Accountability/networking Groups Gathering Spot For Scammers?

Question

Many BP users consider paid coaching/mentoring to not be worth the cost.   Why pay for stuff you can get for free?   Many upsell to more expensive coaching.   Some of the coaches have minimal success on the subject and they are coaching (I personally know one such coach).   I am in the middle ground.  I think good coaching is valuable.  I think a lot of the coaches do not qualify as good coaches.

However, accountability/networking groups seems to not have the same negative stigma as traditional paid coaching/mentoring.  I know 2 separate people who pay $50k/year to belong to a high net worth networking group.  In general, these networking groups (including those with more reasonable fees) have a very high re-commit rate.

These groups are gathering places for people with money to invest.   This makes them an obvious target for people looking for investors including scammers looking for investors.

Two years ago I was solicited (via a networking group member) to invest in an effort to build a tool for investors wanting to exit syndication partnerships early.   I was invited to an online presentation where they were soliciting investors.   The principles apparently did not like my questions and booted me from presentation.

- the principles claimed to have received some sort of exclusion from requirement of existing relationship or accredited investor.  I am skeptical. I am sure many small companies and syndicators would like to have this exclusion.

- how many LPs exit early.   They know that their investment is committed to the effort basically until the GPs decide to exit.  They recognize exiting early is likely going to result in significant loss of investment.  The target source market seems minimal.

- they were going to use AI and data supplied by the GP to determine value of the partnership being sold.   It is rare that a GP provides clear picture of a sinking ship to its investors.   Do you think it is likely they will provide accurate picture to a 3rd party that will use that data to set the aftermarket price?

I asked some of these questions and got booted off the telecon.

The spouse of the founder of the networking group is a successful syndicator who has written a book and taught material on syndications (I took his class many years ago and have loosely stayed in touch meaning we communicate about once or twice a year).   His syndication knowledge is far superior to my knowledge on syndications.   I presented my concerns to him about the solicitation.  He did not immediately reply; I suspect he consulted with his spouse.  When I got my reply back, he did not indicate my fears were misplaced.  He basically indicated the members were adults who need to vet their investments.   I asked him how many LPs have tried to exit his syndications early.   I forget the exact reply but it was not many (I believe it was less than a handful). My concern is trust can result in less thorough vetting.

By the way the person who tried to get us to invest in the effort believes it is doing well and going to be going to market in the near future.   Was I wrong?  I suspect not.  Time will tell.

Fast forward, 4 partnerships in Sacramento area were heavily invested in by members of a networking group.   They were lenders and/or partners.   A primary has been accused of investor fraud at least twice previously.   An article recently was released on her previous frauds and the extent of effort involved.   The networking/accountability group resulted in misplaced trust.  They considered the fraudster to be their friend.  Some of these investors brought in their friends and family.  Some have lost much of their savings.  BP thread: https://www.biggerpockets.com/forums/67/topics/1287246-joint...

Now to the crux of my post, do the networking/accountability primaries have any responsibility vetting members?  These networking groups generally charge at least $5k/year (and at least one charges $50k/year).   I think this vetting of new members could be prudent.   I think it is too cumbersome to vet individual offerings.  How about if an offering and potential issues is brought to the networking group’s primaries’ attention?   My belief vetting members could have saved a lot of members from loosing money on the Sacramento offerings.   I also believe that the LP marketplace product had a lot of red flags and maybe a discussion should have occurred with the person seeking the investors about the potential red flags.  Possibly more so if a founder of the networking group is the spouse of one of the better known syndicators (I consider him an expert on syndications, I did not pay much for the class and definitely believe it was worth the money).

Please thoroughly vet the operators and the offering(s).

Jay Hinrichs · Answer

I went to one well known mastermind spent the 3 days in their get together. Paid the money on the flight back home I was like.. U know 6 or 7 of the folks in this I knew by rep and they were Guru's who just repackage info and not really the kind of folks I wanted to network with but I am sure others in the group got connections that could for sure bring them to another level does not take but one or two connections to change your velocity in this bizz.. I helped one of the companies I met flip a few houses ( provided the capital)  but by and large after the event and once you get a few cocktails into a lot of these guys lots of boasting and well talk of doing deals that were in my mind ripping equity from the less educated etc.. So I got my money back with the company was happy to refund. I think it was 25k a year.. part of my issue though was they had I think 4 meetings a year and the meetings were suppose to be mandatory so by the time you pay for the membership and go to 4 meetings a year that are going to cost 2k at least for airfare and hotel etc. plus the time commitment just was not my thing given where I am at in my personal journey but for those looking for those kind of connections or maybe trying to get to the next level I could see the benefit.. and I dont think they vette anyone past do you have the money they might have behind the scenes.. But there was for sure some not so great people there that I did not care to associate with.

Scott Trench · Answer

@Dan H. I have looked at and had discussions about several such businesses, and the "churn" rate is extremely, extremely high on renewal. Whether that expresses itself in the form, ultimately, of negative reviews and reported dissatisfaction is another question, but unanswerable, as many of the groups force members to sign legal documents that promise to not review the group negatively. If people are dissatisfied, but terrified of the seller, we will never know the extent of the feedback.

Further, to prevent observable churn, or because they know churn is so high, many such coaching programs or masterminds are priced at a one time "lifetime" entry fee.

I would suspect that for a group with a hard cutoff only allowing those with net worth above $10M in for a $50K entry fee, that these dynamics are much weaker. I believe you will find far fewer scams and reported dissatisfaction among $10M+ business owners and investors worth $10M paying $50K for exclusive networking than you will among programs targeting smaller investors or those just starting at $10K. I think a background check is helpful, but what I find more interesting is the evolution. Many scammers and illegitimate businesses begin perfectly legimately. But, when your business, and reputation, all are predicated on projecting as a successful investor, there is a strong incentive to begin the process of fudging the numbers, or placing ever more extreme bets to course correct. A background check will not tell you that someone is in over their skis. Only what their past shows. And, the information about most coaches is readily obtainable these days for those who care to look (and they should, before plopping down $5K for educational programs).

I am still hosting the BP Money Show podcast, and building a bunch of free financial planning sample artifacts. I spent 10 years immersed in real estate. I plan to spend the next few studying taxes and financial planning as it applies to those pursuing financial independence, and I have a TON to learn.

Shiloh Lundahl · Answer

@Scott Trench  Cool. I'll see you there.

Evan Polaski · Answer

@Scott Trench, to your point, I have met several members of Tiger21 (supposed $10mm net worth requirement) and a few from GoBundance (I believe $1 or $2mm net worth requirement).  While I am sure there are people that have not had a great experience with these, generally I have heard decent things about these groups.  But then again, most gurus will have at least someone that has positive reviews of their program.  At the end of the day, I do think there will be scammers anywhere and everywhere.  "A fool and his money will soon be separated."

So to your original point, @Dan H., buyer beware.  Do a deep dive on the person you are considering sending money to.  Even if they are in the same group/mastermind as you, remember what the qualifications were to get into that group: pay money and show up.  The same goes for the man/woman trying to get you to invest in their greatest investment opportunity EVER.

Scott Trench · Answer

I think the issue, at least with very high ticket coaching, is the incredibly high failure rate. Not just of the students paying for coaching, but the fraud/scam/litigation thrown at the coach/seller, and the conviction rates / reputational crises, that the sellers seem to go through. Try using your favorite AI to attempt to construct a base rate first - listing every coaching program that existed from 2015 to 2025 priced at over $5,000. Do this first, so that you don't bias it to the conclusion in part 2.

Then ask it a follow up question - to research each individual or brand offering such high ticket coaching/masterminds/etc., and discuss lawsuits, reputational crises, etc.

This population is NOT entirely scammers. That is too crude. But the ratio of litigation against this cohort, including FTC/SEC losses and civil lawsuits, including just the losses, is wild! And, that's just SO FAR. The number can only increase from here!

Evan Polaski · Answer

@Dan H. when I saw the title, my mind went to the mentorship programs that you allude to: no real knowledge about prudent investing, so rather focus on mindset and accountability with a very low level of basic education provided.  Are these groups gathering spots for scammers?  Sort of. I would agree that networking groups that cost 25k+, more or less, tend to be targets of capital raisers.  If you have a group of people that clearly have disposable income and an interest in real estate investing, then that could be a good target market to build relationships with people that are likely investors.But are all capital raisers scammers?  No. Some are.  A lot are simply niave novices that aren't out to scam people, but certainly undersell the risks they are adding to a deal, often times without even knowing it.

Scott Trench · Answer

Yessir!

Shiloh Lundahl · Answer

Hey @Scott Trench are you going to be at BPcon this year?

Dan H. · Answer

I was distinguishing networking groups from coaching but some of these coaching groups seem to blur the lines.   Like pace morby (sub to) or Jesse Vasquez (STR/MTR arbitrage) have extremely loyal, passionate followers that have a lot in common with more traditional networking groups.   I suspect there is a trust among those mentorship members that is similar to the networking groups.

Are you seeing similar dissatisfaction of networking groups as high price mentorships?   I have not.   It seems those that join mentoring groups re-commit at a high rate.  I even know a couple people who are in multiple networking groups.

In addition, the mentorship often are people with limited financial resources.  They often are spending a significant amount of their net worth on the classes/mentorships.  The networking group members are high net worth people.   The one that costs $50k/year has a $10m net worth requirement.   The implication is the members have money to scam.

I personally believe the networking groups should do a background check of new members and maybe every handful of years on existing members.   It would at a minimum discourage scammers from targeting the group.

I was on the van leaving BPCon Yucatán where you described yourself as an BP employee to my wife.  She asked if I knew you and I replied you were more than a BP employee and then you were recognized by others in the van.  I thought it was great.  Curious, are you currently retired?

Take care

Dan H. · Answer

> I would agree that networking groups that cost 25k+, more or less, tend to be targets of capital raisers.  If you have a group of people that clearly have disposable income and an interest in real estate investing, then that could be a good target market to build relationships with people that are likely investors.

I think the even $25k+ is an outlier.   I suspect there are still many less than $10k/year.   I think every networking/accountability group is a good target market to build relationships with people that are likely investors.  I think that is one on the primary purposes of these networking groups along with the expertise and contacts of the various members.

I had a brief discussion with one of the two I know who is spending $50k/year about it.  He stated the members had a very large and powerful network that could provide assistance in a wide range of items.  Both seemed to believe they were getting more than $50k/year of value.

>are all capital raisers scammers?  No. Some are.  A lot are simply niave novices that aren't out to scam people, but certainly undersell the risks they are adding to a deal, often times without even knowing it.

I agree with both sentiments expressed in these statements but I question if the scammers are higher percentage in the networking groups than in general,   That scammers may seek out these groups because the relationships among members builds a level of trust that scammers can leverage.   In addition to that, possibly more concentrated than on the lower priced networking groups have members who are only moderately successful and may not be scammers but may not be the best operators.   In the case of my 2nd example all indications is that the person is a serial scammer.  Per the article, this is at least the 3rd time she has disappeared on an effort.   She raises capital and takes off.   I personally believe some of the principles in the first one know the issues and are selling something they believe will not succeed but I question if it is like the 2nd case in that most principles did not know there was a scam until it started unraveling.   The serial fraudster was quick to move and disappear.

Do you think these networking groups should require background checks?   They charge between $5k and $50k year.   A background check would have revealed an issue with the Sacramento fraudster even though she seems to actively scrub her internet presence.  I personally think they should.

Thanks for your thoughts.

Accountability/networking Groups Gathering Spot For Scammers?

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