Author Topic: Letter to Realty Shares CEO from Deal-Level Investors - Add Your Name  (Read 33054 times)

groovydude

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It was over 100 mil.

Fellow investors - I had a couple of very interesting conversations today. One was with a former employee of RS. This person agreed to let me share what he said to the group, I'll summarize:

The employees who were laid off (95% of the staff) had NO idea that this change was coming. They had been told that new financing was a sure thing, and it was full steam ahead.
The employees were told that the transition team would be managing the investments and trying to sell the company's assets
There were about 10 people who remained to be on the transition team, mostly asset management staff
This person's opinion was that most of the equity deals were pretty safe, and that some of these have already exited, and that some of the sponsors of these deals pushed forward or are pushing forward to exit sooner just to get away from the RS mess. The preferred equity and especially debt deals are in worse shape (I concur with this).
This person agrees with me that: RS is a fast dying company and that their assets have little future value, that every time a good deal exits it leaves the asset pool looking much worse, and does not understand why the CEO would be trying to sell the assets at this point.
This person has no idea why the company has been communicating so poorly and why the CEO would ignore our group letter.

The second conversation was with a retired real estate attorney. He told me that we, individually and as a group have a few options:
1. File a complaint with the SEC
2. Hire an attorney as a group to initiate a suit. This could be complicated as each member of the group will be suing regarding different investments, but the cost to each person might not be too much if we can get enough people.
3. Contact the owners of the company and try to have a discussion.

He seemed to think that a class action suit was pointless. I will be looking into filing a complaint in the next few days. I'm going to start talking with attorneys in Seattle. If anyone is in the Bay Area (Sam), perhaps it would be best to originate the action from there.

There's a website with information about the VC firms and lead investors that own RealtyShares:
https://www.crunchbase.com/organization/realtyshares#section-funding-rounds

I suggest we start with a letter to these firms and principles. It can be from us as a group or from an attorney. However, those with equity investments will probably stand more to gain if we have to start paying for service. Either way, IMHO we must demand that they redo all the contracts and release all servicing rights back to the sponsors immediately. I see this as the fastest and cleanest way out of this. (Receivership might be a huge mess. Lawsuits may be needed on a case-by-case basis, but problematic for a group this diverse. PM me if you're on board.) I'll draft something up.

Nosferatu_FL

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Groovy I'm on Board.  Thanks for gathering the intel 

I'm making some calls to finance lawyers.  still trying to figure out if it's finance or RE lawyer that would handle this.  would not hurt to get diff opinions until we get some good info. 

Will post any new info I have

dwengca

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Groovy,

I am on board as well. 

Thanks!

groovydude

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I posted notes from my conversation today with an attorney on the other thread, have a look.

John_PVF

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I’ve been traveling so haven’t been on the forums in a while, but did want to provide a quick update re our letter to Realty Shares since people are inquiring.

After it was sent, I was able to connect with Alexis to give him a bit more context on our concerns and recommendations.  I haven’t spoken to him since then, but also haven’t pressed. I sent him a note today to follow up.

I’m still hoping Realty Shares will respond to us officially.

DECA

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See my post on the other forum thread. I think the debt deals and the equity deals may need different approaches (e.g., debt deals don't work to hand them over to the sponsor). 

Perhaps in both cases, however, a securities fraud action against RS might be appropriate.  Certainly for the debt deals, RS Lending sold securities (i.e., promissory notes) and were either reckless or intentional about their knowledge or lack thereof about the sponsors (such as FG). They just wanted to sell their securities, knowing that they had misrepresented FG's expertise.

John_PVF

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Re: Letter to Realty Shares CEO from Deal-Level Investors - Add Your Name
« Reply #26 on: June 10, 2019, 05:49:37 AM »
I am attempting to get someone at RS/RREAF/iintoo to respond to me.  I have not heard anything in a while, nor have I seen any formal response to our letter.  Appears others are have some success getting through, however, so maybe I just haven't found the right person yet.  I will advise of any updates.

JD

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Re: Letter to Realty Shares CEO from Deal-Level Investors - Add Your Name
« Reply #27 on: June 14, 2019, 11:07:02 AM »
Hello everyone, I'm brand new to this forum and thread but really glad I finally found it.

If you're still taking names/bodies for this cause, I've got over 500k stuck in RS deals and like many of you, far too many of them seem to be going into default. Furthermore, I haven't received one tax statement for 2018 yet, INT or K1.

I will definitely do whatever I can to help legitimize our concern as investors. If that ends up including hiring lawyers, I've got enough at stake to justify offering support in that respect as well.

Glad to hear what you guys have done already so thank you all for that. Please feel free to ask or message me if you think I can be of any use. I'll be on this forum from here on out...

gabe

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Re: Letter to Realty Shares CEO from Deal-Level Investors - Add Your Name
« Reply #28 on: June 15, 2019, 07:36:59 AM »
Signed up for the forum and in the same boat - in a lot of RS deals and can offer legal cost support also.

quittj

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Re: Letter to Realty Shares CEO from Deal-Level Investors - Add Your Name
« Reply #29 on: June 17, 2019, 03:42:58 PM »
Another one here; 10k of capital not yet returned (I did receive interest payments). My inquires have been met with radio-silence. The investment was expected to close well over a year ago.

gabe

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Re: Letter to Realty Shares CEO from Deal-Level Investors - Add Your Name
« Reply #30 on: June 17, 2019, 06:46:04 PM »
let's move to https://www.financialsamurai.com/forums/real-estate-crowdfunding/thoughts-on-realtyshares-closing-its-doors-to-new-investors/ so that we don't duplicate threads

oxygen99

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Re: Letter to Realty Shares CEO from Deal-Level Investors - Add Your Name
« Reply #31 on: June 23, 2019, 04:32:58 PM »
John, I'm a newbie on FS and just found the letter you sent to RS.  Would you think it useful to send a second letter signed by yet another wave of deal-level investors?  If, yes, count me in. I have 50k invested with RS. Thanks, Nick