Creative investors must read (long)

Reply: 6
From: M F


Dear All,

Take this as some friendly advice from a serving member of the NSW Police attached to the Detectives in Sydney.

I wont go into moral or ethical arguments of the proposal discussed in this thread as I believe people do what they want to do. Often what suits them best, and come up with varying arguments to justify what most people consider to unacceptable behaviour so they can sleep at night. That's why the more extreme areas of this unacceptable behaviour are made illegal and it is the legal problems this proposal has that I intend to comment on. So for those of you who are in any doubt as whether this behaviour could be deemed criminal read on.

The NSW Crimes Act 1900 includes the offence of "Obtaining money etc by deception", section 158BA. This legislation sets out the following offence:
The accused; by a deception, dishonestly obtained for the accused or another person, money, a valuable thing or financial advantage.

"deception means deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including;
(a) a deception as to the present intentions of the person using the deception or of any other person" - See Crawford's Proof in Criminal Cases (1996), page 202.

Keep in mind also the plain dictionary definition of being 'deceptive' : "to mislead, of a misleading kind."
and
'dishonest' - "fraudulent, insincere."

In summary, if you do anything which deceives another party, and results in you receiving a financial advantage you wouldn't have received without that deception, you are open to prosecution under this legislation.

If, as was proposed by someone, you had included all the conditions of the sale in the loan proposal with the bank and the bank simply missed it a criminal offence is unlikely. But if you don't disclose this info to the bank you leave yourself wide open. Why did you pay more than you had to for the property?? Why didn't you tell the bank of the conditions in the contract when it has a direct impact on whether they lend you the money?? and how much money they lend you?? . Would the bank have lent you that amount of money if they knew all the details of the sale??

The bank is lending you money to cover the purchase of a property at a particular price. It's painfully obvious to the average person and the court that the reason the sale contract has been processed with an inflated price is to get money from the bank they would not have lent to you otherwise. I haven't got my Crimes Act with me but I believe the penalty is a max sentence of 5 yrs gaol.

If I was given a case with these circumstances charges would be laid. For those who wish to try their luck, good luck explaining it to the court. That will eat a big whole in your wealth creation plans. Is it really worth it?

Oh and one more thing. In relation to the person speaking at the seminar who had "legal advice" there was nothing illegal about what he was doing. A large percentage of those charged with offences maintain to the end what they did wasn't wrong. Many of their solicitors say they're not guilty too. What people say and what is the case are two very different things. Especially when the people concerned make a living out of deceiving people.

That should be enough for now. Hope I don't get any of these cases from the banks when they send through their next lot of fraud files. I've got enough to do!

MF.
 
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Reply: 6.1
From: M F


Sorry, one thing I should have pointed out in my previous post. Current asset confiscation legislation allows for application to have anything obtained through criminal activity, or purchased with the proceeds of crime ("tainted") to be forfeited to the crown. In summary this means you would stand a good chance of losing the house you purchased if the charges were upheld at court.

MF.
 
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Reply: 6.1.1
From: Tibor Bode


Hi MF,

It was great to have someone else who is actively involved with cases like that would give an opinion. A barrister earlier already mentioned the 5 years gaol penalty.
I think it is immoral and losing your integrity (apart from your possessions) is more serious than to worth to take the risk. Yes, I do not like banks either, I don't like to pay tax and want to become financially independent tomorrow not in 5 or even 10 years from now, but but at any price. I believe that this goal can be achieved in a more honest way. Having achieved wealth for a couple of years (Skase, Bind, etc) is one thing, to preserve it and sleep well at night and have integrity is another. I personally rather choose the latter.

Tibor
 
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Reply: 6.1.1.1
From: James Doherty


Are you people living in the real world. LOOK outside the two dimensional world u r in. The NAB half year profit. $2.2B closing branches, sacking people, how much of this Money do they put back into the community. In regards to deceptive contracts, use your brains it is not hard to word the contract a way that is harmonious to the banks. Most banks miss the clause anyway, but you did your job by putting it there this is not deception it is a legally signed contract.. I challenge the fact that it is 'obtaining finance by deception-The purchaser and Vendor have a sale contract for a property for X amount. As far as the contract is concerned it is X amount to be paid by X date, if the bank are happy with the valuation and the amount to be borrowed by the purchaser then the contract will be obliged, what financial arrangements the vendor and purchaser have made after the settlement date is of no concern to the bank.Please people are you just on this site to chat or get ideas to remove yourselves from the Matrix?. If u want to chat and put people down there are plenty of chat sites around. If not then lighten up. JD
 
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Reply: 6.1.1.1.1
From: Tibor Bode


James,

While I understand quite clearly your point and emotionally I even tend to agree with it, from practical point of view I simply can't. Its not only a moral issue with potential legal implications, but also one where you might just loose part of all what you have made. You open up yourself to litigation which could much more than you gained, even if you win. Financial institutions are already aware of this practice and albeit some lazy employee might overlooks it, do you really want to piss off your business partner when you rely on them for finance in the long term, to get a short term deal? To me this does not make sense. If a deal does not work with one institution find another or better, find a better broker who can get the deal done, go private finance, etc. I've recently done the same. 2 institution knocked me back, the third (after 2nd valuation) came up with the results I wanted.
To me, banks making obscene profits (at our expense) does NOT justify dishonesty or trying to mislead another party. I am intending not only to make money in real estate but also to keep it for the long term
and not opening myself up for any litigation.

This is only my personal view, of course.

Tibor
 
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Reply: 6.1.1.1.2
From: Alan Hill


James,

I must agree the profits of a couple of the major banks used to make my blood pressure rise a bit in the past too.

I found a nasty capitalistic way of reducing my blood pressure though........well sometimes!

I bought shares in them!

When the news comes on now and I hear how much they just made, instead of the blood pressure rising, a rather relaxed contentment falls upon me....

Hey! You've got to look after your health the best way you can!


:)
 
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Reply: 6.1.1.1.3
From: Rolf Latham


Hi James

That is one way of seeing it. There is another rather obtuse way too.

How much money do "they" put back into the community ?? Very interesting question ?

Who owns the major banks ? You and I do. By far the biggest slice of these companies is held by institutional investors including super funds. Who screams when our super funds return 3 % - WE do. We cant have it both ways ?

BUT yes we can. Use the non bank lenders, the building societies etc, your choice of "ethical" funder has never been better.

By the way, If I had the market capitalisation of the NAB and I made 2.2 bn half year before tax on that I would be really really sad.

Ta

Rolf
 
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Reply: 6.1.1.1.3.1
From: DB Bear


I'm very sorry James, but I have to disagree with you. I want these opinions and ideas and chats and conversations and arguments and, and, and....

Why, because I don't want to unwittingly do something that is illegal. I heard of this strategy a while ago and then someone else said to me - don't touch it, it's illegal! I am very grateful to all the people on this site for keeping me informed of all their experiences - good and bad. This is how we all learn together.

If you find out about some of these strategies and find they're illegal and you do them anyway - it's on your head. I value everybody's experience and opinion - I don't have to agree with it but I still value it.

Voltaire, a philosopher , said something along the lines of "I don't agree with everything that you say but I will defend you to the end of the earth for your right to say them!"

Deb
 
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Reply: 6.1.1.1.3.1.1
From: Dirk Diggler


i cant understand why people criticise a bank for making a profit. would you like them all to loose billions of dollars and see this country go down the toilet like argentina!
 
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Reply: 6.1.1.1.3.1.1.1
From: GoAnna !


I guess I must be lazy. I always wonder why bother people bother working out such elaborate and illegal plans when it is so easy to make money honestly.

Why not just buy under market, or at market and do a renovation, revalue and take out your equity? Has the same effect in a very short time.

GoAnna !
"In the spider-web of facts, many a truth is strangled."
-Paul Eldridge
 
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Reply: 6.1.1.1.3.1.1.1.1
From: Mark Laszczuk


James,
If you decide to use this strategy, be sure to drop me line when they throw you in jail. I'll come visit you, I promise. Look mate, when you start reading about it in the mags and see it on forums, it means the banks have known about it for at least a year, which means they employ people to catch others who think they can get away with it (that means you). If staying out of jail means being a stickler for the rules, then I'll be a tightarse, thanks.

Mark
'no hat, some cattle'
 
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Reply: 6.1.1.1.3.1.1.1.1.1
From: Steve Piggott


Hi James and fellow investors,
Perhaps a simple strategy that's legal and works in many circumstances is a settlement arrangement where you only forward 70-80% of the purchase price and arrange the balance at a later agreed date. Nothing illegal and in some cases very agreeable.
Here's some reasons:
Vendor only wants to release the mortgage as he/she needs to decrease liabilities in order to 'do another deal'.
Vendor is happy not to realise a cap' gain in the present financial year.
Vendor wants to defer profit/cap' gain to other entity/entities in 'bite sized' tax effective amounts.
Vendor wants to sell the property at full asking price and you gladly oblige if settlement can be negotiated in a similar to above fashion.
I'm sure there are more reasons... these have been some for me.
Just remember... It's all about the deal and you never know if you dont ask !

Happy Investing.... Neb :)
 
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Reply: 6.1.1.1.3.1.1.1.1.1.1
From: Robert Forward


Hi Steve

What you've stated there is a simple form of Vendor Finance. This is a good way of getting a deal across the line.

Though you need to make sure that the vendor owns more then 20-30% of the property, otherwise no matter how hard you push the deal it will never work. Again however, doing the deal in this manner, you will still need to notify the banks of it.

Cheers,
Robert

Get your Property Inspection Reports @
http://www.CreativeFinance.com.au
 
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