Jason explores the emerging and devastating crime of identity theft and how to protect yourself from scams. Because the world has become more secure in the physical world, with locks and alarms on everything, criminals have taken to the cyber world to attack unsuspecting people. Identity theft has become a serious problem, and Hartman catalogs the different scams and precautions to take in the market today.
Then, Jorge Newberry, author of Debt Cleanse: How to Settle Your Unaffordable Debts for Pennies on the Dollar, joins the podcast to discuss the ups and downs of his real estate journey, and how he managed to overcome $26 million dollars in debt.
Identity Theft: The Biggest Crime in the World?
Hartman starts the episode by explaining the concept of fake debt. In the previous podcast, he discussed cryptocurrency and fake work, and like fake work, fake debt is a serious problem. Hartman recalls helping people with issues regarding their lenders and fraud during the recession, and lenders continue to act out deplorable strategies and activities in the name of money. He gives the example of Wells Fargo Bank, and how they’ve seemingly got a new scandal cropping up every week. The bank rips people off, sets up fake accounts, and causes problems with loans.
Related to the issue of bank scams is another popular crime, possibly the biggest crime in the world. Hartman refers to it as modern-day robbery, an assault on your property and your life. That crime is identity theft and he discusses how to protect yourself from scams. It’s more difficult today to rob a home than it has been in the past. Many people have locks, alarms, dogs, and other security measures. Criminals know this and there is always an equalizing factor. They morph into a new sort of criminal by engaging in identity theft.
Hartman warns listeners that if they do not have a cross-cut paper shredder, it should be obtained immediately. Shred every piece of paper with your information on it.
Securing your online identity is another method to promote safety. Create strong passwords, change them frequently, and encrypt your data to make it more difficult for identity thieves to target you.
Hartman advises listeners to talk to parents about telemarketing crimes. Older people are very frequently the target of these kinds of scams, and parents need to be informed of the predators on the other end of the phone.
He shares a story about a particular incident involving a scam debt collector who chose the wrong target. A 33-year-old man received a phone call from a debt collector, claiming that he owed $700 for a payday loan from 2015. The recipient of the call was certain that he did not owe any money and that he was being scammed. He argued over the phone with the debt collector, who became aggressive and went so far as to threaten to rape the recipient’s wife.
The man spent over a year trying to seek justice against this fake debt collector, moving up the bar of scam collectors and figuring out their system. He developed an understanding of how these companies develop their lists and how they convince people that they owe money that they do not owe.
Fractional Lending and Foreclosure
Hartman recalls an incident that took place in the 1960s, when a man was being forced to foreclose on his home. He fought the foreclosure and went to court with the lender, where he asked the court to make the lender prove that they lent him any money.
It’s an esoteric concept of fractional reserve banking, how money is lent into existence.
The lending company was not able to prove that the money existed to furnish the loan, and the homeowner won the case.
Hartman points out that this is much like the case of the IRS and taxes. Many people support the idea that the IRS has no real power to tax the people. Truly they do not have any power of law to demand taxes, however, if people don’t pay what’s asked of them, they go to jail. Though the IRS has no right, they execute the same orders every year.
The 5-year Plan Videos
Hartman reminds listeners that the 5-year plan contest is still open, but that it will be coming to a close around Christmas time. Thus far, he loves the entries and tells listeners that those who have submitted videos are doing a great job. Do the video for yourself, and join the contest as an added perk for the opportunity to win some great prizes, worth up to $4200. Share your video as much as you can, on social media and on Jason Hartman’s website. Be sure that you’ve got your video tagged with the proper title as well. For more information, visit www.jasonhartman.com/contest.
Hartman mentions giving a presentation on the Wheel of Life last week at Ken McElroy’s event, who will also be speaking at the upcoming Meet the Masters in January. Former guest Jeff Meyers of Meyers Research, Dr. Ron Paul, and John Burns will also be giving speeches at the event. Local market specialists and marketing teams will be in attendance to teach management styles, education, and how to create wealth. For more information on this event, visit www.jasonhartman.com/masters.
Jorge Newberry’s Real Estate Journey
Jorge Newberry, founder and CEO of AHP, a socially responsible hedge fund, joins the podcast to discuss the ups and downs of his journey in real estate. He is the author of both Burn Zones and Debt Cleanse.
Newberry explains that he started his life racing bikes for a living and decided to pursue a career in real estate. He started working for a mortgage company and became a top producer within six months. He went on to start his own business and started buying apartment units all over the country.
One property in particular was Woodland Meadows in Columbus, Ohio. It was an 1100-unit apartment base. It was referred to as Oozie Alley in reference to the crime in the area, but Newberry bought the property out of bankruptcy and turned it around. The property was hit by an ice storm and though he had $50 million in insurance, the insurance company tried to find a way out of paying the policy.
Newberry states that he then sued the insurance company and borrowed against his other properties to initiate repairing the damages. The cost was significant, at about $47 million in damages. The insurance company waited until Newberry got desperate and offered a $32 million settlement, which he had to accept.
Newberry initially bought the property for $12.5 million, and when it came to seeking the repairs for the damage, he made the mistake of hiring a global disaster firm to assist him. This racked up a significant number of bills from this company. They made a fair amount of money on this deal, but Newberry did not.
He mentions that he could have closed the property when the storm happened, but he was adamant about coming back from the disaster. He lost almost everything and found himself in $26 million in debt.
He was at a disadvantage, because the city of Columbus wanted the property, and in the end they got it. He tried to renovate the property after the ice storm damaged it, but every single renovation he completed could not pass inspections. He later found out that this was because the inspectors were instructed to fail him no matter what improvements he made, a clear sign of government corruption.
False Allegations Against Newberry
After failing the inspections, Newberry was summoned to the Mayor’s office, and during that meeting they made him an offer on the property. In hindsight, Newberry states that he probably should have taken it, but he wanted to keep trying. The city stated that they wanted to buy the property off Newberry, and move his HUD contracts to another property. He was not interested in doing this.
The City and HUD went to the property and offered tenants a HUD voucher to relocate, even the tenants that were not on Section 8. The tenants initially stood behind Newberry, but they felt that they needed to do what was best for their families and relocated.
When the city obtained ownership of the property, they had plans for commercial building until the recession hit. Today, there is a high school on the property taking up only a few of the 54 acres of mostly vacant land.
The City also planted a story against Newberry, spreading allegations of a criminal investigation against Newberry. Upon calling his attorney, he was informed that there was no real investigation and no story behind it. The allegations were a distraction, designed to make Newberry look like a criminal. He went from being respected, to being “under investigation” to receiving sudden audits from the IRS.
Hartman points out that this happens often. The government has so many odds in their favor. Everything is set for them and against the people. They can easily destroy lives, and when people fight these fake investigations, the cases often end with a settlement, where they’re forced to remain silent under order regarding the case. This means that these secrets are required to be taken to the grave.
Strategic Default Practice
After losing his property and money, Newberry wrote the book Debt Cleanse. He points out that there are a lot of thing that consumers don’t know about eliminating their debt. He spoke to people during the recession about strategic default. In contracts, when a person buys property, the contracts usually say that either the mortgage is paid, or the collateral is returned. There is an option to return property and walk away. A fair few have done it, and it is often the smartest decision.
Newberry explains that he had $26 million in debt but he did not want to file bankruptcy. He wanted to get out of debt and in looking for ways to make settlements, he noticed that a creditor made a mistake on his mortgage loan. He went with it, and went to the Court of Appeals in Missouri, where he pointed out the creditor’s error and how the attorney inadvertently extinguished $5 million in debt.
After winning this case, Newberry looked at other communications from his creditors and their legal pleadings to locate mistakes. He noticed that banks large and small made a good deal of errors. In finding this, he created a system to look through his loans and communications to find errors. When he found the errors, he exploited them, and found a reason to fight back against the banks.
He wrote the books on the steps he took, and has about forty steps outlined on mortgages. He notes that most of the time, all forty steps don’t have to take place in order to reach a settlement. His goal is to help people eliminate debt, not to convince people to spend irresponsibly in the hopes that they won’t have to pay it back.
In the US, there are a lot of people that can’t afford their debts, and they keep themselves sustained by using credit, and essentially bringing about more debt. Sometimes this ends badly, but there is a way to proactively take control of finances, settle debts, and not bring about more debt. In many cases, life continues decently.
Hartman says he loves debt, because it’s a very powerful tool to grow wealth. He mentions an article published in Rolling Stone Magazine, covering a big exposé on Goldman Sachs. It was famous around the time it was written, around 2006-07, and stated that the powers running the banks are incentivized to constantly create credit bubbles.
Though the banks promised to smooth out the economy, it has only gotten worse since then. There are frequent ups and downs in our market cycles. It’s in the best interest of the banks, creditors, the Fed, and the wealthy to create bubbles, run up asset prices, and get the whole population into debt. After debt is increased, the banks cause a crash so that they can buy assets back for pennies on the dollar, ruin everybody’s credit, and then make citizens feel like the crushing debt is due to some failure on their part.
On the surface, it may appear to be true, but the bigger picture shows that the banks are bushing this to happen. Wall Street is designed to take the wealth away from lower and middle classes. The most modest of incomes pay the highest interest rates and it is in this that banks are shown as predators.
The wealth and income gaps are huge in the United States and Newberry explains that there needs to be a healthy combination in our society. We are too divided and wealth is concentrated by design. He states that he wants listeners to know that they have options.
The #1 Piece of Advice
In closing the podcast, Newberry advises listeners not to keep paying on debts they cannot afford. Be realistic, if you cannot pay for something, stop now and keep yourselves afloat. If you’re in financial trouble, call your lender and try to make some sort of arrangement.
Hartman points out that if you do this, you have a very high chance of being connected to someone that doesn’t know anything about the company. Most likely, you’ll transferred over and over to a script reader, not a rational person. Even though you won’t be connected with someone of authority, it’s best to try.
If you wait, eventually an attorney will be assigned to the case, and when that happens, you can still have a QWR written. They take so many hours to respond to, and in lieu of having to respond to it, the company will often ask what you, the client, are requesting in this situation. These companies want to save their own time, and little things will happen during this proves to make you an exception to most clients, to have the deal working in your favor. It’s what’s known as the nuclear option, to stop paying and try to salvage what’s left, but sometimes it has to be done in order to stop paying money to the elite.