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  • #31
    Originally posted by afan View Post
    With no evidence that hedge funds or private equity as industries outperform the market on a risk adjusted basis and the risks of private investment funds, why do people invest in these vehicles?
    I think it’s multi-factorial but I think a big reason is that air of exclusivity. It gives people the feeling of being a “refined” investor and not invested in the same thing as Joe Blow. Never underestimate people wanting to feel special. I think another part is that they think it’ll outperform although data suggests it’s more likely to underperform.

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    • #32
      Good point.

      I remember that at least one of the private funds also includes a social club. People will gather together for weekend events open only to investors. Some of the events are "free" if you invest enough money. Dinners, shows, drinking and partying. As best I could tell, this had nothing to do with investing.

      I got the impression that some people invested in the funds in order to join the parties. Baffling to me, but apparently quite popular.
      Last edited by afan; 01-17-2022, 08:58 AM.

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      • #33
        Originally posted by Molar Mechanic View Post

        i saw a reference to something on private investors club, and just did a quick google.
        Good job; besides this, DLP's history is short - around only since around 2013 and that's not full cycle experience. A lot more seasoned sponsors/firms out there with a much longer history; I wouldn't invest with DLP mainly for this reason, as well.

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        • #34
          I don't know that I would rule out DLP if they offered something I wanted.
          I just don't see the appeal of what they or their competitors offer.

          Comment


          • #35
            This thread deserves some closure.

            I’m not going to talk about private real estate investments in general. That’s been done elsewhere on the site and on this forum. They’re for accredited investors only. They are optional. Many savvy investors will choose to use them. Many savvy investors will choose not to use them. You can learn more about that subject (as well as hear some counterpoints in the comments below the article) here:

            https://www.whitecoatinvestor.com/private-real-estate/

            I’ve been an investor with DLP for almost three years now, both indirectly and directly. I am personally invested in both a DLP equity and a DLP debt fund and am enjoying the returns I am getting there. I like their founder and their way of running funds and treating investors. The WCI COO Brett Stevens is also a DLP investor. DLP has been an advertiser/partner here for a little over a year. They pay flat fees for advertising. We don't get paid more if more of you invest, but obviously if none of you ever invested with them they would stop buying ads.

            The “revelation” in this thread (that Bo Parfet now works for DLP) was news to me. No surprise, he was hired over a year after I started investing there, long after my own due diligence process took place. I honestly really wasn’t particularly worried about my own investments there despite the posted allegations because I knew and trusted the people running the funds. However, I know that the biggest question WCIers considering private real estate investments have is “How do I know I’m not just investing in a great big Ponzi scheme?” So anything that even has a whiff of a Ponzi scheme is a huge red flag and given the almost limitless options in this space, will cause many investors to run the other way (read some of the comments earlier in the thread if you don't believe me). So our biggest consideration was not really whether to pull our own money from DLP, but whether we wanted to continue to partner with DLP as an advertiser/sponsor here at WCI. Since our reputation is our greatest asset, it is no surprise we worry about the optics of who advertises here. Just as importantly, we don’t want partnerships that are not win-win relationships. If we can’t send DLP any business, they won’t be advertising with us for very long and they shouldn’t. We want long term partnerships/advertisers, not just a quick win.

            Like most doctors, I am also very much aware that allegations are just that. Anybody can say anything about (or sue) anybody they want at any time. It was clear that what you could find on Bo Parfet from a quick internet search was only one side of the story. I felt you all deserved the other side (and frankly, I wanted to hear it too). So we got the folks from DLP including Bo on a call to just ask all the hard questions that you guys have just as we do. Brett and I spent an hour and a half with him.

            Brett and I learned a lot on the call, much of which we will share with you below. We decided we were going to continue to invest with DLP and frankly, in the end we were more impressed with Don Wenner for hiring Bo than we were before. And now…the rest of the story, with the key points in bold.

            # 1 Bo did not run a Ponzi scheme.

            He started a fund and that fund unknowingly invested in a Ponzi scheme by a separate and unaffiliated group called Global Credit. He invested money of his own, of his family members, of his friends, and of his other investors. He has made lots of great investments in his life. Obviously he has also made one really bad one. This was just as personally and professionally devastating as you would imagine it to be. It's probably similar to what many of us have experienced with a bad outcome and a malpractice case. Lots of sleepless nights etc.

            # 2 The perpetrators are in prison.

            The actual perpetrators of the fraud are all in jail for decades after a lengthy FBI, DOJ, and SEC investigation which Bo and Jumar Management were fully cooperative with. Bo has not been charged with a crime. There are no outstanding legal allegations. He has not been fined or penalized in any way by any investing regulatory authority or legal entity. There were no financial penalties levied against the funds. The Jumar principals also voluntarily repair millions of dollars into the receivership and they continue to cooperate and assist the receivership in an orderly unwinding of the entities.

            #3 Investors did not have a total loss.

            Jumar and its related funds are being managed by a court appointed receiver but hopefully that receivership will all be wrapped up this year. If you’ve ever been involved in a receivership, you know that it takes a long time. Jumar had other legitimate investments which are being wound down. Assets of the perpetrators had to be seized, appraised, and sold. It is complex to sort out net winners and net losers and make final distributions to investors. Suffice it to say, it is a complicated process. Since not all of Jumar’s investments were invested in the fraudulent scheme, the investors should all eventually receive a significant portion of their capital back.

            # 4 The allegations were untrue.

            In 2019, the CO Attorney General made allegations about fraud, selling unregistered securities, and acting as unregistered broker-dealers. The Jumar partners immediately met with the State and once the facts were presented Colorado withdrew ALL charges against the individuals within five days. There were no findings, sanctions, or penalties. The Amended Complaint (attached below) dismissed the individuals as defendants and set forth only two causes of action against the investment funds, one related to the offering of securities which were not registered and one related to payment of compensation to a person who was not registered as a broker-dealer. These were technical findings, which the Jumar principals argue are without merit since the securities were exempt from registration and the payments were not transaction-based compensation. The findings against the funds also came with no sanctions or penalties. Bo and his partners had previously (two days after finding out about the fraud in 2018) stated publicly (in writing) to their investors that they would return assets (their net fees) to the funds. This was not something the State required as a negotiated settlement. It’s something they said they would do from the beginning. Bo has returned millions of dollars of assets to the funds and Bo has cooperated with and helped the receiver recover assets on behalf of the investors.

            See attachment below for details. If you really want to dive in, here is a link to the site of the receiver with all kinds of documents and update.

            https://www.jumarreceivership.com/


            # 5 Bo is just an employee and is not even on the DLP investment committee

            Bo has been an investor in DLP for many years and has known Don Wenner since he met him at a conference years ago. As far as DLP knows, Bo is the only DLP investor in his family. Despite having a grandfather that was a very successful businessman, Bo worked his way through college at a state school before getting a Master’s and a separate MBA and working at various financial firms including his own successful real estate firm prior to starting Jumar. However, after his investment firm and a large part of his personal wealth imploded with the revelation of the Global Credit fraud, he needed a job. Don and the other owners of DLP, after thorough due diligence, decided that his skills and contacts would be valuable to DLP, so they hired him. He is an employee, not an owner. Initially a managing director, he was subsequently promoted to Chief Growth Officer. In this position, he helps with onboarding people, spreading the DLP message, and bringing in big picture ideas and contacts to help grow the company. He is not on the investment committee and has zero control of investor money and frankly, really does not want to manage other people’s money ever again given the personal and professional trauma of the last few years. Many of Jumar’s investors are also invested in DLP. Per the DLP folks, there was zero pressure from any investor for the company to hire Bo.

            Brett and I decided that we really do not have a problem with WCI partnering with a company that has an employee that was once a victim of a Ponzi scheme, even if that employee led his fellow investors into a very, very bad investment. Private investments are risky. That’s why only accredited investors are allowed to invest in them. Brett and I have both had investments go bad before due to fraud. It’s part of being in this high risk, high return space. So not only are we going to leave our personal money invested with DLP, but we are going to continue to accept advertising dollars from DLP and to introduce interested members of our community to the company. As always, consider it an introduction, not a recommendation. The due diligence responsibility lies solely with you on these risky investments.

            If you are a DLP investor or considering investing in DLP and have questions or concerns about this, Bo Parfet and/or other DLP officers are more than willing to jump on a call and answer any questions you may have about what happened at Jumar.
            Attached Files
            Helping those who wear the white coat get a fair shake on Wall Street since 2011

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            • #36
              Thanks for the feedback and update. I did my own best due diligence (even walking through some of their properties which are legit) and have had nothing but good experience DLP. That being said WCI is totally right, this can be the Wild West and fraud can occur. My heart sank when reading this thread and I’m glad that their answer seems reasonable. It’s a good reminder not to overcommit to any one company, investment etc and stay adequately diversified at all times…just in case.

              Comment


              • #37
                It is pretty evident that Jim put in a lot of effort to respond to the comments on this thread. I have never seen this in any other blog and I am even more of a fan of WCI than before.

                Ultimately it comes down to risk tolerance, everybody is an adult and can draw their own line.

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                • #38
                  Great job answering the questions. Thank you for doing the research and explaining what happened.

                  As for accepting ads, anyone who has not seen it should read the post Jim did in, I think, 2019, in which he listed every potential conflict of interest he has at WCI. I have never seen anything like it, from a financial firm or any other business. As upfront as it is possible for a business to be.

                  if I wanted private real estate, this would not put me off DLP.

                  But it illustrates why I would not invest in private equity or private real estate. Far too opaque and illiquid.
                  It is also highlights why I would not hire someone to pick investments for me or invest directly in hedge funds or other private deals. Far, far too opaque.

                  I don't know whether Jumar investors knew that it was putting their money into another hedge fund. They may have simply understood that Parfet was picking investments in hopes of a good return and not asked or been told that much of it would end up on one firm.

                  One would be astonished to find this happening with a conventional fund, mutual or etf, from Vanguard or any of the other major players. You can get the market risk and return for a tiny fraction of what is typically charged in these private deals and funds. In the case of Jumar, I gather there was an annual AUM fee and a percent of profits at the Jumar level and another set of "fees" that would have been charged by the underlying hedge fund, had it been a legitimate operation.

                  Even absent fraud, failures of hedge funds are common and there is no reason to expect a risk adjusted return better than the stock market. I still do not see the appeal.

                  But glad to know that DLP is legit.
                  Last edited by afan; 01-20-2022, 02:26 PM.

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                  • #39
                    Nice to get the full story. That's probably a difficult thing for him to talk about so kudos to him for sitting down and answering some questions.

                    Comment


                    • #40
                      After WCICON22 I was interested in DLP and their offerings.
                      I contacted them via their website. A couple days later they emailed back and we set up a date and time for a Zoom call. I cleared my schedule for that day and never heard from them again!
                      If we're talking about plunking down a half million dollars ('only' $200k minimum for WCIs) and they can't reliable make a phone call, I can't see using them. What kind of service can you expect AFTER they have your money?
                      I'm a little leery about real estate syndicates in general. As Jim likes to say, "there are no called strikes in investing." For me, I'm going to pass on DLP.

                      Comment


                      • #41
                        Originally posted by Ivy View Post
                        After WCICON22 I was interested in DLP and their offerings.
                        I contacted them via their website. A couple days later they emailed back and we set up a date and time for a Zoom call. I cleared my schedule for that day and never heard from them again!
                        If we're talking about plunking down a half million dollars ('only' $200k minimum for WCIs) and they can't reliable make a phone call, I can't see using them. What kind of service can you expect AFTER they have your money?
                        I'm a little leery about real estate syndicates in general. As Jim likes to say, "there are no called strikes in investing." For me, I'm going to pass on DLP.
                        Always disappointing to see a company fail to do the "blocking and tackling" isn't it? Sounds like they lost a good client and now potentially more thanks to you sharing this here. Not sure what happened obviously.
                        Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                        • #42
                          Same thing happened to me... no response at our scheduled time. I had to make the second initiative to get them on the call. It makes me nervous as well even though it seems like most people on this group are extremely happy with them.
                          Last edited by wonderwoman77; 02-27-2022, 02:34 PM.

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                          • #43
                            I worry that they have taken on too many new clients and capital and the customer service may be faltering a bit. Hopefully the extra capital doesn't push them into sub par deals trying to deploy it all. I have a main contact with them as an investor and just call him on his cell and if he doesn't pick up I usually get a call an hour or so later so overall no issues with communication as a client. Sounds like they missed a sales pitch though that could have been good for them.

                            I had the same thing happen with Origin. It was like pulling teeth to get a call scheduled and I had to send a few reminder emails. Then I had the call and never got the overview materials that were promised and had to email again. I didn't invest.

                            I got great immediate feedback and a call with Alpha as well and had a contact recently who says they got the run around.

                            Must be very hard to match customer service reps with demand during a period of rapid growth.

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