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Vernon Martin, the founding principal of American Property Research, performs research, due diligence and valuations regarding commercial real estate throughout the world. He has 34 years of commercial appraisal experience and has worked in 21 countries, 42 U.S. states, and four Canadian provinces. He was previously the chief commercial appraiser at 3 national lending institutions, formerly taught Real Estate Valuation at California State University, Los Angeles and has authored many professional journal articles and two books. He has degrees from the University of Chicago and Southern Methodist University and is a Certified Fraud Examiner. He also wrote the book on commercial real estate fraud, published by the Appraisal Institute as Fraud Prevention for Commercial Real Estate Valuation.
In a 34-year career as a commercial real estate appraiser, I have appraised in 42 U.S. states, 4 Canadian provinces, and 24 foreign nations. I am also a Certified Fraud Examiner with extra skills and resources for detecting fraud and researching the principals and real estate of EB-5 regional centers.
While I can perform custom due diligence on regional centers for EB-5 applicants, in many cases I have already done the due diligence and have even submitted complaints to the SEC on 48 regional centers over the last 28 months, including the California Investment Immigration Fund, who recently pled guilty to fraud, Emilio Francisco of PDC Capital (ZGlobal Regional Center) and the Home Paradise Investment Center, both currently facing litigation by the SEC. Ask me which regional center you are interested in, and I may already have the due diligence ready.
My due diligence includes:
1. Background check on the principals of the regional center. Some have omitted a personal history of bankruptcy, foreclosures, and civil judgments against them in their offering documents. Others have no qualifications to manage the projects that they propose. I check for:
a. Relevant criminal history
b. Record of civil judgments
e. Tax liens
f. Suspicious luxury real estate and vehicle purchases after receiving investor funds.
g. Use of alias names.
h. Experience relevant to the proposed project type.
2. Verification of real estate projects. I will call the relevant planning departments to verify that there is:
a. A submitted Development Plan
b. Development Plan approval
c. Application for building permits
d. Building permit approvals
e. I will also check to see if the approved project is the same as was advertised.
3. A site visit to the project(s). I will evaluate site preparation and look for leasing or sales signs in English from licensed brokers.
4. I will search Baidu.com, using Chinese language search terms, for any alternate advertising for the regional center.
5. I will express my opinion of the feasibility of the project, based on local demographic and real estate trends.
6. I will review the PPM (Private Placement Memorandum) or alternative offering document, as well as financial projections. I will also judge whether the financial projections are realistic.
7. I will find publicly known assets of the principals.
The final report will present any concerns about the regional center, the feasibility of the project, including conclusions of possible fraud and self-dealing.
The intended use of the report will be for investors to make decisions about their investments in this regional center, including the possibility of litigation to have their funds returned if fraud is involved.
The information I will need is as follows:
1. The offering document, most likely a PPM (Private Placement Memorandum), for this regional center.
2. Any other information about the project(s) being financed, such as location and type of project.
3. If possible, a digital photo of the principals, preferably one that can be located on the Internet.
4. Digital copies of correspondence with the principals
5. The number of known investors in this regional center.
6. Any advertising, web sites, letters or e-mails inducing the investors to invest in this regional center.
2. Verification of real estate projects. Some regional centers actually advertise fake real estate projects.
3. My opinion of the feasibility of the project. A project that fails to produce the necessary 10 jobs per investor is likely to be a waste of time and money for the EB-5 applicant. A project that is too large, likewise, may fail to attract enough investors to every get started.
4. Thorough review of the PPM (Private Placement Memorandum) and financial projections. The PPM is a lengthy document, but someone has to read it. I also judge whether the financial projections are realistic.
The initial telephone consultation is free, as is a brief look at the PPM or offering document.
Questions and Answers
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