AN AMERICAN TRAGEDY
How Aussies are ripped off in America
WESTAN JOHNSON. Recommended New York state; investors bought in New York state and then he stopped recommending New York state.
by Neil Jenman.
On the morning of April Fool's day, back in 2005, an email was sent to hundreds of Australian investors. It was a reminder about a series of 'Investing in the USA, Information Evenings' that were about to be held in Melbourne, Sydney and Brisbane.
The email, from a spruiker called Alvin Johnson, had an urgent tone. The Melbourne event was fully booked and hopeful investors were now being placed on a waiting list. "People are travelling long distances to attend, some are coming from WA and others from SA to attend in Melbourne," said the message. One investor was flying from Darwin to attend the Brisbane event.
The four advertised presenters were two Australians, Westan Johnson and Dymphna Boholt together with two Americans, Daniel Glushefski and James Graham.
According to his self-description, Westan Johnson began investing in property in Australia in 1997. He boasted that, by 2003, he had retired at the age of 39.
Apparently the retirement didn't last long because, in 2004, Westan moved from Australia to New Zealand in search of better "cash positive properties" which he sourced for a fee on behalf of investors.
By 2005, he had turned his attention to the United States. Hence the reason for this 'Information Evening'. Westan said he was "very enthusiastic about opportunities of investing in the USA". Although tickets for the event were $150 a head, it was billed as a "not for profit exercise".
Westan Johnson (and his brother Alvin Johnson) also describe themselves as Christians who "maintain the importance of integrity and honesty in our business practices."
The other Aussie at the events was Dymphna Boholt, a get-rich-very-quick spruiker from Queensland.
Dymphna is currently promising women that they can replace their income within 90 days. In other words, if you are earning $40,000 a year, then, in less than three months, you can stop work and still get the $40,000 a year (according to Dymphna).
For several years, Dymphna has been spruiking property in America. She tells Aussie
DYMPHNA BOHOLT. Get-rich-very-quick spruiker who says NY State is a great opportunity. Sure, but for whom?
investors that they can get "phenomenal returns" and that "returns of 20 - 30 % are not uncommon".
Buying in the USA, according to Dymphna, is a great opportunity. "You can buy properties for a lot less than you would think in America (for example, properties for just $40,000 US in New York State), and manufacture huge growth/equity by knowing what to buy and where to buy," Dymphna wrote in a press release in 2006.
Clearly, Dymphna Boholt and Westan Johnson infer to Aussie investors that they (Dymphna and Westan) have done the research and they know the right people and the right places when it comes to investing in the USA.
So, now that we have told you about Westan Johnson and Dymphna Boholt, let's look at what happens to Aussie investors who trust their American co-presenters.
What you are about to learn is information that Westan Johnson, Alvin Johnson and Dymphna Boholt either knew (and dishonestly concealed) or didn't know and so could not reveal (which makes them incompetent, to put it mildly).
James Graham is the CEO of a company called Genesis Real Estate Investments based in Rochester in New York state. Daniel Glushefski is the CEO of a company called Pilgrim Properties based in Buffalo in New York state.
Both men make a very big deal about being Christians.
However, you don't have to ask around too much in Rochester or Buffalo to discover that both men have - and this is again putting it mildly - rather dubious reputations.
They are what's known as "flippers". And no, unlike a dolphin, a property 'flipper' is someone who buys a property at a cheap price and immediately on-sells it for a much higher price.
The sharpest scammers (sorry, flippers) will buy from the local sellers at bargain prices and sell to non-local buyers (out-of-towners) for inflated prices. Of course, the further away the buyer, the more chance of the flipper getting an inflated price.
And you can't get much further away from upstate New York in the United States than the Sydney suburb of Menai in Australia.
So, for the sake of simplicity, let's take just one example of what may be hundreds of Aussies who have bought real estate in the Buffalo or Rochester regions.
Kathy is a 45-year-old single mother of three boys, the sort of woman that Dymphna Boholt claims to be able to help.
In 2005, after her divorce, Kathy owned a home in Menai (in Sydney). She had been ill with cancer and was worried about her financial future.
Enter Westan Johnson and Dymphna Boholt's co-seminar-presenter, James Graham of Genesis Real Estate Investments.
Kathy was offered three properties, two in Rochester and one in Buffalo.
Take a look at the numbers and the rental returns…
The first property was priced at US$79,500. The rent was supposedly US$18,000 a year. That's a 22 per cent return (gross).
The second property was priced at US$51,900. The rent was supposedly US$11,400 a year. Again, that's 22 per cent return. Impressive indeed.
The third property was priced at US$34,900. The rent was supposedly US$8,100 a year. That's 23 per cent. Irresistible.
When converted to Aussie dollars, the total of all the purchase prices for the three properties, plus the spotter's fees and the buying costs came to around $250,000.
Kathy took a loan on her Sydney home and sent the money to America. She should now have a good steady income. Positive cash flow, as Dymphna and Westan are so fond of mentioning.
According to Kathy, for the first couple of months everything went well. Genesis was sending her the money.
But then, suddenly, there were growing gaps in the payments. By February 2007, the payments stopped completely.
When she tried to contact James Graham, the devout Christian, he was always hard to find.
In desperation, Kathy did what she should have done back in 2005. She contacted other agents in the area. And that's when she discovered what Westan and Alvin Johnson should have discovered.
The properties that Kathy had bought - all of which seemed so mouth-wateringly attractive - had all been purchased by James Graham at low prices and flipped to her at inflated prices.
Let's take another look at the numbers (with the benefit of good research)...
The first property, for which Kathy paid US$79,500 had been bought by James Graham for US$37,000.
The second property, for which Kathy paid US$51,900, had been bought by James Graham for US$11,000. Yes, that's right, eleven thousand dollars - and just two weeks before he on-sold it to Kathy for US$51,900.
The third property, for which Kathy paid US$34,900, had been bought by James Graham for US$13,000.
So, from just one Aussie investor (a single and seriously ill single mother), self-professed devout Christian James Graham made a quick gross profit of US$105,300 (which, in 2005, amounted to around $160,000 Aussie dollars).
"I am committed to running this business with Godly principles and for His glory, not mine," says James Graham on his web site.
Today, in 2007, Kathy's situation is so dire, she barely has enough money to feed her boys. She says she cannot afford her cancer medicines.
"Because of the misery Genesis have done to our lives, we now live on the bread line," said Kathy.
Kathy is not alone.
According to Michelle Johnson (no relation to Westan and Alvin), a housing clerk in Buffalo who has been trying to warn non-local investors about the flipping scammers, "Hundreds of properties around Buffalo have been bought by Aussie investors."
As for the future of the district that Westan and Alvin Johnson claimed to have "spent time on the ground" and had "investigated", here's what Michelle told us, "Buffalo is a city that had many factories which have now all closed. There used to be 570,000 people here; now we are down to about 260,000. We have 14,000 vacant properties in the city."
As for James Graham and Daniel Glushefski, Michelle has this to say, "They are Holy Roller scammers. Scam on your own. Leave God out of it."
Today, in 2007, Dymphna Boholt is promoting herself on YOUTUBE with her arm around a woman telling her that she can replace her income in 90 days. Try telling that to Kathy who invested with your American co-seminar presenters.
And Westan Johnson now runs International Property Consulting Pty Ltd with a bloke called Frank Stace. Their web site is called Global Property Deals in which Westan boasts that he "was one of the first Australians to facilitate investment interest into the Buffalo NY market".
His web site says, "If you are a property investor, and interested in considering good cash flow and capital growth investments throughout the USA, Australia, and New Zealand - you are at the right place! It doesn't get much easier than this." For whom does he mean?
Again, try telling that to Kathy and all those investors involved in their own USA investing nightmare.
They are living an American tragedy.
FOOTNOTE: We asked both Westan Johnson and Dymphna Boholt for a comment.
Westan Johnson says that he "has not recommended investing in Buffalo, Rochester, or the NY state area since Nov 05. Neither have I had transactions with James Graham since June 05 (from memory). In fact I have been publicly discouraging investors from these markets."
Yea, well, that's a bit like James Hardie saying they no longer recommend asbestos.
Dymphna Boholt said, "I attended [the seminars] purely as a guest speaker on Asset protection and Taxation Structures in the US.
Both then and now my message is clear that the US market is just like any other and due diligence should be carried out on any purchase and on any market."
Yes, and clearly investors should do extra due diligence whenever Dymphna Boholt is speaking.
FURTHER READING AND INFORMATION:
CITY OF BUFFALO - MAYOR'S WARNING. Click here
JAMES GRAHAM'S GENESIS web site - Prayer Pages. Click here
DANIEL GLUSHEFSKI OF PILGRIM and his religious beliefs. Click here
WESTAN JOHNSON'S web site. Click here
DYMPHNA BOHOLT spruiking her 'replace your income in 90 days' pitch. Click here