Unfortunately, after wiring the money to Scott in October 2017, the promised monthly updates never came. For the first 2 months I gave him the benefit of the doubt. Having invested in a few notes I knew that getting servicing transferred and disclosures out to borrowers could take some time and it was clear Scott was a busy guy. But then I mentioned to another local investor I had started working on NPNs and had invested with Scott, he hesitantly told me that he knew of another investor who had a real hard time getting their money back from Scott, he didn’t have a lot of details but advised me to be careful. So at this point I started being much more persistent about asking for updates and I did start to get some from Scott's assistant. One of the 4 assets had made payments and looked like it would become performing. It seemed like things were on track, and I looked forward to my first promised quarterly payment. Mid-March I asked Scott about it and he assured me it was being processed and I should have it in a few days. A month goes by, with no payment or update. I can see on Facebook that Scott is off vacationing in Europe so I give him a pass for not responding to my inquiries. I try to email the assistant and get an Auto reply that as of May 22 she is no longer working there.

When Scott gets back in June 2018 he tells me that his assistant has not been updating the files for a couple of months, but that he will get my payment out to me by the end of the week. A week goes by, no payment. I ask about it and get no response, a few days go by, I ask again, no response, a few more days. I start hitting him daily. Finally he does wire me a payment but there is no accounting of which notes it is for, what is principle, what is interest, or anything like that so I start asking for that info. He tells me he will upload the full accounting to an online account I can access (as agreed to in the JV contract) by the end of the week. Same story as before, I keep asking for the info and getting no response or occasionally "I will get that to you in a few days". This goes on for several months.

In Feb this year (about 15 months into the deal) Scott tells me all the assets are up for sale. At this point I still have not received any additional quarterly payments and have no idea what is going on with any of the loans aside from a very infrequent and vague response form Scott like “one loan has made a few payments and we are working with legal to cancel the contracts on the rest.” A month goes by I ask for updates, no response, same next month. I look up in the county records to see if I can see anything. I see that the deeds were recorded into Scott’s Company but the deed of trust that was supposed to be recorded at the same time in favor of my company to secure my interest in the property was never recorded. There is also an $800 water lien against one of the properties. When I finally get Scott to respond he again says all assets are being sold and I should have the money soon. Fast forward 6 months and the same investor who initially warned me about Scott sends me a link to the following BP thread:

https://www.biggerpockets.com/forums/70/topics/738696-do-not-invest-with-scott-carson-we-close-notes-or-inverse-asset?page=1

It is quite lengthy but to summarize, it turns out several other investors have also had negative experiences with Scott including:

Gerry Cohen, Al Curiel, Beth Hale, Bella Scanland, Chris Frank, Michele Orgell, Kristin Cook, Gar Parries

Most of the stories are almost identical to mine. At least one takes it a step farther and say that Scott partnered with multiple people on the same asset without their knowledge. Many have or are getting legal judgments against Scott. As I’m reading, the thread I’m hoping to see someone jump on and defend Scott and say they had a positive outcome investing with him. Nope. Instead I see people I recognize from presenting at his NoteCamp event saying they think he will probably go to jail. I type in Scott Carson the Travis County District Clerk site here:

https://www.traviscountytx.gov/district-clerk/online-case-information

and find 7 closed and 7 active cases against Scott

From there I go to the Clerks site to see the judgments:

https://www.tccsearch.org/RealEstate/SearchEntry.aspx

There are 4 from what look like investors and one from the IRS: 


One is particularly troubling as it specifically mentions Fraud:

I started to look at other counties. Williamson County where Scott is located posts their Jail Records with mugshots online:

https://judicialrecords.wilco.org/PublicAccess/default.aspx

Not good. Booked 4/15/19 Charge: Writ of Attachment Released on $10k bond 4/16/19

I had to look up what a writ of attachment was. From Wikipedia:

“A writ of attachment is a court order to "attach" or seize an asset.[1] It is issued by a court to a law enforcement officer or sheriff. The writ of attachment is issued in order to satisfy a judgment issued by the court. A prejudgment writ of attachment may be used to freeze assets of a defendant while a legal action is pending. Common grounds for obtaining a prejudgment writ of attachment are that a defendant has committed fraud or that a defendant is prepared to hide assets from a court.”

So at this point I'm pretty scared that my entire investment is in Jeopardy. I finally get Scott on the phone and he tells me not to worry, he has already made it right with all the people on the thread. I ask him why the deed of trust was never filed for me, he doesn't really apologize or give any explanation but says he will get that done right away. Days go by. It doesn't happen. I tell him I want my money back per our contract terms. He says no problem, that he has bids on all the assets they should be closed by the end of the month and he and he can pay me out then. The end of the month comes. No money, several ignored calls, texts, and emails. Eventually he does respond with some vague excuses. He is waiting for IRA companies that are taking longer than usual on some, there are some title issues being cleared up with others. Seemingly plausible, but it seems like just a stall tactic.

By this point I have talked to several other investors who have been mixed up with Scott. The ones that did finally get something out of Scott all said it was not until they started hurting him online. So I started reaching out to people from NoteCamp and my wife started contacting people who were having him on their podcast. After that he agreed to transfer 3 out of the 4 assets over to my company. This time action was swift. He actually showed up unexpected at my doorstep at 7pm to personally deliver the loan files. I tried to get him to explain what was going on but he said he was late for another meeting. The 4th asset was allegedly still being sold and was supposed to close by the end of the week at which point he would wire me the money. If you guessed that the end of the week came and I didn’t get paid, you must have read the rest of this post. Or maybe you read this one:

https://www.biggerpockets.com/forums/70/topics/757247-another-victim-of-scott-carson-we-close-notes-and-inverse-assets?page=1

or this one:

https://www.biggerpockets.com/forums/70/topics/738696-do-not-invest-with-scott-carson-we-close-notes-or-inverse-asset?page=1

So I guess I got something. I'm sure Scott would add me to his list of investors who had some delays but were taken care of in the end. But I have spent way too much time stressing about what was supposed to be a passive investment and now I have to do the work to dispose of the Assets that he was supposed to do. Not exactly what I signed up for. I can now finally see the servicing records on those 3 CFDs. One CFD never made a payment but he didn't take back the property in almost 2 years. Two of the three have made some payments. He collected over $12k in P&I payments. 50% of that was supposed to go to me in quarterly payments. I only got one payment for a bit over $2k. He also still owes me for the 4th asset. If he does pay those off I will post an update. Scott has wronged a lot of people, I sincerely hope he can make it right.

you got 3 out of 4 investments back under control I think you did well being the squeaky wheel..  

good sleuthing on your part.. 

@Ryan Snelson

Great job on the research. Especially understanding where the loans stood etc. if you need any assistance on these 3 loans let me know how I can help. Be happy to try and assist. 

Thank you for your great work exposing this thief for what he is, a liar who says anything to keep the gravy train going. Anyone else defrauded in any way is encouraged to start a NEW thread so the threads are so overwhelming it counters his relentless continuance to find new victims to scam to pay off the old investors.

I am in the same boat I endup filing two case against him.  I am about to start website and make sure that he get a good attention from SEC.jv should not be a way to do illegal things 

Ryan, awesome job ratting him out. I wish more people would do the same. Rahul - a website chronicling his illicit behavior would be great. I'll pay you for the site registration and for some SEO optimization work to get your site appearing first in google searches. I wish this would put a nail in the coffin of fraudsters, but unfortunately, that is wishful thinking. History is rife with this type of person. My mentor (this ages me!) in 2004 was Mark Kemp. Look where he ended up: http://www.securities.utah.gov/dockets/cr0040601.pdf. Then there is the magnificent duo of Peter Andrews (https://casetext.com/case/wiedis-v-dreambuilder-invs-llc) and the lovely Madden family (can't find any court records at the moment but I personally know one attorney who is in settlement discussions w/the Maddens for non-payment of fees, as well as 3 sets of investors who have been treated by the Maddens similarly to the way Ryan has been). 

Originally posted by @Rahul Bhatt :

I am in the same boat I endup filing two case against him.  I am about to start website and make sure that he get a good attention from SEC.jv should not be a way to do illegal things 

@Rahul Bhatt, Please start a new thread to counter his continuing advertising for new victims. Are there any class action lawyers interested in this??? PM me for more info. I know it hurts, but this criminal needs to be put behind bars...

 

Originally posted by @Dean Engle :

Ryan, awesome job ratting him out. I wish more people would do the same. Rahul - a website chronicling his illicit behavior would be great. I'll pay you for the site registration and for some SEO optimization work to get your site appearing first in google searches. I wish this would put a nail in the coffin of fraudsters, but unfortunately, that is wishful thinking. History is rife with this type of person. My mentor (this ages me!) in 2004 was Mark Kemp. Look where he ended up: http://www.securities.utah.gov/dockets/cr0040601.pdf. Then there is the magnificent duo of Peter Andrews (https://casetext.com/case/wiedis-v-dreambuilder-invs-llc) and the lovely Madden family (can't find any court records at the moment but I personally know one attorney who is in settlement discussions w/the Maddens for non-payment of fees, as well as 3 sets of investors who have been treated by the Maddens similarly to the way Ryan has been). 

 Good to hear a big Guru chiming in, great of your offer to help Dean...

The most interesting point of this post is that every time I hear or read about someone getting ripped off in real estate, there is always this long drawn out belief in all the lies that eventually everything will be made whole. So much denial. Sucks you had to go through this. Just interesting from a psychological perspective that many people who get taken go through the same process before they finally take some action. And, some even believe eventually they will be made whole, but that is obviously not the case here.

Disclosure: investor

Please include me in any action to get our funds back. Has anyone started legal proceeding that I can join. I need to work on getting something back if possible. Thanks

No denial Aaron Mazzrillo I was warned about Scott by some of his former students but also meet many who loved the guy. Warm fuzzies all around. But my conversation and his expertise won out. Heck his guy taught those guys so I was a bit questioning their motives for the warning. But you know when you get that voice that tell you to be careful. Ya man I tell ya I still haven't learned to listen to that intuition. I got it now. 

No denial just hope that right wins out and a good law suit. If it's a loss its a loss, maybe I can write it off on my taxes or maybe our story saves others from a similar pain. Just think I didn't join Eddie Speeds course because I heard negatives about him. Who knows anymore. 

The biggest take away-Always maintain control.

@Ryan Snelson, based on what you've written, I would add that you were not actually in a Joint Venture with this guy. Anytime you expect to make money solely off of someone else's actions, you're actually buying a security, not investing in a JV. In that case, he should have created a syndication for you and others to invest in and filed Form D with both the SEC and the state. So, you can add SEC violations to the list of things he did wrong.

Since you now have the notes in your possession and are actively working them, that might have changed now however, I would bet that if you contacted the SEC and told them this story, they would probably take action.

I am so glad someone posted this. He seemed like the nicest guy, talking about helping the homeowner out with payments and how he is the nice guy on payoffs.  Shows you can never trust ANYBODY! 

Originally posted by @Daniel Flores :

Please include me in any action to get our funds back. Has anyone started legal proceeding that I can join. I need to work on getting something back if possible. Thanks

No denial Aaron Mazzrillo I was warned about Scott by some of his former students but also meet many who loved the guy. Warm fuzzies all around. But my conversation and his expertise won out. Heck his guy taught those guys so I was a bit questioning their motives for the warning. But you know when you get that voice that tell you to be careful. Ya man I tell ya I still haven't learned to listen to that intuition. I got it now. 

No denial just hope that right wins out and a good law suit. If it's a loss its a loss, maybe I can write it off on my taxes or maybe our story saves others from a similar pain. Just think I didn't join Eddie Speeds course because I heard negatives about him. Who knows anymore. 

The biggest take away-Always maintain control.

 I've been contacted by a few victims, not an easy choice, even sharing litigation costs, you have a difficult to enforce judgment.

@Aaron Mazzrillo Your comment about being in denial really touched a nerve with me.  Maybe it is Stockholm syndrome or whatever but even today I still wonder if Scott really is trying to do the best he can to make this right. After all, he did give me something.  He is still talking to me (sometimes).

It is so easy to want to believe that Scott really is a good guy.  Especially when, as Todd points out, your other options besides sit and hope are really pretty crappy.  Scott was just on a podcast where he basically said that all the people saying negative things about him are just mudslinging trolls who have never done business with him and are jealous of his success or investors who just overreact when a deal takes a little longer then expected. Up until recently there was not all these people coming out of the woodwork warning people about Scott.  That coupled with the fact that it does often take a long time for these note deals to play out makes waiting just a bit longer seem like a pretty reasonable choice when you are in that situation.  I have to give a big thank you to @Gerry Cohen for sort of being the first to stand up and say no, I'm not going to be quiet even if it costs me.  A few people in that thread also said they had seen previous negative posts about Scott but that they were quickly taken down.  Well I guess I know why now...

Yesterday Scott emailed me and basically said he would not give me the rest of my money unless I took down this post.  Here is the entire email.  This was after I had asked him send me my share of the money that he has collected over the last 2 years:

So that's pretty much where I am.  It doesn't seem like Scott is trying to make things right or even admitting that he has done anything wrong.  He keeps acting like the only issue is that deals have taken longer to close than expected. He never addresses why he would just ignore people and never give anyone updates or payouts on loans.  For a while I just gave him the benefit of the doubt that he was too busy, but that just doesn't make sense especially when it started causing him so much damage.  Perhaps he knows he is basically just trying to run a fund selling unregistered securities posing as Joint Ventures and is trying to keep under the SEC radar.  I really don't know, but it is definitely not just deals taking longer then expected to close at this point.

He could just own it and admit he had not met his obligations to his investors and try to make it right but instead he is trying to keep people from finding out how he operates so he can bring in new unsuspecting investors to keep the machine going. What can I do? I do hope still that he will return what's legally owed to me and others. I don't fault people in the past for doing what they had to do get their money back, but I have had so many people reach out to me who have invested with Scott with their retirement money and are so distraught that they could be loosing it.  It makes me sick.  

Originally posted by @Bernie Granier :

@Ryan Snelson, based on what you've written, I would add that you were not actually in a Joint Venture with this guy. Anytime you expect to make money solely off of someone else's actions, you're actually buying a security, not investing in a JV. In that case, he should have created a syndication for you and others to invest in and filed Form D with both the SEC and the state. So, you can add SEC violations to the list of things he did wrong.

Since you now have the notes in your possession and are actively working them, that might have changed now however, I would bet that if you contacted the SEC and told them this story, they would probably take action.

the HOWRY test !!!

 

Sending repeated texts, calling and leaving voice mails, sending emails, then going on social media for some keyboard justice is scarcity mentality. These are emotional decisions you are making. These are actions taken by people who are terrified to lose money. Like there is no more available to them. They must "get back" what they lost. So they squander their precious time chasing lost money. You can keep heading down this same course of action, constantly getting ignored and lied to, or you can have an abundance mentality and a wealthy mindset and make a business decision.

Wealthy people lawyer up and prosecute when they are lied to and stolen from. Your time is too valuable to chase this lost money. It's gone. Sue this guy, file a complaint with the FBI, (you said you wired him money, so wire fraud seems like a good contender.) Then use your time to chase new more profitable ventures and make new money.

I owe MILLIONS of dollars to my friends and they never miss a payment, never mind receiving a payment even late, and they never don't get an immediate return text or phone call from me when they want to talk to me. I have a responsibility to them. I even have a large life insurance policy in case something happens to me, so my wife can make sure everyone gets paid back. You think any of them are jealous of my success? You think they'd have anything bad to say about me? I'm their best f'ing financial friend!!! They want me to be successful, number one so I can pay them back, but also so they can keep lending me more money and making even more for themselves.

Ripping people off and then paying victim is a psychological profile I've seen countless times in this industry. People who lie and steal belong in prison. Get your judgement so you're first in line when assets are sold. Otherwise, it will keep going again and again until someone else takes action and then they are first in line.

We had a guy operating here in SoCal, who lived in Utah, but flew here every month running a real estate club. That dude took people for like $3.3M. His name is Shawn Watkins. He acted exactly like this. I knew some of his victims and I kept saying the same thing; Stop chasing lost money. It is FAR easier to spend your time chasing new money. Call the authorities, put him in prison and move on. The money is gone. It isn't worth your precious time "getting it back." You can easily spend that time drumming up new business and make more. 1099 him for it, write it off on your books, and get on with your business. Finally someone did contact the authorities and the FBI got him, and now he and his partner are in prison, he has a huge judgement against him, and he's barred from doing business in real estate ever again.

If you play this game long enough, you will eventually lose money. Either from your own bad decisions, or from decisions made by others for you, but you should never lose money because of misrepresentation or outright theft. I've lost money a bunch of times. Most recently just the other day in fact. A few months ago I was on vacation and my main contractor let one of his subs move into a vacant property he was working on because he was having a lot of equipment theft and vandalism issues at night. After my new tenant's psycho hoarder wife destroyed my property, smashing all the windows and bringing mountains of trash back to the property, I finally got possession last Wednesday. That decision by my contractor has cost me about $5,000 so far. In this case, it was just bad judgement on the part of my contractor. He was trying to easily solve what he thought was a complex issue. Now, had he let the guy move in, collected the rent, and not paid me, I would have sued him and put him in jail without hesitating.

Now that you're done reading this, file a complaint:
https://www.fbi.gov/contact-us

For further reading, if you're interested...

https://www.justice.gov/usao-c...

@Ryan Snelson What he is admitting to in his email is that he is running a Ponzi scheme.  He said that 3 people flaked because of things you wrote or stated online about him and if they hadn't of flaked then you would have gotten your money back.  In other words, he is waiting for other people to bring in money in order to pay you out.  The new investor's money pays out the old investor's money until there are no more new investors.  

@Aaron Mazzrillo I get what you are saying about accepting the loss and spending one's time and effort to find new deals rather than chasing lost money.  But at the same time, if he is still  getting more money from unexpected investors who will likely lose money as well, then I think it is great for Ryan to shout from the roof tops a voice of warning to others to beware of Scott Carson by sharing his personal story.  He may not get his all or any of his money back, but he can sure help others from falling in the same pit as he did.  And I think that is admirable.

@Aaron Mazzrillo   nice to see you back on the forums.. I for one missed your posts.. 

being on the lending side for decades this is something we deal with daily.. and its never going to stop.. 

you have the bad judgement folks , you have the inept and you have the out and out thieves.. 

part and parcel of what brought these folks to this situation is highly risky assets that take a ton of work to figure out and work out.  sounds like a lot of smaller dollars  IE under 100k investors.. so usually not worth litigating over money wise and then someone who gets over his ski tips .. never intended to end up with all these pissed off and wrong investors but once you Rob Peter to Pay Paul you rarely recover.. 

Then this guy spawns a whole sub set of students who then try to do the same model.. some will be fine but you watch others will have issues.. its just inevitable..  IRS is the way to get at these folks.. most will not pay tax on ill gotten gains and that is tax evasion.. Someone I know in Oregon is going through it right now.. and the 1099C is a great wake up call. 

Originally posted by @Rahul Bhatt :

I am in the same boat I endup filing two case against him.  I am about to start website and make sure that he get a good attention from SEC.jv should not be a way to do illegal things 

 Please start a new thread & file a ripoff report 

Nice to know I put a solution on this post to get your money back that I personally used myself and for other investors after pursuing all the other options everyone suggested since I exposed Carson 3yrs ago and it gets deleted-- so much for Bigger Pockets transparency-- for anyone that didn't get the opportunity to read the post reach out to me-- If BP censors this message again it says a lot about the guys running this site

Williamson county seems to be a magnet for white collar fraudsters. Thirteen years seven investors including myself were defrauded on a general partnership land deal in williamson county. That crook took us for 1.35 mil plus legal fees.  He had help with a crooked appraiser. We won the case against him and  obtained a judgement but saw zero dollars as he allready spent the money. He also scamed an older couple by borrowing money on a fake 2nd deed of trust. We talked to the fbi and they said the dollar amount was too small to use man hours on the case. We notified the texas dept of real estate and they did nothing. A kid can steal 50 bucks from a store and gets locked up. A grown man steals 1.35 mil and nothing happens to him. 

Originally posted by @Shiloh Lundahl:

 @Aaron Mazzrillo I get what you are saying about accepting the loss and spending one's time and effort to find new deals rather than chasing lost money.  But at the same time, if he is still  getting more money from unexpected investors who will likely lose money as well, then I think it is great for Ryan to shout from the roof tops a voice of warning to others to beware of Scott Carson by sharing his personal story.  He may not get his all or any of his money back, but he can sure help others from falling in the same pit as he did.  And I think that is admirable.

 I never told him to stop talking about the guy. I even gave him the link to the FBI's website. The best course of action is to report him and move on. Being the warning signal to other investors is admirable, but it is a low paying job. As in no pay. It is a no paying job.

Originally posted by @Gordon Cuffe :

Williamson county seems to be a magnet for white collar fraudsters. Thirteen years seven investors including myself were defrauded on a general partnership land deal in williamson county. That crook took us for 1.35 mil plus legal fees.  He had help with a crooked appraiser. We won the case against him and  obtained a judgement but saw zero dollars as he allready spent the money. He also scamed an older couple by borrowing money on a fake 2nd deed of trust. We talked to the fbi and they said the dollar amount was too small to use man hours on the case. We notified the texas dept of real estate and they did nothing. A kid can steal 50 bucks from a store and gets locked up. A grown man steals 1.35 mil and nothing happens to him. 

Totally agree the secretary for the YMCA steals 20k from the general account and gets 3 years see it all the time.. I think part of it is these cases are complicated.. so hard and time consuming to prosecute.

the one I have first hand knowledge of here in Oregon.. its the IRS that ended up taking it on.. these guys take this money but don't pay tax on it.. that's tax evasion money laundry and wire fraud.. I sat through a 2 hour interview with the IRS criminal investigator its taken almost 3 years but when I asked her point blank.. she was like Nope we don't work on it this long and this hard and let it go.  And FBI your right 3 to 5 million is kind of their starting point.  if the authorities wont pick it up the best you can do is get a fraud judgement and chase them for the rest of their days.. which most wont do