Posted by Peter Wunsch on 11/20/08

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Amid all the financial turmoil of the recent months, you may
have missed a front page story in the Wall Street Journal
about the scandal surrounding Vesta Strategies, one of
several Section 1031 Qualified Intermediaries that has
recently gone bust. In Vesta’s case, it has managed to tie
up more than $100 million of their client’s money. I know
the heartache of working with Vesta first-hand: in early
2007 I almost lost $6 million by trusting them with my 1031
exchange.

A qualified intermediary (in case you don’t know) is a
company that is licensed to perform 1031 exchanges. As a
third-party that holds onto your money during the 180 days
of the 1031 exchange process, they have COMPLETE DISCRETION
how to use this money, subject only to the agreement you
sign with them. For Vesta, it seems this meant unsound
investments.

The case of Vesta Strategies is not an isolated incident.
To capture all of the 1031 abuse that happens, I’ve started
a blog at 1031Vigilante.com where you can read about the
latest 1031 abuse and the unregulated nature of Qualified
Intermediaries. I sincerely hope you are never unfortunate
enough to discover the heartache of an experience like my
mine. But my story does have a happy ending, as well as a
new beginning.

I’ve also been working on my personal brand of revenge:
Starting a 1031 exchange company that puts investors first;
that will protect the investor’s money as if it were their
own. Launching this month, RockSolid 1031 goes beyond
current regulations (or lack thereof) to ensure the security
of your money. We commit to depositing funds only in
money-market accounts that invest in government-backed
securities. We have built RockSolid to facilitate the
simplest 1031 exchanges possible. With unparalleled
transparency and service throughout the entire process,
RockSolid is a qualified intermediary created by real estate
investors to meet the specific needs of real estate
investors and their advisors.

1031 abuse is a disturbing trend that all real estate
investors should be aware of. Staying alert to deception in
the market is our best chance to avoid becoming a victim.
The next time you consider working with a Qualified
Intermediary, please take the effort to find out where your
money is really going. And before you give put your money at
risk, make sure you are working with a company that deserves
your trust.

Thank You,

Peter Wunsch
Chairman, RockSolid 1031
646-695-4700

RockSolid 1031

My 1031 Exchange Almost Cost Me $6 million; Don’t Let it Hap, 11/20/08, by Peter Wunsch.

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