586 replies to this topic

[VicHockeyFan]

I'm sure they all knew what they were getting into, but people see roads to riches with these schemes and fall victim to a "bond sale" instead of an actual real-estate purchase. So what did they think? That they would invest $490k and a year later sell their stake for $550k?

Ya I think we saw in the disclosure documents for the bonds that there was a warning that there was a possibility of complete default.

[LocalMom]

Sooo - I should use up my gift card sooner rather than later?

[dasmo]

It's a confidence game... The mark should always have known better.... This is the trick with grifting, The mark needs to be greedy....

 

 

 

A confidence trick (synonyms include confidence scheme, scam and stratagem) is an attempt to defraud a person or group after first gaining their confidence, used in the classical sense of trust. Confidence tricks exploit characteristics of the human psyche such as dishonesty, honesty,vanity, compassion, credulity, irresponsibility, naïveté and greed.

[Nparker]

It's a confidence game... The mark should always have known better.... This is the trick with grifting, The mark needs to be greedy....

As the old saying goes, "You can't cheat an honest man".

[Coreyburger]

Sooo - I should use up my gift card sooner rather than later?

 

The bankruptcy monitor's statements say that they are honouring gift cards

[VicHockeyFan]

It's a confidence game... The mark should always have known better.... This is the trick with grifting, The mark needs to be greedy....

 

A mark that puts up a half million dollars - one third of his retirement fund - ought to be more careful.  

 

Steven Spielberg losing $5M with Bernie Madoff, that's such  a tiny fraction of his worth, probably worth the gamble.

[jonny]

dasmo, I don't think this was a scam. It was a terrible investment opportunity some jumped on, as they always seem to do, but I don't think there was any scam involved. I don't think investors were misled, intentionally or not, either.

 

The bonds were high yield, which should signal to even an unsophisticated investor that there was considerable risk involved.

 

I also don't think the Walkers made out with a ton of cash or anything. Quite the opposite, from what I've read.

[Mike K.]

Everyone's a victim when an investment flops, right? "I was mislead." "I was scammed." "I had no idea of the risks." "It was such a sure thing." "OMG, I sunk my entire life savings into an investment I read about in this nice brochure."

 

But it all starts with "Honey, I think we can make some serious $$$ here, check this out!!!!111!!!!1!!!!"

[jonny]

Everyone's a victim when an investment flops, right? "I was mislead." "I was scammed." "I had no idea of the risks." "It was such a sure thing." "OMG, I sunk my entire life savings into an investment I read about in this nice brochure."

 

But it all starts with "Honey, I think we can make some serious $$$ here, check this out!!!!111!!!!1!!!!"

 

Yeah, people see those double digit interest rates on the coupon payments and do the math. $500,000 principal times 10% per year interest...wow, that's an easy 50 grand per year!

 

Problem is, those investment were speculative at best.

 

It's easy, and yeah, you probably will get some coupon payments in the mail, but it's also real easy for that principal to go to $0.

 

The OBBH's credit rating was most certainly in the B level at best. http://en.wikipedia....d_credit_rating There's a reason they call B level and below bonds "non investment grade".

[Nparker]

If it seems too good to be true, it probably is.

[Rob Randall]

It's too bad the Walkers got caught up in the recession--if the project hadn't been bogged down in the approval process they might have sold much of it before the bottom fell out of the market. And who knows, sometimes people love a project and it sells out, sometimes they hate it. This project for whatever reason didn't capture the public's imagination the way they thought. In an alternate universe, this project avoided the recession, it sold well, the hotel was comfortably booked and the investors made a nice profit. It's a roll of the dice.

 

But I'll say exactly what I said in the League thread--this was a risky, complex investment--beginners beware. And like VHF says--for God's sakes spend a couple hundred bucks on a lawyer first and don't put your retirement in something like this.

[VicHockeyFan]

It's too bad the Walkers got caught up in the recession--if the project hadn't been bogged down in the approval process they might have sold much of it before the bottom fell out of the market. And who knows, sometimes people love a project and it sells out, sometimes they hate it. This project for whatever reason didn't capture the public's imagination the way they thought. 

 

Maybe that's what the mistake was.  They really, really, really underestimated the demand for "hotel suite" living.  Most people do not want to live in a hotel, and there are no shortage of projects like this that failed.  ie. Parkside, right here in town.

[Sparky]

^ The "Q" however booked up very quickly. It however is a rental.

[Mike K.]

Maybe that's what the mistake was.  They really, really, really underestimated the demand for "hotel suite" living.  Most people do not want to live in a hotel, and there are no shortage of projects like this that failed.  ie. Parkside, right here in town.

 

That's a quarter share, not a residence like the OBBH hotel is.

 

I'm sure the OBBH proponents thought that they could make out like The Pier (in Sidney) and Brentwood Lodge/Hotel (in Brentwood Bay) did and how quite a few upscale hotel/residential projects have fared in Vancouver (Shangri-La, Fairmont Residences, Trump [under construction], etc.).

[Rob Randall]

Don't you think that share-scheme was not the Walkers' preferred choice? I mean that they would have rather built a regular hotel but the bank said, hey, we're in a recession now and we need to see more upfront money from sales, not future hotel revenue.

[dasmo]

Certainly this falls under Caveat emptor. Still The books should be opened up to those investors now. Where did the bond money go if not to pay for cunstruction? Perhaps it is like league where there are hundreds of numbered companies that received payments and very steep management fees?

[VicHockeyFan]

That's a quarter share, not a residence like the OBBH hotel is.

 

I'm sure the OBBH proponents thought that they could make out like The Pier (in Sidney) and Brentwood Lodge/Hotel (in Brentwood Bay) did and how quite a few upscale hotel/residential projects have fared in Vancouver (Shangri-La, Fairmont Residences, Trump [under construction], etc.).

 

There were 4 things for sale here.

 

Full ownership, live there all the time condos.  20?

 

Hotel suites that you could occupy a portion of the year, get portions of the rental on the rest of the time.  100?

 

Then two levels of vacation packages that you paid up front for, then had rights for certain free stays and amenities forward.

 

The last report from the receiver last it our pretty good what all was on offer, and who bought each.  And it shows that Bison loaned itself all the proceeds from the two sets of vacation packages to fund day-to-day and marketing operations.

[VicHockeyFan]

Still The books should be opened up to those investors now.

I'm not sure if that's usual process, but I agree. Maybe they can just see them, complete with a non-disclosure promise?

[johnk]

Below investment-grade bonds aka junk bonds.
The questions remain, what happened to the money? How did things get to $113 million from $52 million?
Not exactly a minor cost overrun.
The bond holders aren't the only ones getting stiffed, how about the trades? Something does not smell right, IMO.

[spanky123]

Certainly this falls under Caveat emptor. Still The books should be opened up to those investors now. Where did the bond money go if not to pay for cunstruction? Perhaps it is like league where there are hundreds of numbered companies that received payments and very steep management fees?

 

It really sounds like this was a matter of overbuilding for the market. The project was more expensive than anticipated and the sales did not materialize at the price point expected. There was never any evidence at League that anyone lined their pockets and I doubt that it exists here either. If you overspend and then fail to sell then interest, sales and marketing and professional costs start to eat up money really quickly.