Syndicator Threatens LPs for Negative Comment about them On BP

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

1y

Investors bear responsibility for doing their due diligence on any investment they make - or being willing to suffer the consequences IF the sponsor/syndicator did the following and possessed the following

1. Laid out all the risks beforehand

2. Vetted the investors so that it was reasonable to belief that each investor understood the risks and could afford to lose their investment

3. Had the ability, experience, and knowledge to succeed

4. Disclosed all fees, compensation and incentives

5. Operated on a fiduciary capacity

in other words if the above was done and the investment still went south, then that’s just x% outcome (risk) occurring, and a natural part of the investment process. We’ve got to separate this type of loss from those in which the 5 items listed above weren’t followed.

I cannot agree with this more. Every LP should realize there is risk even if the sponsor does a good job. In the recent times it was easy to forget this when many/most syndications were achieving 20%+ annual returns. Did LPs believe such returns were being achieved at zero risk?

I am an LP in a syndication that I believe is struggling. The sponsors continue to state an all is good sentiment, but distributions do not lie. If the distributions do not start when they were projected, that is an early indicator that things may not be going well. I would like more frank communication.

My other syndications appear to be doing fine but one was a conservative offering (lower risk but also lower upside). The other is a non-traditional offering (higher risk and ideally higher return that even with some large issues seems likely to hit the high returns and is very frank about the problems they have encountered).

0 Reply

Duke Giordano

Investor · Passiveadvantage.com · Member since 2019 · 166 posts · 91 votes

1y

The nature of the limited partner and syndicator relationship is at best "holding information back" and at worst "deceptive or untruthful". This dynamic needs to change and hopefully difficult times like we are currently in will force limited partners to demands more transparency. Some of us in the industry are fighting to help with that for the limited partner, and hopefully that comes to fruition in the near future.

1 Reply

Cheryl A.

Investor · UT · Member since 2018 · 33 posts · 26 votes

1y

Quote from @Chris Seveney:

Quote from @Scott Trench:

Quote from @Cheryl A.:

Quote from @Scott Trench:

I don't know who needs to read this, but I feel it needs to be posted, publicly.

Recently the following happened:

- BP Member posts negative statement about syndicator to these forums, involving lost money, poor communication, etc.

- Syndicator is radio silent, apparently pretending not to notice dozens or hundreds of discussions about their business. Syndicator does not respond to thread.

- Syndicator intimidates investor (who just lost tens or hundreds of thousands of dollars investing with said syndicator) with legal threat

- Terrified LP, already having lost money, now is scared that wealthy syndicator could ruin them, and asks me to remove the forum post discussing the company

While I am in no position to verify the truth or falsity of claims made on these forums by LPs or GPs, to me, it seems like a special hell is emerging for investors where the following reality is possible:

- Invest tens or hundreds of thousands of dollars with a syndicator

- Lose all or most of this investment

- Get ghosted/poor communication from sponsor

- When they complain or ask for help, get threatened with legal action

I told the person with the original post the following:

- Name the syndicator, and I will publicly call them out for their threat, if they confirm who it is. I will invite the syndicator to confirm or deny the threat publicly. The member who messaged me has not confirmed who it was and named two people in their post. Otherwise, I'd be naming them right now.

- If the syndicator actually sues this member, we will make the litigation a headline issue in every major BiggerPockets content channel, including YouTube, Blog, Podcast, and these forums. We will cover the story in detail, with regular updates, through to resolution.

After all, Investors need to know which sponsors sue their own investors after allegedly losing their money and ghosting them.

- If the OP is lying, we will expose that and call out the syndicator's innocence, of course.

- If the OP is generally telling the truth, we will expose the syndicator's performance and behavior in threatening and suing their own investor as far and wide as we possibly can. We will evaluate their portfolio, estimating the purchase price and current value of every deal they've done from the beginning of time. We will research occupancy rates, and report on outcomes.

I am disgusted by the accusation, if true, made by this recent member, and while this is the most egregious situation to date, it's part of a disturbing pattern. The power dynamic between GP and LP is out of control. I have received multiple DMs from terrified members intimidated by wealthy sponsors, asking them to pull down their forum posts, even though they claim they posted truthful information.

We will rectify that power dynamic.

Maybe some GPs can intimidate their own LPs in private. But, not here on BiggerPockets. If you do that, we will come after you.

Syndicators - by all means, defend your reputation and set the record straight. If someone says something untrue about your business, respond and tell us what's really going on.

But, be warned, GPs - if you threaten your LPs for posting generally accurate negative stuff about you on BiggerPockets, we will make a public example of you for all to see.

Hi Scott, thanks for starting this thread. This happened to me recently. I invested two deals with Djuric Family Office (DFO) also know as Blake Capital Group. When the first deal failed I turned to BP to get answers to questions I had that were not being answered by DFO and share my experience with other LPs.

Within a few days I received an email DFO stating:

"I will be sending you a legal letter in the mail and email tomorrow regarding your false and misleading internet comments."

To date no letter has been received.

The second deal just failed with complete loss of all investments. I'll be updating my experience on BP, so who knows what will happen next.

Cheryl - I am facing a VERY interesting situation (not with Djuric family office / Blake Capital Group but with another sponsor).

Basically, it is clear that this sponsor lost all of their investor's money, and multiple investors claim that the sponsor lost their money, ghosted them, and behaved inappropriately.

But, none of them are willing to discuss the matter on the record. We put a journalist on a particular story, and no source is willing to discuss the situation publicly.

To me, THAT is the story. LPs who feel mistreated/robbed/lied to are too scared to say anything.

You are an extremely rare breed in being willing to discuss a sponsor in a negatively light publicly.

How do we change this dynamic? We want people to discuss sponsors like they'd discuss plumbers - the good, the bad, and the ugly, with 5 star ratings.

The only place we can get some semblance of this is on PassivePockets.com, where some sponsors are reviewed by LPs behind an LP-only wall.

Why do you think folks are so afraid to speak up?

I agree. I think one thing people who do not want to go public is they can shift the story but focus on truth not opinions. When you go blasting people for ponzi etc without proof I would never do that, but if you lost money in a deal a way to shape it was?

Wow - did you see XYZ syndicator who owned 123 Main St was foreclosed on the deal and the property was taken back by the lender? This must be very unfortunate for the investors because they had only sourced 70% debt so 30% of the equity from investors went poof..

Re: threat of legal letter, personally I would post that online and say "wow, see the response I finally get"... (Not legal advice or noting you should do this, just what I would do" and then ask "happy to let this play out in court and go to discovery - love to see how you financially handled this... and oh by the way, please refrain from destroying any documents, emails etc. as it relates to this deal for discovery purposes..."

The US has consumer protection rights that should apply to this space.

The Federal Trade Consumer’s Bureau of Consumer Protection stops unfair, deceptive and fraudulent business practices by collecting reports from consumers and conducting investigations, suing companies and people that break the law, developing rules to maintain a fair marketplace, and educating consumers and businesses about their rights and responsibilities.

In all other industries consumers are able to rate the performance of service providers and potential investors have a right to have these insights. For some of us the $$$ we invest is very significant.

How you share your feedback does matter. I share my experience based on truths and facts and have evidence to support them should this end up in court.

I'm speaking up because the Djuric Family Office failed to operate the deal according to the promises they made to investors.

Promised -> Received
- Quarterly investor reports -> were either not received unless I asked for them, or they were received 2-3 months late.
- K-1s by end Q1 -> K-1s received Sept-Oct every year.
- Robust investor portal -> portal not actively used.
- Direct investment in the deals -> one of the deals turned out to be a fund of funds investment.
- Prompt & transparent communications -> very poor, e.g. in Apr 2024 I was informed the property had been foreclosed in Dec 2023.
- Lead operator in the deals -> well not really.

Had this information been available to me before I invested with DFO I would have passed.

1 Reply

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes