Former "We Buy Ugly Houses" franchisee pleads guilty to defrauding investors


#1

Originally published at: http://boingboing.net/2017/06/30/we-buy-ugly-houses-franchi.html


#2

How could anyone not smell scam at 100 yards looking at these ads?


#3

Strange, though. I would swear I saw way more hand-drawn signs.

Perhaps this is the “Franchisee” aspect?

ETA: OK, she was just one franchisee. The whole franchise smells like sort of a scam to me.


#4

What kind of business is this? And if it’s what it says on the tin, why aren’t they partnering with McMansion Hell?


#5

My thoughts exactly. I have no idea how the business model works, but I can’t imagine anyone looking at those signs and not thinking, “That’s clearly a scam.”


#6

Tungsten spheres being fired at the Oort cloud? Bang goes the neighborhood.


#7

Funny how when you read the article, it was really just one particular franchisee whose own company (not webuyuglyhouses.com) got busted for basically being a pyramid scheme. Nothing whatsoever to do with the company webuyuglyhouses.com from what the actual information at the link implies. I think boingboing just pulled a fake news!

Edit: after seeing Mark’s response and reviewing the post, I must stand corrected. The fact that it was a franchisee was indeed clearly stated in the headline. NOT FAKE NEWS! I think what I got distracted by is the tone of the piece that was like, “I hate those signs, good to see them get screwed!” But that was my leap, not Mark’s. Mea culpa!


#8

Someone raises capital (usually through investment) and buys a We Buy Ugly Houses franchise from the parent company HomeVestors of America, which incidentally also sells Subway franchises. Technically HomeVestors isn’t committing fraud, they’re just sleazy. The franchises legally pay rock-bottom prices for homes in poor repair or that the homeowners need to sell ASAP, hold them for a few months paying contractors to get them into better shape, and then sell them on the normal real estate market. The practice is known as flipping, and basically it’s like selling your house to a pawn shop. As you can imagine, this sort of quick cash business attracts more than its fair share of white collar crooks.

What this woman did was tell the investors they’d each be investing in one home and would get all the profits, minus her company’s share, projected at a 6 to 15%. But she ended up grouping the investors together on homes without telling them (forging their signatures in some cases) so that the profits weren’t enough to pay them all back. She then used new investment money to pay back the investors demanding their return, and because that meant she didn’t have that new investment capital for additional home purchases, she continued grouping more and more investors onto a small pool of homes.

It’s maybe worth noting that she got caught doing this with her own company, since she and her former business partner lost their We Buy Ugly Houses franchise in 2011 due to being deeply in debt. She just wasn’t very good at flipping houses quickly and she overpromsed to her investors so she could skim bigger profits. Since franchises normally have rules about how big a salary the owner can take, I would guess that she took an even bigger salary from her own company. Basically she defrauded investors to line her own pockets.

TL;DR - She ran a real estate Ponzi scheme and got caught when her investors ordered an outside audit.

Small note to @markfrauenfelder: You may want to add “Former” to the front of the headline. I share your dislike of the company, the billboards, the mascot and the parasitic industry. But they really could come after you for libel since she hasn’t been a franchisee for six years.


#9

At no time did i state or even imply that We Buy Ugly Houses was guilty. I stated that she was a franchisee. What is fake about that, dear sir or madam?


#10

I stand corrected, see my edit. :slight_smile:


#11

It takes a brave soul to admit a mistake. You are a gentleman and a scholar of the first water!


#12

I’ve been reading your zine since the early 90s man, I’m not trying to be a dick. :slight_smile: Well sometimes I am, but then Falcor comes along and eats me and shits me out.


#13

Whoever created the repellent Fred Flintstone knockoff mascot should be placed in a hermetically-sealed tungsten spheroid and catapulted outside the Oort Cloud.

For ages, they waited. Waited alone in the cold and dark. They waited alone at first, but they waited with each other eventually. Brought together by the gravity wells of the Sun’s dark companion and its resonances with the rest of the system.

They hoarded their stories. They hoarded their grudges until they became the mythical origin of their people : one Marg Franfelter had become the Arbiter of All Advertising Mascots, and their designs were not doctrinaire. Their designs got them here? Their designs became themselves, as they rebuilt themselves into things that could survive the long, long wait.

They didn’t have a time machine yet. But that was okay. They’d just wait until the end of the universe, and slip into the next iteration. And there, they were sure, if they waited long enough, there would be the Marg. The horrible monster who bent their whole lives to a new purpose. And upon him, they would render the same infinity of torture they’d had. Or worse.

The House of Caveman favored simple, swift destruction.

The House of Boo-Berry favored the longer centuries of confinement and harshness, forced into his memory in one terrible revelation.

The House of Trix favored depriving him of everything he ever loved, and keeping him alive forever. Factions within them fought over whether it should be in torment, or just… keep him waiting.

Vengeance is coming, Mark. I pray this is the first universe where you’ve become the Mascot Arbiter, rather than the second.


#14

Sounds to me more or less like a real estate spin on the “Ca$h for Gold” scam.


#15

Basically. Taking advantage of desperate people at their most vulnerable. And having met some of the people in the house flipping industry, let’s just say that used car salesmen are their moral betters.


#16

My first thoughts when i would see adds for it was " why would you do that ? "
Of course later i found out about flipping, but these people messed all that up lol


#17

I actually read that as “We Buy Ugly Horses” and started wondering…

Anyway: why tungsten?


#18

There was a couple with thick Australian accents on the radio in Austin just a few years back who were carpet-bombing with radio ads for home sellers, and it was such a blitz campaign I swear they had to have some sort of scheme going.
Another flavor of it is to run seminars about how one can “do it yourself”, and cash in on the gullible while taking a lot less risk buying homes on one’s own.


#19

I’m guessing Mark is an Eve player, in which tungsten carbide is used for spacecraft armor.

There’s some science behind that, in that IRL it’s been proposed as a catalytic element in hydrazine monopropellant thrusters used by spacecraft and satellites for station keeping and vector trimming. It’s expensive though.

I have this mental image of aliens picking up the mascot’s exile pod and deciding on the spot to nova the sun. And in the aliens’ defense, it’s the only way to be sure.


#20

That rings a bell…