Missouri Secretary of State Jason Kander
Two real estate investment companies in Missouri have been shut down after investigations by the secretary of state’s office showed schemes where investor money was converted for personal use.
Investment Midwest, operated by Renee Goodman, and Herman Beck and Ozark Investor’s Group, LLC, were both told to stop doing business by Missouri Secretary of State Jason Kander.
Goodman took in at least $635,000 from real estate investors, promising quick returns but “allegedly Goodman commingled the investor money with personal funds, subsequently withdrawing $400,000 in cash and spending part of the remainder on a variety of personal expenses,” Kander said in the release about his office’s investigation. Goodman pulled six investors into the scheme.
Beck “supplied investors with false or incomplete information, taking in $130,000 from unknowing victims. After skirting state registration requirements, Beck allegedly took a portion of the investors’ money for himself,” the release stated. There were 58 investors in the Beck operation. Kander’s action creates the possibility that they will be able to reclaim their money in the future.
“Real estate scams are one of the top threats to investors, and my number one goal in this investigation is recovering these investors’ hard-earned money,” Kander said in the release.
“I encourage Missourians to call my office’s Investor Protection Hotline to ensure that both the person and product they are considering are registered,” Kander said. “Nobody who handles people’s hard-earned money should act outside of the law. Not being registered is a major red flag.”
One investor “put $37,500 into Investment Midwest for an ownership stake in a house to be built in Branson. Allegedly, after Goodman told the investor that the property was under contract and set to close, she convinced the investor to reinvest the principal in another house to be constructed in an adjacent lot,” Kander stated in the release. “Goodman later reported back that the second house had been built but a deal to sell it ‘fell through.’ But the investor’s subsequent calls to a local Realtor and the Stone County Recorder of Deeds revealed that the original house never sold and the second home was never built.”
Renee Goodman owner of Midwest Invest from her LinkedIn profile
Kander said Goodman promised quick, above-market returns from the proceeds of various consumer mainstays such as Waffle House and automobile lubrication shops. In fact, the investigation revealed that Goodman, who is not registered to sell investments in Missouri, directed only a portion of the money toward one of the advertised projects, a failing quick-lube shop in southwest Missouri.
Goodman allegedly told one investor that the quick-lube shop in Forsyth, a town 20 minutes away from Branson, would generate a 100 percent return within one year. A $40,000 investment in a nearby Waffle House would lead to a 180 percent annual return, the same investor was allegedly told, according to Kander’s release.
A review of records for both Goodman’s personal and business bank accounts uncovered evidence of mismanagement of investor funds, Kander’s office contends. Besides questionable cash withdrawals and personal expenditures, investigators found investor and personal funds commingled—something that is frequently indicative of fraud, Kander said.
Neither Goodman nor any of Investment Midwest’s offerings were registered with the state, as required by law. Documents show that the company instead claimed at least three of the offerings were “exempt from the U.S. Securities Act and all similar acts of other jurisdictions.” Such blanket statements rarely hold up for the type of investment arrangements Investment Midwest offered, Kander said in the release.
Kander’s action bans Goodman and Investment Midwest from continuing their scheme in Missouri. It also begins the process of recovering investors’ money and imposing penalties.
Kander’s office urges that before making an investment decision in Missouri, investors should call his toll-free Investor Protection Hotline at 1-800-721-7996.
In the Beck case, over the course of several years, Beck allegedly solicited prospective investors door-to-door and over the Internet with opportunities to purchase stock in Ozark Investor’s Group, which funneled the money to another business that Beck controlled: Back 40 Group. Beck also directly solicited funds for the Back 40 Group, an Internet-based retailer for books and media.
But none of the investors identified by Kander’s office have received full repayment of the principal of their investment, let alone a profitable return. Instead, the state’s investigation revealed that Beck commingled the investment money with personal and other business funds.
From the combined funds, Beck allegedly made numerous payments to himself as well as a nearby nature preserve that he owned and operated. The state’s investigation also turned up evidence that Beck spent investors’ money at several restaurants and retail establishments.
In defrauding his victims, Beck made claims that far outpaced the true financial position of the Back 40 Group, Kander’s office asserts. According to state investigators, one Summersville resident was told an investment in the Back 40 Group would triple. Allegedly, Beck brought in $40,000 from another victim after saying large investment banks were investing in the company.
“It is management’s opinion that our return to members will be well above average and that the risk is low,” Beck wrote on the Back 40 Group’s website. Beck also faces the prospect of multiple civil penalties.
You can read more here on Kander’s site.
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