The MFI-Miami Magic 8-Ball Says A Romspen Financial Colonoscopy Is On The Horizon And The Outlook For Romspen Is Not Good
Things aren’t looking well for the Toronto-based lender right now. Romspen has found itself in a quagmire in several of their lawsuits. A defendant in one of the lawsuits says he plans on performing what he dubbed, “A Romspen Financial Colonoscopy.”
The defendant who asked not to be identified stated that he plans on making Romspen open their financial records for his forensic CPA to review. In addition, he said he plans on having his lawyers issue a subpoena for Romspen’s underwriting guidelines used on a handful of their loans currently in foreclosure.
He says Romspen will need to prove financial damages in their lawsuit that he believes they can’t show. As a result, they will refuse to open their books.
However, by refusing to open their books, they will be sabotaging their own case and could find themselves heavily sanctioned by the federal judge hearing the case.
Other Romspen defendants apparently have similar plans to compel Romspen to open their books as well.
This could be disastrous for Romspen. Why? It’s no-win scenario for the lender because either way, they lose.
Will A Romspen Financial Colonoscopy Reveal How They Are Scamming Grandma And Grandpa?
Canadian and American retirees are always prowling the internet for ways to enhance their fixed incomes.
Retirees are old school and believe real estate is a safe investment even after experiencing the financial crisis of 2008.
So, they look for companies that promise big returns on real estate.
Soon they find the slick packaging from Toronto-based Romspen and their affiliated brokers like BridgeInvest and Eyzenberg & Company in Miami with promises of big payoffs.
Long story short, Romspen and their partners get these inexperienced investors all excited over the promise of big returns. The seniors fall for it and then throw their life savings at Romspen.
Unfortunately and unbeknownst to grandma and grandpa, Romspen on the surface appears to be a Ponzi scheme. However, it’s a little more complicated as to why Romspen fails to pay their investor redemptions.
Romspen’s current business model relies heavily on a steady flow of fresh flow of investor cash. This is because they need to pay investor redemptions to previous commercial loan investors. Yes, we know, it’s sounds like like a Ponzi scheme.
The reason for this is pretty easy. The majority of the loans made by Romspen have gone into default due to the company’s “Loan-To-Own” scheme (see below). As a result, the vast majority of their defaulted loans get tied up in endless litigation. Thus, not generating revenue for Romspen and Romspen investors not getting paid.
It’s no surprise that Romspen investors are getting aggravated with Romspen executives. Investors haven’t received a full redemption payment since April of 2020.
Will A Romspen Financial Colonoscopy Expose A “Loan-ToOwn” Scheme That Backfired On Romspen?
The reason why Romspen doesn’t fully pay investor redemptions is simply because they don’t have the cash.
But, why? Simply put, Romspen is lending against projects that don’t generate any revenue or income.
The borrowers aren’t going to pay back the principal and interest until they can develop the project. That could take nearly a decade.
Braden Maccke at Deep Dive pointed this out a year ago:
Unfortunately, Romspen investors who are mostly senior citizens don’t have a decade to wait for their money.
How The Romspen Loan-To-Own Strategy Dupes Entrepreneurs
So to keep investors and their families from filing complaints with American and Canadian securities regulators, Romspen resorted to a shady lending scheme known as, “Loan-To-Own.”
Lexology defines “Loan-To-Own” is defined as follows:
Romspen’s business model is to find inexperienced entrepreneurs like fake Miami developer Caroline Weiss or the three stoners from Colorado. Then lure them in with big promises. Then throw a big wad of cash at them. Cash that they know the borrowers will never be able to pay. This sets it up so Romspen can take over the project. Romspen can either sell property at a huge profit. Alternatively, they could complete it and pocket millions more.
According to one source, 40% of all the loans that Romspen issues results in them taking ownership of the respective projects.
In the bankruptcy proceedings, companies that ascribe to the Loan-To-Own model will devalue the project less than the loan amount in order to increase their profitability to obtain and sell the property.
However bankruptcy cases could drag out for years. This means Romspen’s investors aren’t get paid during this time. Even if Romspen does eventually take over the property.
Will A Romspen Financial Colonoscopy Show Working With The Company Is A Trap?
Romspen waits until the last minute and does not disburse funding to the borrower. This results in the borrower passing the maturity date of the agreement.
So, what might their motivation be? One source indicated that it is directly related to two key factors. The first being to force the borrower into a default on the loan. This would allow Romspen to start the process of taking ownership of the project. It would also allow Romspen to increase the interest rate to a point where the borrower is forced to go into bankruptcy.
Once Romspen highlights that a default has happened, the borrower has 45 days to pay the balance. If that doesn’t happen, Romspen can foreclose on the property.
Thus, the failure to pay results in an increased default rate. This toxic spiral can put the borrower in a point where they must borrow from another lender or sell property to pay the interest. In most cases, Romspen wants the companies to drown in the endless sea of debt in order to simply own the project for themselves.
However, it turns out it, this business model has turned out to be a trainwreck for the company. This business model also explains why Romspen is having problems paying redemption payments to their investors.
Check Out These Government Websites If You Feel You Are A Victim Of Investment Fraud By Romspen.
How To File A Complaint In Canada:
Contact The Canadian Investment Regulatory Organization (CIRO) At 1.877.442.4322 For More Information. You Can Also Email Them At complaints@mfda.ca
If That Doesn’t Work, Contact Deputy Prime Minister And Finance Minister Chrystia Freeland:
You Can Also Contact Her Office On Parliament Hill At 613.992.5234 Or Her Office At Her Toronto at 416.928.1451.
If All Else Fails, Contact Opposition Leader Pierre Poilievre’s Office In Ottawa:
Email: Pierre.Poilievre@parl.gc.ca
Call His Office At 613.992.2772 (Parliament Hill) or 613.692.3331.
If You Are An American Citizen. Contact These Federal Agencies:
You Can File A Complaint With The Securities And Exchange Commission By Clicking Here.
Also, You Can File A Complaint With The Federal Trade Commission By Clicking Here
In Addition, You Can File A Complaint With FINRA By Clicking Here
Read More About Romspen On MFI-Miami:
Another Justin Trudeau Scandal? Is PM Too Cozy With Romspen?
Romspen Is Scamming Grandma and Grandpa
The Deceptive Romspen Loan-To-Own Toxic Financing Scam
Romspen Just Got Spanked By The Florida 3rd DCA In The Weiss Family Feud
Will A Romspen Super Lawyer Cost Romspen $21 Million?
Canadian Commercial Lender Romspen Gave 3 Colorado Stoners $54 Million
Romspen Threw In The Towel On Uphill Foreclosure Fight
Romspen Investors Are Mad As Hell And Want Their Money
Canadian Lender Romspen Is Withholding Partial Redemption Payments
Romspen Investment Corp. Sues Fake Real Estate Tycoon
Miami Developer Caroline Weiss Accused Of Multiple Counts Of Fraud
Romspen Sued For $21M In Miami Real Estate Fraud Case
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