Most Helpful

It's the ultra fine print in his contracts. And the fact that the government won't investigate him.

If you read his SEC filings, he clearly writes out how he is screwing his investors. He front runs his fund by purchasing the property first, selling to the fund at a premium. He not only collects profit on that sale, but gets a commission for the transaction. He then takes a cut of every rental payment that comes from the tenants before disbursement and charges all his investors a management fee. On top of the management fee, the investors capital is used to reimburse him for all maintenance and upkeep charges the property incurs. He locks his investors into an indefinite lockup and they are required to get lawyers involved just to claw back a fraction of their investment if they ever want to liquidate. He lastly will charge a disposition fee (if he ever sells. Which he states in his own filings that he doesn't want to do). He will charge the disposition fee of the total sale amount of the property AND take a cut of any profit that was made on the sale of the property.

He does all of this while bragging about how rich and smart he is on the internet to unaccredited investors that don't know how to read any of these documents. These are all spelled out in the SEC filings and it actually made my stomach drop when I first read how many different ways he's conning the everyday person. 

And if you decide to call him out on any of it, he, his cronies, and even his executives will come at you and threaten to sue you for "defamation".

 

He's a really good motivational speaker. I genuinely just think he leverages that charisma with people who are honestly illiterate in investing to buy into his funds. I had a conversation with someone who was an investor and claimed they were happy with the performance because they received checks every month. When I asked about why they chose to have an indefinite lockup period just to receive returns inferior to a >5% yield on a T-bill (at time of conversation), they got mad and defensive over Grant's impeccable investment prowess and that I am "a nobody". He really does prey on the people who don't know better or who get so deep into his 10X cult that they will get extremely upset if you ever speak ill about their savior.

 

What's the chance he eventually ends up in prison, or are his lawyers good enough to protect him? 

 

Honestly, I'd say fairly low. I think he's extremely unethical and arrogant, but he spells out exactly how he's screwing everyone. It just takes one or two google searches and about 5-10 minutes of reading. But he gets his investors so hyped up that they just want to be involved with "Uncle G". 

Unless he seriously screws up and blows up his funds or gets found out that he's actually just running an elaborate ponzi scheme (he did get sued for advertising 15%+ IRR years ago), nothing will happen. But something just never added up in my head about how he's only raising 10-50mm for these funds to purchase 250mm+ properties, but somehow owns multiple mansions, expensive cars, high-end watches, and a private jet. The math isn't mathing.

 

If you believe cap rates will go down to 2% within the next 5 years, and people give you money to invest in real estate deals based on that thesis, is it illegal?

 

Never illegal to invest with anyone based on their thesis. However, he did post a video on linkedin just today about how inflation is great because the value of his properties appreciate when more money is printed. So I'm not necessarily sure his financial takes are ones I would trust, personally.

 
Funniest

Arguably the funniest/greatest confrontation I seen of Grant Cardone is his conversation with John Legere. Sadly WSO won’t let me post the link.

John Legere is a legend in the telecommunications industry and the TMobile CEO. Him and Grant hopped on a public conversation where he picks apart Grant and his fraudulent behavior.

Grant, is now trying to sue him for $100MM for defamation (lol). Worth the 15 min watch.

Also, some other good laughs over GC is watching his interview with Jordan Belfort where Grant notably walks in the room on a fake phone call screaming “I WANT $80 MILLION OR I WALK” then fake hangs up. Jordan sees through his bs and calls him a “great marketer”, GC funny enough doesn’t understand what he really meant. Or listen to GC on Robert kiyosaki show telling all hopeful investors that it’s better to purchase a $20MM property rather than a small investment for their first deal “because it’s all the same” lol, they ended the interview bc Robert said this is not informational your solely here to promote yourself. GC is a jackass, it’s comical his lil possee stand up for him.

On instagram follow BallerBusters, they have content over all these frauds, including Grant.

 

If you explain the scam to someone in great detail, is it really a scam anymore?

At some point, investors/consumers need to be held responsible for their own bad decisions.  Grant Cardone isn't holding a gun to anyone's head.

 

I think this is a yes/no kind of thing. If I give you an investment memo that says you give me your bank account info and I steal your money, but its in Chinese and you don't understand Chinese, is that a scam? Same if you find people who don't really understand investing/financials, but you give it to them.

On the flip side, I do agree some people need to be smart enough to know not to get into things they don't understand, but everyone wants to make money no one wants to work hard they say. 

 

You hit the nail on the head. His entire target demographic is non-accredited non-sophisticated investors who don't understand what they are investing in. He dances and shouts on all his ads about cash flow and that it's the only way to become wealthy.

Once he gets people to buy in, yes they still receive monthly payments, but its nearly impossible to get their initial investment back. They are happy because they believe that they are absolutely crushing the market because they got a $100 check in the mail from GC. He never discloses any actual financials about the properties, not even T-12s. Just because it's possible to find the information I stated above, does not mean that it is clearly laid out to potential investors. I, as well as everyone else in this thread, either work in finance or have a strong passion for it. We understand how to read the filings and where to look for them. The average person who gets bombarded with his ads and goes to 10X events don't even know what yield is.

 
ironman32

I think this is a yes/no kind of thing. If I give you an investment memo that says you give me your bank account info and I steal your money, but its in Chinese and you don't understand Chinese, is that a scam? Same if you find people who don't really understand investing/financials, but you give it to them.

On the flip side, I do agree some people need to be smart enough to know not to get into things they don't understand, but everyone wants to make money no one wants to work hard they say. 

OK, but if I sign a document in Chinese even though I don't speak or read the language, then I'm once again on the hook for making a decision I literally cannot understand the details of.  At some point people need to be held responsible for their own actions and decisions, and not make themselves out to be a victim of a situation their own greed entrapped them in.

At some point we need to have some basic level of responsibility as individuals.  If my doctor prescribes me a medication which turns out to be bad for me, that's a different story - a professional gave me bad advice.  The thing is, in this analogy, Grant Cardone isn't the doctor: he's the medicine.  If I find some pills in the trash can and ingest them, no one should feel sorry for me.  Grant Cardone is the trash pills.  If my accredited financial advisor puts my money into Grant Cardone's scam, then you have an argument that I should be entitled to restitution, because he's my doctor, he's my Chinese translator.  Grant Cardone is a scumbag and a scam artist, but I feel extremely strongly that idiocy should not be a protected class.

 

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