rockypointexposed.com Blog

I HAVE CANCER AND THEY OFFERED US A TYLENOL.

     After waiting three long months, North Beach investors hoped Sonora officials would make good on their promises of March 5 to provide some viable solutions to the problems at North Beach. Instead, as one disappointed investor put it: “I have cancer and they offered us a Tylenol”.

     A meeting was held at the Arizona Department of Real Estate on June 19, 2008 for the purpose of the Sonora government addressing serious problems brought to their attention at a previous meeting held on March 5, 2008. At that March 5 meeting, Sonora government officials were made aware of problems relating to North Beach including land fraud, and an on-going law suit, tying up millions of investor and developer dollars. The officials promised that, within three months, they would investigate and provide solutions to the investors at the June 19, 2008 meeting concerning the following North Beach properties:
                                       Las Gardenias, Kasitas, Sunset Beach (North Beach)
                                                                     Playa Azul
                                                                    Riviera Real
                                                                   Playa Dorado

     Four separate ½ hour meetings were arranged by the Arizona Department of Real Estate to be held with investors and Sonora officials, leading us to believe that individual properties and their problems would be addressed. Much to the disappointment of the approximately 75 investor attendees, the Sonora officials presented the same SONORA PROPOSAL shown below. No individual properties or problems were addressed! According to the Sonora officials, they allegedly conferred with their governor, developers, private business people, and Puerto Penasco officials to come up with this proposal designed to address all North Beach investors.

Below is the proposal submitted by the State of Sonora:

                                                   MEETING WITH NORTH BEACH INVESTORS

                                           LOCATION: ARIZONA DEPARTMENT OF REAL ESTATE

                                                           June 19, 2008  PHOENIX, AZ

                                                                 SONORA PROPOSAL:

OBJECTIVE: Offer North Beach property buyers an incentive program in which they could recover up to 100% of their down payment (made in North Beach), through credit incentives applied towards the acquisition on a new property in Puerto Penasco, without declining rights to the ongoing legal process.

INCENTIVE DESCRIPTION:

1) Agreement with Puerto Penasco Developers to offer the following incentives:
        a. LAS PALOMAS: 50% credit of down payments made in North Beach properties (Las Palomas) applied towards         the acquisition of a property of equal or greater value.
         b. BELLA SIRENAS: 50% credit down payments made in North Beach Properties (Bella Sirenas) applied towards the acquisition of a property of equal or greater value, limited to $50,000.

NOTE: Both developments currently have an Arizona Subdivision Disclosure Report (public report).

2) 100% exemption of closing and transaction costs.
              a. Registro Publico de la Propiedad (Property Tax)
              b. Traslado de Dominio (Transfer tax)
              c. Honorarios de Notarios Publicos (Public Notary fees)
              d. Avaluos (Appraisals)

NOTE: There will be nominal fees that apply in some instances, in such case, Sonora will absorb all costs.

3) Possibility of a capital loss tax write off in the United States for the investment Made in North Beach (please consult your accountant and/or tax advisor).

                                All transactions under this Program must be closed before August 31, 2009.

—————————————————————————————————————————-

     Not one attendee of this meeting found anything encouraging.  We asked people from each of the 4 developments involved what they thought, and all felt it was a complete waste of time. 

      Because each meeting was only ½ hour, of which the Sonora officials took 15 minutes, and because we had questions regarding the litigation, there was little time to fully digest the offer, but upon closer examination, the following points emerged:

     “ Under the BEST of circumstances, the buyer loses ½ of his down payment and if he elects to purchase a property at Bella Sirena, the maximum he can be credited with $50,000.  In most cases, the down payments at both Las Palomas and Bella Sirena were in excess of $100,000.00.
     “ Both of these developments are having such a difficult time selling their properties, that any “live” buyer could most likely get the same discount. 
     “ Las Palomas has just raised its Homeowners Association fees to $850.00 per month. “ As a result of this increase, it has been reported that claims have been filed for refunds in the amount of approximately $4 million by people who have met the refund criteria within their contracts with Las Palomas.  

Part 2 of the proposal would be considered a step in the right direction if anyone chose to take advantage of Part 1.

Part 3 is not an offer at all from Sonora.  Anyone can investigate the possibility of a tax write off and it has nothing to do with the Sonora government participation.

      We also came up with the following questions, which we will forward to the Real Estate Department, as well as to the Director of Tourism of Sonora:

     “ Is there a limit of $50,000 credit on Las Palomas as there is on Bella Sirena?
     “ In the unlikely event there is any interest on any buyer’s part, how is the contract between the buyer and the developer, e.g.. Playa Azul affected?  As an example, if I purchased a unit at Playa Azul in the amount of $300,000 and gave a down payment of $150,000, I am credited with $75,000 towards purchase in Las Palomas.  But what happens to the developer of Playa Azul?  Is my contract with him still in effect?  And what position does this put the developer in?
    

     When confronted with the issue of fraud being perpetrated, their excuse was that they were part of the Executive branch and not the judicial branch and there was nothing they could do for those investors who lost $2.5 million dollars in the original North Beach development. They suggested that these investors file a criminal action against the perpetrators (Martin and Grijavla). It was pointed out that the criminal statute of limitations was long past and there was an on-going lawsuit (2.5 years). These very same perpetrators named in that lawsuit had not even been served summonses to appear in court, therefore how could defrauded investors serve summonses to these individuals responsible for the fraud. They basically shrugged.  Time after time, these officials made it clear that they were the Executive branch and could do absolutely nothing about fraud. When questioned why someone from the judicial branch was not in attendance, they again shrugged. It was made clear to them that members of the judicial branch should be in attendance at any further meeting between investors and the government.
     It became clear to the officials that the media was watching very closely as evidenced by ABC News15 interviewing investors at the conclusion of each meeting. We will continue to keep pressure on the Sonora government by actively seeking media involvement including national exposure to the problems associated with Mexican real estate investments.  
  

     The Sonora officials indicated that this proposal was a first step and several other measures were allegedly being addressed by the Sonora government that they could not disclose. They indicated that there would be other meetings with investors before years’ end. They were reminded that the state of Sonora as well as Puerto Penasco will continue to lose many millions of dollars in tourism and real estate investment if these problems were not resolved quickly and fairly. Until then, we will continue to discourage any investment in Mexico.

On Thursday, April 10, Howard and Madeline Israel, the administrators of this blog were invited by AMPI (Mexican Association for Real Estate Professionals) to discuss how North Beach investors could find common ground with the real estate community in addressing many challenges we are facing. This presentation was warmly received by members of AMPI and several action items were generated, with an eye to resolving these challenging issues.

AMPI meeting presentation April 10, 2008

Thank you for your kind invitation to present the investor side of the North Beach story. Let’s begin by imagining what could have been, rather than what is:

1. Imagine for a moment that the North Beach project as presented to the general public in late 1999 went off as advertised. The condos, the hotels, the 6 Jim Fazio golf courses, a 200 slip marina, etc. How many happy investors would there have been. More importantly, how many happy real estate agents would there have been?

2. Imagine if both Playa Azul and Riviera Real had gone off as planned. How many new and resale units would have been available for you to market? How much money could you have made?

3. Imagine if you will that after discovering we had been lied to, and defrauded of our money, we had gone silently into the night. Chalking it up to “well, what do you expect, that’s Mexico”.

4. Imagine how many other investors would have wound up in the very same situation we and many others would have found themselves in, had we not brought our situation to light.

5. Imagine if what has happened to us, happened to some of you (and by the way, I do believe some of you have had it happen). What would you have done?

6. Imagine North Beach as big as and as successful as Sandy Beach but for the likes of a few easily identifiable thugs who should be blamed for the problems that exist now.

I have been told by several people that my website, Rockypointexposed.com is doing irreparable harm to the community of Rocky Point. I could not disagree more. My answer to these people is that:

1. They’re shooting the messenger.
2. They are taking their anger out on the wrong person.
3. They should have been, and should continue to be angry at the Martins, who were arrested for land fraud in 1994, the Grijalvas, the Palacios and the many opportunistic developers who have aided and abetted the fraud that has been, and is still going on in Rocky Point. Villa Cortez, Los Palomas, Fiesta De Cortez and Acropolis are a few that come to mind. And speaking of the Palacios, each time you entertain a client at the Point restaurant, thank the many investors of North Beach — for that’s where part of their $2.5 million investment went in building that place the Palacios now own. We knew them when they didn’t have a dime to their name.
4. They should be angry at the local media who knowingly accept advertising and articles containing blatantly false and misleading claims about Rocky Point real estate. And when made aware of these proven, documented untruths, absolutely refused to make the necessary corrections.
5. They should be angry at the blogs who continue to praise the virtues of owning property in Rocky Point without disclosing the many pitfalls regarding bank trusts, title insurance, management fees, federal taxes, etc, etc, etc.
6. And finally, they should be angry at themselves to allow what is happening in Rocky Point.

Ladies and gentlemen, Maddy and I as well as hundreds of others invested in Rocky Point because we believed in Rocky Point and all it had to offer. So please, don’t place the blame on us for what is happening here in Rocky Point.

On the other hand, we take full credit for making everyone aware of what is going on in Rocky Point, from alerting the Arizona Republic, getting ABC-15 involved and publishing our website and blog.

And just consider the result of our actions:

1. The Arizona Dept. of Real Estate held a meeting on March 5, 2008 attended by government officials of both Arizona and Sonora to become familiar with the real estate problems in Rocky Point.

2. The governments of both Arizona and Mexico have finally come to the realization that there is a problem here in Rocky Point, as well as the entire state of Sonora.

3. We have received a commitment from the Sonora government that they will try and resolve these issues. We look forward with great anticipation to a meeting on June 19 to see the result of that commitment.

4. We have received a commitment from the Arizona Real Estate Commission that they will take a much more active role in policing some of the practices going on in the states regarding advertising of Mexican property as well as other unlawful activities.

5. We have begun a dialogue with some of our adversaries to develop a mutual understanding of the problems here in Rocky Point and to come up with workable solutions to solving these problems, as evidenced by our recent meeting with Raul O’Farrill and with you folks today.

6. Congressional representatives from Arizona and other states (including our son, United States Congressman Steve Israel (D.NY)) have taken an interest in, and are beginning a dialogue with high Mexican government officials.

So, let me ask again; what would have happened if we had gone silently into the night? Quite frankly, we don’t know. However, what we do know is that all our endeavors will hopefully prevent others from going through the heartache of dealing with lies, deceit and fraud.

As I Have indicated on my website and blog, I sincerely feel that we are at a tipping point, that point at which the momentum for change becomes unstoppable. We collectively are very close to a major tipping point in achieving the mutual goal of cleaning up Rocky Point.

In conclusion, I have done some research about AMPI. I am impressed with Section 1. Relations with the Public.

Article 3 speaks about “truth, protecting against fraud, abuse and immoral practices in the real estate field”. I’m sure you will agree that has not happened in Rocky Point until recently. I commend the real estate community for making an effort to clean up Rocky Point, something we’ve been trying to do for the past seven years. We ask for your help in making Rocky Point the great place it was meant to be, rather than a quaint little fishing village it used to be.

Thank you again for your kind attention. 

This blog is open to all who wish to comment about real estate matters in Rocky Point. If you are visiting with us, you might have viewed the website: rockypointexposed.com. Perhaps you’ve got something on your mind regarding real estate issues in Rocky Point. This is the place to discuss your issue, get something off your chest, or get help or advice. If you’ve got news about Rocky Point real estate, feel free to post it. This is your resource, use it often and well. Please post general comments below where numbered (xx) Comments are indicated.

RPE

Please go to the website www.rockypointexposed.com for information regarding current real estate issues in Rocky Point. After visiting the site, feel free to post comments on this blog.  Just click on the “(xx) Comments” button below to view or post your comment.