This is the story of my life not too long ago…
(And please forgive me for not writing it in first person, as it is something that was on the news, as well as in my other blog – Ron Barness. I just copied-pasted it as it is for you to read).
Many people in the US were left devastated by the crash of the real estate market. The crash has hit Phoenix particularly hard, as prices in the city had enjoyed drastic inflation before the real estate bubble burst several years ago. Ron Barness – up until the crash one of the biggest players in Phoenix’s real estate market- felt it more than anyone. Having lost everything, Barness has faced lawsuits, lost his savings, and is now fighting to clear his name and reputation.
- A really short video of me about my commitment to AIPAC -
2008 and 2009 saw several lawsuits filled against the formerly successful Ron Barness and his then business partner Alex Papakyriakou. As CEO and principal of Barness Papas Investments Barness found that he was a prime target for these lawsuits during the aftermath of the market crash. Investors accused Ron and Alex of inaccurately reporting sales and earnings of their properties. At the time of writing, the Maricopa County Superior Court has successfully dismissed all but one of these lawsuits. Luckily for Barness, the one lawsuit which is still outstanding is also expected to be dismissed soon.
However, there are several other outstanding lawsuits against Ron Barness. These have been filed by angry lenders who allege that Ron has not followed through on his personal guarantees he made about his real estate property investment. Barnes is currently working hard to clear his name following these suits, which he says are the result of investors taking advantage of the legal system during a downturn in the market. Barness says that these investors lost money incompletely different real estate deals and have capitalized on the opportunity to take legal action against him.
Barness has been in the real estate business for 27 years, and has largely worked in the acquisition, development of shopping centre investment properties. These investment have involved almost 1000 individual partners and investors. Up until 2007 when the real estate market crashed, there was not one investor in Phoenix who had lost any money by trusting and investing with Barness. Quite the opposite – during the last 15 years of Barness career, his investors could expect to receive a return of between 15% – 13% per annum.
The writing was on the wall for Barness when the market began to turn for the worse. Barness felt all of his projects negatively affected. Cash flow became a problem when each of his properties began to suffer from extreme vacancies. In order to try to protect the money of his investors, Barness injected his suffering projects with his family’s savings.
Barness says, “The sheer magnitude of the market collapse and the size of the portfolio I controlled ultimately led to the demise of my business and the loss of the projects,”
Barness had deeply believed in each deal he had made for investors. As testament, he personally guaranteed each project in addition to getting them backed by a total of 27 lenders. No single investor could claim to have risked personal liability for any of Barness real estate loans. “It has been a devastating ride that has taken everything I have made for myself out from under me and my family, but more than 99% of the investors I have worked with over the years have stood by my side, believing that I have done the best I could do,” said Barness. “Although I have been forced to start over, I am fortunate that I have a wonderful family who believes in me and gives me strength. And, I know that whatever any individual investor lost through investing with me pales in comparison with what I have lost trying to protect their investment.”
Barness is now focusing his energy on re-establishing his career. By learning from his experience and facing the truths of what happened to him during the crash of the real estate market, he is taking away the valuable lesson of operating with caution.
