All posts by jd

Real estate broker, civil engineer and general contractor.
Business

Bernard Madoff, King of Ponzi

This chart shows how a pyramid scheme (also known as a Ponzi scheme) is impossible to substain.
This chart shows how a pyramid scheme (also known as a Ponzi scheme) is impossible to substain.

Bernard Madoff, the king of Ponzi, sits in jail for the next 150 years, or at least until he dies, whichever comes first. In the meantime, Irving Picard, the court appointed trustee, also known as the liquidator, is searching for the billions of dollars that disappeared.

Where did the money go?  Madoff sent out statements to his “investors” that the fund was worth 64.8 billion dollars. According to Mr. Picard’s chief counsel David Sheehan, the statement was total lies.  The statement of 64.8 billion dollars was an illusion to keep investors investing.

According to CBS 60 Minutes:

“Asked how much real money went into the whole scheme, Sheehan told Safer, “I’d say about $36 billion. And about 18 of it went out before the collapse. And 18 of it is just missing. And that $18 billion is what we’re trying to get back.”

So for the past nine months, Picard and his team have been on a global treasure hunt. The first step: liquidating Madoff’s boats, his art, even his season tickets to the New York Mets, plus Bernie’s various homes, all sold or about to be sold with a U.S. Marshal as real estate pitchman.

“They didn’t exactly hide their wealth, did they?” Safer asked.

“They did have the house in Palm Beach. They had a place in Montauk. They had to have, you know, an apartment here on Park Avenue in the city – all of which are the accoutrements of great wealth. But it wasn’t an extraordinary lifestyle,” Sheehan said.

According to the government, those homes, boats, art and more are worth over $50 million.

That’s just a drop in an oversized bucket, nothing close to what investors lost. So Picard and his team continue to follow the money.

They started at Madoff’s New York offices, now an impressive landscape of emptiness.

And close by, perhaps a work of art that sums up the entire story: “It was called the ‘Soft Screw.’ And it was about four, I guess four to six feet high. And it was sitting right here,” Picard explained, describing a screw-like sculpture that used to be displayed in Madoff’s office.

And sitting on top of the world was Madoff himself. “He was much like the Wizard of Oz, just hiding behind this wall. And no one could quite penetrate it but they sort of really liked the results,” Sheehan said”

It looks like the “soft screw” turned out to be a total reaming.

Construction

Now I’m Building a Barn, Part 1

In addition to my real estate company, I also have a construction company, O’Dell Construction. I have been building in Nevada County and surrounding areas since 1971.  This has been a slow year, but I have two projects, one which I just finished for a former client. Right now, I am building a barn for another former client.

The perimeter foundation is formed, ready for concrete to be poured.
The perimeter foundation is formed, ready for concrete to be poured.

I built a 3,850 square  home for this particular client in 2002. Than I built  a 1200 square foot wood working shop for them in early 2008. Now I’m building a barn for them since they have decided to have horses.

You can see in these pictures some of the latest progress.  The barn has a perimeter foundation, with decomposed granite for a floor instead of concrete. The decomposed granite will be much easier on the horses legs than a concrete floor.  We placed a perforated pipe under the granite to  drain liquids away from underneath the granite floor.  The walls will be ten feet high and have vaulted trusses set on top of the walls. There will also be a twelve foot covered area for the horses to stand under just outside the barn.

Concrete is poured, forms ready to be stripped
Concrete is poured, forms ready to be stripped

The barn is twenty eight feet wide and forty two feet long.  Some of the requirements that are a little different than a home or work shop is that the wiring has to be in conduit and the light fixtures have to be explosion proof because of any potential dust setting off a fire.

Foundation and finish grading complete. Decomposed granite in place.
Foundation and finish grading complete. Decomposed granite in place.

This picture was taken September 24, 2009. The owner’s home is in the background.

Lakes in nevada county

Scotts Flat Lake Level Drops

Scotts-Flat-Lake-fall-2009

September 28, 2009

As you can see from the picture I took from my deck last Saturday morning, Scotts Flat Lake is down to its usual fall levels. On May of this year, the water level was at around elevation 3,070. Nevada Irrigation District chart shows that it contained 500,000 acre feet of water. (An acre foot is one foot of water spread over one acre or 43,560 cubic feet of water) NID estimates that the water level is now at 3,046 feet with about 300,000 acre feet of water.

Looking north at Cascade Shores Campgrounds & boat moorings
Looking north at Cascade Shores Campgrounds & boat moorings

Most if not all of the boats which were moored on the north side of the lake are gone.  Scotts Flat Lake is known for sailing  and most of the boats that were moored in the lake were fairly large sail boats. You can get the rates for mooring on the lake during the boating season by calling NID at (530) 273-6185. If you are interested, I suggest you call now, since most of the moorings are grabbed up early, way before the boating season starts. By the way, my house is in Cascade Shores at an elevation of 3,700 feet.

Real Estate

LA Firefigher, Real Estate Broker Faces Jail Time

man in jail cell

It seems that people are always trying to make money by illegal means. If they would put as much effort into doing something legally as the schemes they come up with, they would in all probability make more money. At least they wouldn’t end up in jail.

A case in point is the scheme by a Los Angeles City fire firefighter and part time real estate broker who was arrested on September 23 of this year. In a press release by the Deputy DA of Los Angeles, Brent Lamont Mathews is charged with six counts of forgery, thee counts of attempt to file a false or forged instrument and two counts of grand theft.

Of course to falsify deeds and documents, you need a notary. It was handy of Mathews to have a girlfriend who is a notary. So along with Mathews, his girlfriend Joi Rochelle Smith faces the same criminal charges.

Prosecutors allege that Mathews put himself on the title of a Hacienda Heights property without the true owner’s knowledge or consent through a series of forgeries and false filings. Mathews allegedly went on to defraud two investors in 2008 whom he solicited as partners to flip the house. The victims collectively lost $146,000, which the defendant purportedly borrowed by issuing trust deeds on the property and thereafter filing false reconveyances of those trust deeds.

Smith allegedly notarized key documents, enabling the illegal transactions.

Mathews sold the property for $699,000 and netted $203,969, prosecutors said. None of the proceeds from that sale were used to satisfy the trust deeds or to benefit the true owner of the property.

Detectives of the Los Angeles County Sheriff’s Department, Commercial Crimes Bureau, investigated the matter.

The recommended bail for Mathews and Smith is $846,000. If convicted as charged, the defendants face a maximum state prison term of 11 years and four months.

So isn’t that neat, you put your name on someone else’s property, get some trusting souls to invest in a house that isn’t yours, sell it and net over $200,000. Let’s see divide $200,000 by eleven years in jail, you make about $18,000 a year, minus of course attorney’s fees, income tax and other associated expenses. Of course you have free room and board during your jail time.

Real Estate

Foreclosure Rate Drops in California

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Foreclosure sign

The latest figures from ForeclosureRadar show that the number of distressed filings in California, one of the worst hit states in the country, fell in August.

Notices of default in California, which is the first step in the foreclosure process, dropped from July to 36,396 filings, a monthly dip of 19.1% and a 14.2% decrease from August of last year.

In a report the firm says that the government’s Home Affordable Modification Programme which provides cap incentives to servicers for the modification of loans in default or on the verge of default, appears to be having a positive impact.

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But Sean O’Toole, founder and CEO of ForeclosureRadar, said that the programme could be hiding the true picture.

‘In effect the HAMP postpones a large amount of filings,’ he said. If it fails, the market would need further government intervention or there would be a wave of new foreclosures, he warned.
But overall the outlook for recovery is still muted.

According to the latest analysis from Moody’s it will be at least another 10 years before residential property prices return to the peak levels of 2006.

Source Property Wire

Community Events, nevada county fair

Grayling, Michigan Judge Will Pick Winners At Annual Draft Horse Classic and Harvest Fair

Six-Up-hitch-horses

Sharon Priebe from Grayling, Michigan, has been selected to judge this year’s Draft Horse Classic, September 24 – 27, at the Nevada County Fairgrounds.

Priebe has been judging horse shows for more than 15 years, and has judged All-American Shows, All-Canadian Standings, the Illinois State Fair, the Michigan State Fair, Centerville, and the Del Mar State Fair. Additionally, Priebe has shown Draft Horses throughout the United States for more than 25 years. She is also a past member of the Clydesdales Associations Board of Directors and a well-known Clydesdale breeder.

Live entertainment, a world class art show, Treat Street goodies, vendors with western wear and items, a clogging jamboree, a live shoeing competition, community exhibits, and visits to the barns to see the magnificent Gentle Giant Draft Horses are also part of the events activities at the Fairgrounds.

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This Draft Horse Classic starts this Thursday, September 24th and runs through Sunday, September 27. Draft Horses Western United States will be competing throughout the four day event for close to $40,000 in prize money.

Priebe will be busy judging all six Draft Horse Classic performances starting on Thursday, September 24 at 6:30 pm and ending on Sunday, September 27, at 4 pm.

Tickets to the performances are on sale now, as well as the day of the event, and may be purchased by calling the Fair office at 530-273-6217. Visit www.NevadaCountyFair.com for additional information.

Source Wendy Oaks, Nevada County Fairgrounds

Community Events

Great Yuba Cleanup and Restoration Day’ set for Saturday Sept. 26

south-yuba-river

The South Yuba River Citizens League will hold its 12th Annual Great Yuba Cleanup and Restoration Day on Saturday, Sept. 19.

Each year, volunteers haul out tons of old tires, mattresses and even junked cars from area watersheds. Items found have included bus seats, an old ditch tiller and a sofa.

This all-day event includes the volunteer clean-up and restoration project from 8:30 a.m. to 1 p.m., followed by festivities at Bridgeport in the South Yuba River State Park.

SYRCL is the designated regional coordinator for western Nevada County as part of the 25th annual statewide California Coastal Cleanup Day. Thirty five sites on the Yuba and Bear rivers and Wolf and Deer creeks will be coordinated by SYRCL as clean-up locations for this year’s event.

“The South Yuba alone receives about a half-million visitors a year, and not all of them ‘leave no trace,’ SYRCL Executive Director Jason Rainey said. “With the diminished — perhaps eliminated — capacity of the state to manage the South Yuba parklands, this is a particularly important time to gather on behalf of our river.”

in 2008, 658 volunteers at 34 sites in the Yuba and Bear river watersheds and Deer and Wolf creek watersheds collected 16,318 pounds of trash and 3,240 pounds of recyclable items along 92 miles of river and creek waterways.

Volunteers must pre-register to participate and can do so at http://www.facebook.com/l/834f2;www.yubariver.org.

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The free picnic lunch for volunteers will be provided courtesy of Sunsmile Farms, Living Lands Agrarian Network, SPD Market, California Organics, Sopa Thai, Broad Street Bistro, The Fix, Matteo’s Public, Flour Garden Bakery, Carl’s Jr., Summer Thyme’s Bakery, Mother Truckers, Natural Selection and Safeway.

“We simply couldn’t clean up the tons of trash each year without all this community support,” said Miriam Limov,

Public celebration at 12:30 p.m. Saturday After lunch the public is invited to a celebration of the 10th anniversary of SYRCL’s successful campaign to protect the South Yuba River through state Wild and Scenic designation.

The party will include amplified, peddle-powered music by the Ginger Ninjas and other local talent, volunteer appreciation, the Haute Trash fashion show, a New Belgium Brewery beer garden, a raffle, prizes and other surprises.

The party will start at 12:30 p.m. and last until sundown. Guests are asked to bring low-back chairs, blankets, plates, cups and utensils.

Event sponsors are Nevada City Self Storage, New Belgium, Wild Mountain Yoga Center, BriarPatch Co-Op, California State Parks, B & C True Value, Anderson Physical Therapy, Sierra Solar Systems, Wolf Creek Wilderness, Mountain Recreation, Tour of Nevada City, South Yuba Club, Young’s Carpet One, Xtremely Green and The Union.

Real Estate

Donald Trump’s Ex-Partner Indicted

donald-trump- hair

Donald Trump has interesting ways of valuing his holdings, including his own net worth.   Mr. Trump, with his apparent combed over hair, seems to have an ego greater than the City of New York.

So when Trump sued his Hong Kong real estate partners four years ago for not getting a good price on a major Manhattan development and evading taxes, it seemed like sour grapes, as the New York Times puts it.

Today, we find out Trump had good reason to quibble with the $1.76 billion valuation: the Manhattan District Attorney is going after a former partner for grand larceny and tax evasion

The defendant, BARRY D. GROSS, 45, has been indicted on charges of grand larceny, falsifying business records, offering a false instrument for filing, filing a false personal tax return, and failure to file unincorporated business taxes. The crimes charged in the indictment occurred between February 2006 and September 2008.

Back in 2005, it was the biggest residential land deal in the history of the city—Hudson Waterfront Associates, the Hong Kong-based consortium that worked with Donald Trump to develop and market the massive Trump Place development on the West Side, sold a 77 acre parcel of land to Extell for $1.76 billion. Now the Manhattan DA’s office revealed it just arrested the project director for tax evasion and are looking into whether Hudson Waterfront evaded taxes on a $17 million portion of deal.

According to the Post, “Prosecutors say [Barry] Gross hid $1 million that he earned on the deal by shifting the money to a shell company the next year, then filing amended tax returns to hide his fraud.” Gross’s lawyer—Benjamin Brafman—”downplayed the DA’s grand-larceny and fraud case against his client as an overblown tax dispute that should have been settled in civil court.”

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But, Manhattan DA Robert Morgenthau says that Hudson Water paid a $17 million “finder’s fee” to a British Virgin Island company, Fineview, which is believed to be just a shell company. The NY Times Reports, “Mr. Morgenthau said investigators were able to track the flow of the money, which was transferred to from the Channel Islands and to London, before ending up in Hong Kong in the hands of someone associated with the investors. By routing the $17 million through Fineview, Mr. Morgenthau said, the investors were able to avoid paying income taxes on it as part of the purchase.”

Morgenthau said more arrests are coming. And now it looks like Donald Trump, who had complained Hudson Waterfront could have gotten more than $1.76 billion, is a victim in this, too, since some of that $17 million should have gone to him! The Donald told the Times, “I greatly commend the district attorney for his work and feel certain it will continue.”

Source New York Times.

Real Estate

Madoff’s Beach Home Sells for More Than $8.75 Millon

madoffs beach home

Bernard Madoff’s Montauk, New York, beach house sold for more than the asking price of $8.75 million, two weeks after it was listed for sale.

Corcoran Group broker Joan Hegner confirmed the sale and didn’t disclose the buyer or the purchase price.

The home is the first of three once owned by Madoff that the government is selling to pay restitution to victims of Madoff’s Ponzi scheme, the largest in history. The 3,000 square- foot home on Old Montauk Highway, on the east end of New York’s Long Island, was seized July 1 by U.S. Marshals.

The Montauk property Madoff shared with his wife, Ruth, has a panoramic view of the Atlantic from every room, said Roland Ubaldo, a deputy U.S. Marshal in New York. It was built in 1982 and the Madoffs were the first and only occupants, Hegner said.

The house, with 182 feet of beachfront, is 50 feet from a sand dune, so close that environmental regulations would no longer permit building there, Hegner said.

Minkoff said there have been 15 showings of the property, which is priced at $8.49 million. An open house for brokers on Sept. 15 brought 120 agents, he said in an interview. The Palm Beach house still has most of the furniture and artwork, which are being sold separately

Source Bloomberg