Feeling sorry for Andy Shaw & Greg Ballard?

Yesterday I received a call from a chap who put down a £45,000 deposit on a villa in Cyprus being marketed bby Andy Shaw through ASI (presumably Andy Shaw Investments) in Chichester.  After his money was bounced from one failed purchase to another, he finally decided the investment wasn't happening and he requested its return.  You can guess the rest.  Apparently, he is one of 11 people in the same position and yes, he had been told that the money would be held in a safe, separate account. After all, these were DEPOSIT FUNDS for a property purchase, not money given to Andy to use as he saw fit. If everyone invested the same, this amounts to almost half a £million!

Yet I know there are still people out there who will be feeling "sorry" for Greg and Andy and probably saying that people should have done their own due diligence and that those who invested cash personally on which Andy & Greg promised to pay interest (and were doing up until early this year when the contracts started coming to an end and the money was due back) had to accept that with big reward came the big risks.  Do they have a point?  After all, the credit crunch has hit many, hasn't it? 

My comments are as follows:

1. I always agree, and advocate, that people should do their own due diligence before getting into an investment.  Passive Investments' (check the name) business model appealed to, and was marketed to, those who (a) did not understand property investments, and many not have understood enough to realise HOW to do such due diligence, and (b) those who did not have the time to do the work themselves.  An excerpt from their STILL LIVE website states: 

   "Our experts manage the entire process from start to finish allowing you to focus your energies on your family and working life. This is why we are called Passive, and why we are the investment choice of professional people seeking security for their future, or retirement.

   Passive Investments will save you time, because we deal with all of the complex processes and legal matters on your behalf. We also save you money because our knowledgeable teams understand the buy-to-let market inside out, we know how to manage property efficiently, how to minimise costs and maximise value."
2. Those who invested their unsecured cash did so for a fixed period,mostly personally providing this money to Andy & Greg. They received a very good interest rate. Presumably Andy & Greg used this money to purchase properties with the intention that they would refinance and pull out the money to repay the individuals before the cash was due back.  Their defence now is that the market has fallen and they are currently unable to pull out the money which is locked in the properties.  Andy, who has always been very vocal about having an uncanny knack of always being right about the markets, obviously did not predict what was going to happen but, even so, Passive claimed their system could refinance quickly and they had 2 or 3 years (depending on lengths of agreements) notice that the money was due back! In addition, they stopped paying the interest earllier this year because they had no cash flow. How come? One of the great things about the current financial market is that my cash flow from properties has increased enormously. Greg & Andy claimed to have (depending on who they spoke to and when they said it) 200+ properties.
3. Various estimates from ex staff state that there were possibly 150+ investors involved in the portfolio build. Even if there were only 100 who paid an average of £37,500 each (some paid less, some more), we're looking at close to £4million. They paid this money for a 6 year service yet Greg claims all the money has gone and cites that he has had staff and premises to pay for. Many people have not even received one property yet!
Surely, if you commit to someone to provide a service for 6 years and you take £37,500 from them to do this, wouldn't you ensure the money would be spread to pay for the necessary resources over this period of commitment?  To blow all the money before you've provided the full service is bad management and, as far as I can see, nothing whatever to do with the credit crunch, unless... they've used that money to purchase property for themselves. Is this legal?  I believe this is purely bad management.
 
Some people have also said that Passive were right to continue plying their wares. They were at the Property Buyer's Show about 3 weeks ago (those stands are not cheap!) looking for new clients. At that time, and at the time they took fees from people, and at the time Steve Howson was telling people their money was safe, Greg was also telling others that he could not pay them back, that the VAT and tax people were onto him and he did not have the funds to pay and Passive already had at least one court judgement against the company for almost £7,000.  I do not believe they were right to continue bringing in more people. I believe it was dishonest. They were selling a service they knew they could not provide and they must have known the company would not be around for the long haul. Greg actually told people, individually, that if they rocked the boat it would stop others signing up which would mean he would not be able to bring in the money he needed to pay them. Anyone heard of Berni Madoff? A massive Ponzi or pyramid scheme - a little like the UK government pension plan that Greg & Andy said their product was an alternative to!
 
My final belief is that they had a great business model but they got greedy and forgot that the universe demands you provide good service to others in order to benefit from wealth.  They did not provide a good service once they had received people's money (as many of you know, I found this out to my cost when their inefficiency led to me getting slapped with a CCJ - full story earlier on this blog) and they began providing shoddy properties (some currently unlettable!) and charging a lot of money for "renovations" that were not worth the cost.  Anyone who complained was treated with contempt and told they were a solitary unhappy client. Now we are finding out the truth.
 
So, do you feel sorry for Andy and Greg? Well they have closed down many companies and walked away from debt before but I believe these were previously company debts through their double glazing firm rather than people's inheritances, pension funds, mortgage funds, etc. This time it's personal, yet, through Tudor Equity they appear to be gearing up to continue the model, with someone else in the director's seat (due to Greg & Andy's looming personal bankruptcies) but with Greg Ballard "available to help and advise us when necessary". One comment I received yesterday was "Greg pulling the strings".  So will this company be run any better?  I sincerely hope none of the Passive Investments clients who have received letters from Tudor Equity sign new contracts with them for the "small contribution of £2,500" and a reduction in Acquisition Management fee to only £10,000 per property when it looks like any properties with charges in favour of Passive Investments may be free of those charges (to be confirmed) when Passive goes into liquidation.
 
Finally, Knowledge to Action yesterday sent out a joint venture email promoting a video by "Andy Shaw and Greg Ballard, Multi-millionaire Property Investors".
 
Now perhaps the content is good, after all, 30 seminar attendees allegedly paid £5K each to attend (there's another £150K, less costs!), but what is the definition of "multi-millionaire" these days?  This kind of marketing, when you know what's going on in the background, affects us all. It gives a bad name to those of us who are genuine millionaires (and for clarification, I'm talking net worth (EXCLUDING BORROWINGS!) rather than £1m lying around in the bank).  I'm sick of individuals who lie & cheat others. They are not the first (I was also used by one other after Passive, and had to get involved in sorting that out, too, with both time and money, but it was nowhere near on the scale of the Passive debacle) and unfortunately, I'm sure they won't be the last.
 
I think the saddest part of all this is not whatever becomes of Andy & Greg, nor even the amounts of money people have lost - people who may never have that kind of money again and people who are left to repay the money borrowed from mortgages and loans - but the fact that many of these people will never trust anyone or another investment again. That's very sad.
 
 

Comments

[Stabilo]

There is an outline plan to help some of Passive Investments clients on Singing Pig at http://www.singingpig.co.uk/forums/931529/ShowThread.aspx#931529

The post was only made in the last hour or so but so far we have been offered 3 deals for the Passive Investment clients.

[Mirage]

Hi ,
I had made an investment in a villa purchase with ASI a year ago and the kept telling me that I re-invest in other scheme as the earlier one had not progressed. Then again I went through the rigmarole of my mortgage not being approved and they kept on sending me new form of different banks for the same.
Today I recieved an email from ASI saying they could only repay me 10% of my deposit now and the rst could follow in the next 36 months. I wonder how many other innocent people have been duped in this same manner? I for one shall never buy a property until I see it ready on solid ground and my faith in humans has been badly shaken , because the word TRUST without the letter "T" is just RUST!!!!!!!

I hope other people reading this can share and advise and I wished I had BING-ed Womeninpropertinvestment earlier.

Thanks,regards
ASIgned to lose.