The Rank & File

Posted June 28th, 2007 by Joe Kaiser

"But don't you mean the final, final, final?" I'd say. We'd been promised "the final" so many times I'd lost count by then.

Dear Rob,

Mike Rankin was a partner who absolutely screwed us over, costing my company, Fiscal Dynamics, Inc., somewhere in the neighborhood of $250k.

But that was nothing compared to years we wasted dealing with him on our projects.

Mike hung his license with my partner Walt, a broker, and sometime in 1999 or thereabouts, we did our first deal with Mike, a little house just down the road.


50/50 profit split

It needed a lot of work but we bought it cheap enough and there looked like plenty of room for profit. And after that deal, we just kept right on going with Mike.

He’d find properties and buy them on his own.

We’d pay him back any money he had into the purchase (he typically got low down loans so it was next to nothing), pay for the entire rehab, and once completed, put the properties on the market and split the profits 50/50.

It was a good deal for Mike because he didn’t have to come up with much in the way of money (he didn’t have any), and a good deal for us because with Mike being responsible for getting things done, all we had to do was write a check.

So, we got that first property fixed up and ready to sell . . and then Walt’s wife drove by one night and noticed the lights were on. She even thought someone was living there.

Not possible.


Oh, that makes perfect sense

We drove out to the property the next day and sure enough, tenants.

Huh?

Mike drove over to meet us to explain the situation.

“No,” he says, “these aren’t your tenants, Joe, these are my tenants. They’re actually renting one of my other houses.”

“But Mike,” I say, “they’re living here.”

“That’s kind of a technically,” says Mike. “I needed a place to put them while I fixed up the rental they’re actually paying for.”

Hmmmmmm.

Two years later, they were still living in it.


And that’s final

And by then, we’d done six or eight deals with Mike and only one of them had been finished and sold. The rest just never seemed to get done, which frustrated me to no end.

We’d meet every Friday to get an update from Mike, and it was always the same thing, “the final will be signed off on Wednesday.”

“The final final?” I’d say.

“Yeah, the final, final,” he’d say.

“But don’t you mean the final, final, final?” I’d say. We’d been promised “the final” so many times I’d lost count by then.

And finally, I’d had enough. It was obvious to me the whole thing was a con and we’d wasted thousands of dollars and countless hours dealing with this idiot.

We agreed to split the partnership, and since we’d put up all the money and Mike had nothing out of pocket for any of it, most if not all the properties ended up as ours. Mike did keep the one next to his house, but to balance things out he gave us a $115,000 note and second mortgage.

And that clown was out of our lives for good.


Moving on . . .

We jumped in and did our thing, getting the handful of properties fixed up and on the market. Soon enough, the offers started coming in and one-by-one, the properties were getting sold off, finally.

And then a funny thing happened . . .

We got our first title report in from the title company on a little six unit place we’d completely rehabbed. We owed $100k, the loan the seller financed when we bought it, but not according to the title report.

Since the properties had all been in Mike’s name originally, once we’d fixed them up, he’d just turn around and get new loans against them, pocketing all the money.

And that’s why, it turns out, he never got them done and on the market (doing so would have exposed his fraud).

And the six unit?

We didn’t owe $100k. With the new loan we now owed $145k.

And the house down the street?

We thought we owed $80k on the house and zero on the lot we’d split off to sell separately. Not even close. We owed $120k on the house now, and $32k on the lot, both new loans Mike had secretly acquired.


Not good

We ordered title on everything and were in terror simply opening the envelopes as they came in. And yes, every property had been refinanced in some manner with Mike stealing tens of thousands of dollars at a time.

And that $115k second mortgage on the property he kept?

Not a second after all, but a fifth that would eventually be lost when the first foreclosed. By then, Mike had not only pocketed another $100k from the property, he’d cheated the seller out of the $60k he still owed him (now living in California with his daughter, broke and on public assistance).

I remember the day Mike drove up in a brand new Jaguar and let me take it for a spin, me not knowing I’d bought the damn thing for him.

Must have been a hoot.


Capone Me

So, we sued him and he counterclaimed right back, alleging fraud, bribery, forgery, and on and on and on. A typical con man with a clueless attorney just doing what those clowns do.

They even claimed we were guilty of violating the federal RICO statutes.

Whatever.

When Mike’s day to testify came, he whimped out and filed bankruptcy, putting an end to the trial. Still, we chased him into bankruptcy court for his third Chapter 7 and won a $200k judgment against him.

He admitted his guilt, acknowledged his counterclaim was without merit and eventually we settled on him paying us $40k at $1,500 a month.

It was an incredible display of greed, lies, and deceit. I haven’t begun to tell the story of Michael J. Rankin, (there’s not that kind of time), but know it goes on and on and on.


Screwed over

Mike was a con man in every sense of the word. Maybe he’s cleaned up his act now, but I doubt it.

I do know he screwed us over, costing us hundreds of thousands of dollars and wasting years of our lives. On top of that, we had to deal with the accusations he’d made against us and eagerly sought to spread among our little investment community.

Why am I telling you all of this, Rob?

No, it’s not to relate my tales of woe. It’s because after having spent the last year dealing with your office, I can say with complete confidence . . . Rankin was an amateur.

Respectfully,

Joe Kaiser


3 Responses to: “The Rank & File”

  1. Seth responds:
    Posted: June 28th, 2007 at 7:08 am

    ah ha ha

    Nice

  2. alan sweitzer responds:
    Posted: June 28th, 2007 at 7:09 pm

    I’m betting that you do not accept the runaround from business partners for long without some due dilligence into excuses(lies).

  3. Joe Kaiser responds:
    Posted: June 29th, 2007 at 9:15 pm

    Alan,

    It was merely a lack of business acumen on my part.

    A buddy of mine, also investor, got real excited when his assistant showed up with a new car. He said, “she can’t possibly afford that on what I pay her” and figured she was getting into the petty cash account.

    I thought the “with what I pay her” part was hilarious.

    And the Jaguar should have been a tip off. Me, I’m like “duh, nice car.”

    Joe


Post a Comment

Enter Your Details:


You may write the following basic XHTML Strict in your comments:
<a href="" title=""></a> · <acronym title=""></acronym> · <abbr title=""></abbr>
<blockquote cite=""></blockquote> · <code></code> · <strong></strong> · <em></em>

  • If you’re a first-time commenter, your response will be moderated.
  • If your response includes a link, it will require moderator approval.
Enter Your Comments:



Note: This is the end of the usable page. The image(s) below are preloaded for performance only.