Private equity CEO pleads guilty to real estate and mortgage fraud

Eric Malley, the founder and former CEO of private equity investment firm MG Capital Management, has pleaded guilty to securities fraud for running a real estate investment scam that tricked 335 investors into forking over an estimated $58

 million.

In 2014, Malley started a real estate investment fund called MG Capital Management Residential Fund III, and three years later he launched MG Capital Management Residential Fund IV. According to the allegations against Malley listed in court documents, he promised investors they would be able to own an equity interest in hundreds of income-producing luxury properties throughout Manhattan. He also boasted about having a debt-free investment strategy that was based on sophisticated proprietary analytics he had developed during his career in real estate.

In addition to telling investors that the funds were debt-free, he also told them that the properties held by the fund were mainly leased to companies, which purportedly included a prominent tech company and a well-known university.

“Contrary to his claims that the funds were debt-free, Malley had in fact mortgaged multiple properties held by the funds,” according to the complaint. “And the vast majority of properties held by the funds were leased to individuals, rather than corporate tenants.”

Malley also told investors that the fund’s predecessors, which he referred to as fund I and fund II, were extremely successful. However, as it turned out, the performance and even the existence of the first two funds “were largely fabricated,” the complaint said.

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For the last recession, central banks took the unusual step of greenlighting stimulus funds directly to households.

In the U.S., and to a lesser extent in other developed economies, the result has been a much faster recovery than after 2008. That success is opening a new phase in the fight over policy. Lessons have been learned about how to get out of a downturn. Now it’s time to figure out how to manage the boom.

This Bloomberg paywalled article outlines the global impact and it’s well worth burning through one of your free articles a week to read it!

But let’s talk about what it’s done you our workforce nationally. 

The April jobs report was very disappointing — and the whispers suggest that May’s jobs report may be a flop as well. Official expectations are for approximately 600,000 non-farm payrolls created. While that’s not great, there are still 8.5 million fewer people employed now than before the pandemic, and the Dallas Fed expects less than half of those to return to employment, with many others having chosen to retire.

“However, I do believe that the majority of the unemployed have not permanently retired and will slowly return to work as the impediments to returning dissipate (childcare options increase, health fears abate as infection rates drop, availability of public transportation improves, and enhanced unemployment benefits end),” said Invesco global strategist Kristina Hooper.

But there’s a catch. The drive to get people back into offices is clashing with workers who’ve embraced remote work as the new normal.

While companies from Google to Ford Motor and Citigroup have promised greater flexibility, many chief executives have publicly extolled the importance of being in offices (Bloomberg paywall). Some have lamented the perils of remote work, saying it diminishes collaboration and company culture. JPMorgan Chase & Co.’s Jamie Dimon said at a recent conference that it doesn’t work “for those who want to hustle.”

But legions of employees aren’t so sure. If anything, the past year has proved that lots of work can be done from anywhere, sans lengthy commutes on crowded trains or highways. Some people have moved. Others have lingering worries about the virus and vaccine-hesitant colleagues.

It’s still early to say how the post-pandemic work environment will look. Only about 28% of U.S. office workers are back at their buildings, according to an index of 10 metro areas compiled by security company Kastle Systems. Many employers are still being lenient with policies as the virus lingers, vaccinations continue to roll out and childcare situations remain erratic.

But as office returns accelerate, some employees may want different options. A May survey of 1,000 U.S. adults showed that 39% would consider quitting if their employers weren’t flexible about remote work. The generational difference is clear: Among millennials and Gen Z, that figure was 49%, according to the poll by Morning Consult on behalf of Bloomberg News.

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One way that none-office inclined people can find a new career, is to consider passive real estate investing.

Passive investing simply means you invest your money in a real estate deal, but you’re not involved in any wayin the management or operation of the property. Instead, you pay others to manage things for you. Otherwise, you’re considered an active investor.

You can sit back, in your home, and manage your empire all online and never have to leave the house again! Do you have what it

 takes? Find out by reading this.

“Many individuals who have transitioned out of corporate life tend to rank “taking control of their time” at the top of the benefits list, while others state that saying “goodbye” to their boss is ranked number one,” the article states.

Still, others claim choosing your own hours should be at the top of any list. 

For those who have been working from home due to the pandemic, the thought of avoiding going back to a long daily commute would rank on their list of benefits. 

“Whatever way you choose to rank the downside of a nine-to-five job, just realize there are many benefits to transitioning your career to full-time passive real estate investing,” the article adds.

Just a spoiler alert before reading about your exciting new career as a passive real estate investor: “passive” doesn’t mean “no work at all.”

“You’ll also be constantly reviewing new investment opportunities and vetting those deals as potential investments. It’s an ongoing learning process, but the time you spend educating yourself will make you a better passive investor,” writes Ellie Perlman, CEO of Blue Lake Capital.

“This is a standard practice within the industry, as many successful investors were coached by other investors who have achieved substantial success,” Perlman said.

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