Real Estate Investors Must Keep Watchful Eye for Fraudulent Behavior

There is a lot of money to be made through real estate investing, as shrewd investment strategies can yield a great return over time. Many investors have enhanced their wealth and achieved financial security through their real estate holdings, but it is important to recognize that any lucrative investment opportunity is also one that may be targeted by individuals or organizations seeking to profit from fraudulent activity. Unfortunately for investors, fraudulent behavior happens more frequently than most realize and is one of the most underreported activities due to the intentional deception involved.

One such example of this relates to Cabot Investment Properties, a firm that defrauded its investors by misappropriating funds and concealing the misappropriation by falsifying the financial reports provided to investors. The executives defrauded their investors to the sizable sum of $17 million, using the defrauded money for, according to Ian Andrews, funding personal expenses that included luxury cars and tuition for private school. The fraudulent activity related to tenant-in-common (TIC) securities, and Cabot Investment Properties worked diligently to hide the profits from investors in order to keep the profits for themselves.

As has been noted previously by Ian Andrews, fraudsters such as these are a blight on the investment community. While the company was able to generate significant profits along with a sizable return for its investors, simple greed led to this fraudulent activity. If a company such as this -– one that is performing well -– is engaging in fraudulent behavior, investors should be even more wary of their investment strategies and which companies they entrust with their future financial security. Investing is a risk in and of itself and requires due diligence to ensure success, and with the risk of fraudulent behavior, the importance of thorough research becomes even greater.

According to Ian Andrews, city and state officials pay close attention to this sort of activity, but ultimately it is up to the investors to protect their money from fraudulent behavior. Preventive action is the best way to avoid deception, and to use an example popularized by Ian Andrews, bank officials routinely screen for any activity that seems suspect and will conduct an investigation to be sure that the potential fraud is rooted out before it leads to a substantial loss. Real estate investors should perform similar screenings to ensure that they can avoid the sort of fraud Cabot Investment Properties committed on its clients.

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