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We Cannot Keep Up With The Financial Burden Of This House

Two reports from the Buffalo News. “A Kuwaiti realtor and his multiple companies bought or brokered at least 160 houses in struggling Buffalo neighborhoods as part of an international Ponzi scheme. The realtor and his associates are serving prison time in the $140 million to $240 million scam that extended to Rochester, Detroit, Cleveland, Florida and North Carolina.”

“More than 6,400 miles away, Kuwaiti realtor AbdulAziz HouHou and associates were hunting for investment properties in the United States. In Buffalo, they found plenty. HouHou and his multiple real estate companies bought or brokered at least 160 low-end houses in Black Rock-Riverside, South Buffalo, the West Side, and the city’s East Side – almost all of which were resold to other Kuwaitis.”

“Almost six years after HouHou’s house-hunting spree began, struggling Buffalo neighborhoods are still contending with the path of blight the Kuwaiti real estate broker left behind, including vacant, dilapidated and foreclosed properties.”

“It was a Ponzi scheme financed by as many as 2,000 unsuspecting investors who bought as many as 3,000 properties, mostly in the United States, said Ali Al-Attar, an attorney for the Kuwaiti investors. The scam has not been reported in the United States until now.”

“HouHou and his companies promised investors 15 percent returns, with a management company taking care of everything from tenant leasing to repairs and rent collection. In reality, the Kuwaiti investors said, the houses often turned out to be run-down, usually vacant or needing substantial repairs, and in struggling urban neighborhoods. Some were dilapidated the day they were sold; others quickly deteriorated from lack of maintenance, Kuwaitis learned.”

“Sometimes, the Kuwaiti court found, HouHou and his firms sold the same house to two different investors at the same time. Sometimes they sold houses that weren’t for sale. Half of the 40 houses HouHou sold in Buffalo on a single day in December 2015 were vacant at the time of sale, according to a Buffalo housing inspections report. HouHou companies also sold vacant lots, mostly in Florida but also in North Carolina, for future development that never materialized, records show.”

“Of the 160 houses flipped in Buffalo from late 2013 through mid-2016, about a quarter ended up with housing court judgments, and about half ended up in foreclosure, The Buffalo News found.”

“Alhashemi said he paid a HouHou firm $103,000 for a two-story house. Alhashemi later learned he didn’t actually buy anything. Neither HouHou nor any HouHou companies ever owned the Ontario Street property, records show. Yet, Alhashemi said, HouHou’s firm ‘sold’ it to two separate investors within a year’s time. Neither buyer ever received a property deed.”

“At first, Alhashemi said, he was happy with the purchase. Shortly after the contract was signed, HouHou’s’s firm began forwarding him $1,350 monthly rent payments, he said. But after nine or 10 months, the promised deed still hadn’t arrived. And the rent payments stopped. ‘I called the company in Kuwait,’ Alhashemi said. ‘Their sales people promised to call back, and they didn’t call back.'”

“A Rochester real estate agent also contacted the FBI. ‘We talked about the escalated sales prices and that money was being wired overseas to HouHou but that property owners were not being paid rents,’ said agent Carole Snow.”

“Buffalo, meanwhile, like other cities struck by HouHou’s scam, continues addressing the fallout, dealing with houses like the one at 25 Mesmer Ave., which has sat largely vacant since HouHou bought and flipped it in 2015. The house is headed for foreclosure, and likely demolition, officials said.”

“‘HouHou never should have sold it,’ Alhasan said of the house his family bought from HouHou. ‘We cannot keep up with the financial burden of this house.'”

“Drive around Buffalo, and you’re bound to pass a house flipped through Kuwaiti real estate broker AbdulAziz HouHou. It’s hard to avoid them, especially on the city’s East Side. Continue driving and you’ll come across another HouHou house at 43 Goembel Ave., off Walden. There are no doors or windows. It is pretty much a shell.”

“After buying the house for $2,500 in August 2014, owner Glebova Realty Group flipped the house two days later to a Kuwaiti investor for $43,000, with HouHou’s firm serving as broker. The Kuwaiti investor sold the house for $6,000 in April 2018 to buyers from Brooklyn, records show.”

From Fox 61 on Florida. “A real estate developer and friend of former Connecticut governor John Rowland pled guilty in connection with fraud schemes Thursday. Robert V. Matthews, 61, of Palm Beach Florida, pleaded guilty in Bridgeport federal court to conspiracy, money laundering and tax evasion offenses related to multiple schemes to defraud foreign investors and financial institutions. In addition, Matthews’ wife, Maria Matthews, 52, pleaded guilty in Bridgeport to tax evasion.”

“Matthews helped Rowland lease and sell Rowland’s Washington DC condo at inflated prices. Officials said Robert Matthews was a real estate developer in charge of The Palm House Hotel , a property that he sought to develop in Palm Beach.”

“In a statement, law enforcement officials said the following about the case: The EB-5 visa program is a federal program by which foreign nationals and their families are eligible to apply for lawful permanent resident status (commonly known as a ‘green card’) if they meet certain requirements by investing in a development project in the U.S.”

“In pleading guilty, Matthews admitted that he and others defrauded EB-5 investors by representing that funds from EB-5 investors would be used to develop the PHH; that certain well-known individuals would be on the PHH advisory board and certain well-known entertainers, businesspeople and politicians ‘will be a part of the club.'”

“As part of this scheme, Robert Matthews and others moved investor funds through various bank accounts located in Connecticut and Florida. The funds were used to pay Robert and Maria Matthews’ credit card debts, and to purchase two properties located in Washington Depot, Connecticut. One of the Washington Depot properties was a property that Robert Matthews had previously lost in foreclosure. Robert Matthews, Nicholas Laudano and others conspired to purchase the property out of foreclosure by concealing both the relationship between the co-conspirators, and the source of the funds used to purchase the property.”

This Post Has 37 Comments
  1. ‘It was a Ponzi scheme financed by as many as 2,000 unsuspecting investors who bought as many as 3,000 properties, mostly in the United States, said Ali Al-Attar, an attorney for the Kuwaiti investors. The scam has not been reported in the United States until now’

    Funny how these scams take a while to come to light. We had a poster here who said, “there’s no fraud, these prices are legit!”

    ‘A Rochester real estate agent also contacted the FBI. ‘We talked about the escalated sales prices’

    In this same paper a few years ago, they reported shacks that had been selling for $10,000 in Buffalo were suddenly going for $30,000 and more. Now we know why.

    1. Funny how these scams take a while to come to light.

      Real Journalists and their globalist media bosses like to cover stories like this. With a pillow, until they stop squirming.

      1. Well this Buffalo News report is top notch and in depth, I recommend reading it in full. The same paper and the Rochester paper also published multiple reports of the giant apartment fraud cases up there, which the WSJ covered once and hasn’t touched it again. So it can be done, small newspapers doing fantastic investigative journalism which is in the towns best interests.

        1. Some local newspapers with deep roots in the community are still exceptions to the rule, and are committed to delivering real news. However, with six corporations owned by oligarchs controlling virtually every media outlet in this country (Google it), journalists and editors who speak truth to power instead of purveying The Narrative and DNC talking points have become a dying breed.

          1. …which is to say, I agree with your assessment. You are more likely to find a billionaire riding the bus than to find an honest, unbiased news story

    2. That Kuwaiti Ponzi scheme could be the poster child of debased fiat currency looking for places to go.

      1. The article said no one remembered this guy ever being in Buffalo. Pretty easy to con people out of over $100M.

    3. I’m on the east coast visiting family and did some bubble recon this morning. They are converting old school buildings and such to luxury condos in Portsmouth NH. 2-3 bds luxury condos In town are on the market for 800-900k and higher. Property taxes in NH are >2% and any loan over 485k is a jumbo mortgage. My back of the envelope numbers are >6k/month in expenses for mortgage, taxes, and condo fees with 20% down. The most expensive condo for rent I found on Craigslist was asking 3850$/month. The median 2 bd condo is renting for about 1800-2200$/month.

      1. But it’s the American dream!! For 3x the cost to rent you can ball and chain yourself to a shack the bank owns thus giving you the “privilege” of calling yourself a “home(loan)owner”. I mentioned this before but thought would be worth an update: just witnessed a good friend who earns a quite low income for the area, purchase a condo for 10x his household income. Him and his wife are soooo happy to be new home owners especially because they just had another kid. He is on the hunt to find a new job that will help accommodate the HOA, mortgage, taxes, and brand new family van payment. I guess this is somewhat normal 🤔

    4. I must be the only one who believes that stuff like this as a national security issue. Why should foreign entities be allowed to buy up American land? Condos maybe, but not the dirt. It wouldn’t be difficult to buy up a few city blocks in cash-strapped small cities like Buffalo and transforming them compounds.

      1. I must be the only one who believes that stuff like this as a national security issue. Why should foreign entities be allowed to buy up American land?

        Globalists are all about selling off formerly sovereign countries to the highest bidder. With both parties bought and paid for by their oligarch donors, the only “national security issue” is monitoring those “far-right” nutters who object to the treason of the globalists and their quislings.

      2. Lets say you are foreign and sell the USA something. Lets call it oil. In exchange for your oil the USA gives you some slips of paper with pictures of dead presidents on them. Despite being immensely pleased with these slips of paper you decide it might be nice to buy something in America, like a windowless shack in Buffalo. Imagine your disappointment when the USA informs you that you can’t buy stuff with your slips of paper.

        1. They can buy other stuff with their friggin slips of electronic paper. Giving open access to foreign purchase of interior real estate is a recipe for security problems, as Oxide suggests.

  2. ‘Matthews helped Rowland lease and sell Rowland’s Washington DC condo at inflated prices’

    Wa? But that’s unpossible! Are they saying… DC never falls, taxpayer said so!

    1. We’re still in the halcyon days. I’ve never seen the roads so jam-packed in my life. New toys abound, nothing to see here….

  3. Recent Reddit post, landlord wants tips from tenants ($ not advice)…

    Because rents already cheap enough as it

    “Does anyone else feel like their tenants don’t appreciate them? We work our asses off everyday to provide high quality housing and never once do they give us a tip on our rent? Do your tenants tip? I feel like at least 10-15% would be a nice thank you. After all we provide a valuable community service.”

    Also: renters being recognized by Dems as voting block:
    Renters Are Mad. Presidential Candidates Have Noticed.

    Elizabeth Warren, house flipper.

  4. Oh dear. While the REIC touts and shills have clung to the “home price appreciation is slowing” and “fewer bidding wars” memes in a desperate attempt to Always Be Closing, now they have to acknowledge the first YOY decrease in shack prices. Despite the NAR’s mantra of “now is always the best time to buy,” it’s going to be harder to lure in the marks when the latter deduce there’s more downside risk than upside potential in RE.

    1. Fake news, please don’t read this, buy Lyft stawks and take loans on cars and homes to help the greater good of our country

    2. Even my silly husband is rethinking the rush to buy right now— he was trying to force me to commit to a new construction in a nowhere area in an undesirable school district because it was “affordable”, relatively speaking. Feeling pressured to buy before the spring price increases! But while the sub is mostly sold, these last most recently constructed units are sitting. Price reductions, not increases. He’s at least stfu-ing about needing to buy right now thank god. Asking prices on used houses are still outrageous and increasing, but I’m seeing inventory piling up so maybe he’ll let us do the sane thing and keep waiting…

      1. Not much of anything here selling at the moment, and sellers still digging their heels in on asking prices. Just waiting to see who blinks first now.

  5. Reminds me of 06 and 07. These type of scams came to light shortly before the last collapse. Anyone who cannot see history repeating must be blind.

    Human nature is the most predictable of events.

    1. We recently saw video of half finished shacks in Salt Lake City, with lawsuits, and a similar fiasco in the Dallas area, with lawsuits, which included alleged visa fraud.

  6. acknowledge the first YOY decrease in shack prices.

    When Case-Shiller turns negative it will be really big news. Until then, not much air time.

    Probably Q3 this year C-S turns down.

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