Help me decipher this scam (Real Estate land deal)

I've got a potential job with a guy I am concerned about.

In doing my due diligence, I found a weird anomaly in the tax assessor's records.

His company, XYZ LLC bought the property we are working on on 10/30/12 from ABC LLC for $1.25 million.

ABC LLC bought it from an unidentified grantor on 4/18/08 for $1.175 million.

It was previously purchased on 10/25/06 for $900,000 from an auto dealer.

OK, nothing weird so far...

But another property across town, a worthless piece of dirt with 0.6 acres and a shack of a house on it has the EXACT SAME HISTORY. Same prices sold on the exact same days by the same companies, except the 10/25/06 seller is not the auto dealer, but an individual (who is likely the owner of the auto dealer).

What the heck is going on? Help me do a little sleuthing.

Were the two properties bundled together in one deal? And if you're that concerned, ask him.

Maybe some method of hiding personal real estate gains by covering dates up with LLC sales... though my accountant-fu is a bit rusty at this juncture, and I may or may not have any idea what Im talking about.

sounds like the first company bought 2 properties from separate people. then later, sold the same 2 properties to a second company on the same day, which happened again a few years later when the properties changed hands to a third company.

the 2nd and 3rd transactions most likely were handled with 1 deed and 1 price, for both properties (thats not uncommon). if you read the deed it probably has a legal description for each of the properties attached. if that were the case, there may not be a price breakdown telling you how much was paid for each property individually on your assessors website.

If you are concerned, just go look at the deeds and that should clear things up for the chain of title. regarding the unidentified grantee/grantor...their name is not visible on the assessment website by request, it will be on the deeds though.

In reply to failboat:

Yeah, except the starting point was not the same company. 1 property was owned by a company, 1 by an individual. Wouldn't that be a little weird to tie together into 1 sale?

You are right about the deeds. Haven't had a chance to review them yet.

For what it is worth, I'm pretty sure this guy is not above a shady deal.

sorry i realize my post is worded a little confusingly.

That first transaction might be 2 separate deeds/transactions, but recorded on the same day. does the assessment website show 2 different prices? does it provide you the deed instrument # or deed book and page? if you suspect the "dirt lot" may have been owned by the individual that owned the car dealership I don't think it would be too out of the ordinary for the parcels to be transferred with one document. since he would be the one to sign the deeds for both of them.

you never know until you look. :P

(I look at a lot of deeds for my job)

Dr. Hess wrote: Were the two properties bundled together in one deal? And if you're that concerned, ask him.

This^

Yeah, makes sense.

Unfortunately, I am dealing with a slimeball, so I'm pretty sure there is more to it.

Oh well...

I worded the original question badly.

You guys are offering responses that explain legit reasons the property transfers could have been the way they are. I understand these things, and am familiar with them, but this situation is different.

I KNOW this guy is a crook, and that everything about him and what he does is shady.

I am completely confident he is gaming the system, and that the deals are crooked.

I was looking for ways in which this could be explained as a problem, and what his game could be. I'm good at the honest part. I'm trying to understand the various possible ways in which this could potentially be abused.

SVreX wrote: I've got a potential job with a guy I am concerned about. In doing my due diligence, I found a weird anomaly in the tax assessor's records.

And how is this going to bite me in the rear if I continue to deal with him?

What angles do I need to watching for this guy to try and blindside me with?

Could be a loan scam. A group got busted here in Dekalb for buying/selling houses using homeless people as buyers. A house would be bought for $100k, appraised by a crooked appraiser for $150K, then sold to another homeless person for $200k, appraised higher, sold, and repeat. They had a bank loan officer working with them to get the loans approved, and of course the appraiser was on the take as well. They'd sell houses back and forth to each other and just keep pocketing the "profit" each time. Maybe Paul's guy is doing the same with LLCs?

If you know he's a crook, why would you want to go into business with him?

Just be sure you get paid in advance in cash.

z31maniac wrote: If you know he's a crook, why would you want to go into business with him?

Learned after the fact. Tied to him already, trying to look ahead at the future additional problems that are coming.

slefain wrote: Could be a loan scam. A group got busted here in Dekalb for buying/selling houses using homeless people as buyers. A house would be bought for $100k, appraised by a crooked appraiser for $150K, then sold to another homeless person for $200k, appraised higher, sold, and repeat. They had a bank loan officer working with them to get the loans approved, and of course the appraiser was on the take as well. They'd sell houses back and forth to each other and just keep pocketing the "profit" each time. Maybe Paul's guy is doing the same with LLCs?

Interesting thought, especially considering this guy sits on a bank board of directors.

SVreX wrote:

z31maniac wrote: If you know he's a crook, why would you want to go into business with him?

Learned after the fact. Tied to him already, trying to look ahead at the future additional problems that are coming.

That sucks, I guess breaking whatever contract you have with him is more expensive than possibly being tied to a shady deal?

In reply to z31maniac:

Very much so.

But being "tied to a shady deal" doesn't mean I have to handle myself in shady ways.

Just trying to sort it out.

It's not shady, it's normal. The dude might be shady, but the deal you described isn't.

Those are combined prices, and why the prices are the same.

Likely the start of the process was property one was owned by the company, and property 2 was deeded to the owner of that company. His right to sell both in the same transaction for $900k, then they are sold together again and so on.

Could the pricing and valuation be shady for any number of reasons, of course. Having that asset on the books for varying amounts as you transfer it to various LLC, can be done to your advantage if you are seeking financing. I'm guessing an auto dealer, has learned the ins and outs of making the company's bottom line serve the needs of his financing requirements.

Could be other ugly stuff, but not entirely out of line with the state of things around the US.