Grant Cardone likes good Cuban cigars and pays for them from passive income. It’s all about cashflow baby.
Grant Cardone created Cardone Equity Fund IX in late 2019.
Cardone Capital and published details of the $50 million offering on January 27, 2020. This was two months before the COVID-19 pandemic hit. Cardone Equity Fund IX was a Reg A offering which meant that Cardone was focusing on unaccredited investors. Specifically, Cardone wanted to sell 50,000 Class A interests at $1,000 each.
In the initial publication, Equity Fund IX seemed like just another plain vanilla effort by Grant Cardone to raise $50 million to buy more apartments. However, being a Scientologist means that one never wastes an opportunity to profit from a crisis. This is why Scientology leader David Miscavige has been using the pandemic to promote Scientology as having taken leadership in the crisis. Miscavige’s lawyer Jeff Riffer wrote a ridiculous threat letter to Marlow Stern of The Daily Beast in which he made this laughably ridiculous statement:
The world would be in a better condition today had governments and other organizations timely followed Mr. Miscavige’s lead.
Right. The governments of the world could have averted catastrophe had they taken the advice of a high school drop out who runs a religious cult. In any case, Grant Cardone smelled money in the pandemic and retooled his Equity Fund IX as we see on Cardone Capital’s website:
Grant Cardone was suddenly looking to pick the bones of those poor souls who were financially destroyed by the pandemic and had to sell their real estate at fire sale prices. But then Cardone himself was seized by panic as the reality of the pandemic set in and his own cash flow and assets seemed threatened.
As we documented, Cardone engaged in erratic behavior which included a bizarre and incredibly irresponsible PR stunt in which he claimed his company was going bankrupt. Cardone froze monthly distributions to his investors.
Suddenly and without fanfare, Cardone Capital sent the US Securities and Exchange Commission the following letter via EDGAR on May 5, 2020 in which he withdrew Cardone Equity Fund IX:
VIA EDGAR
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549Request for Withdrawal of Offering Statement on Form 1-A, exhibits, and subsequent amendments
(File No. 024-11142)Ladies and Gentlemen:
On behalf of Cardone Equity Fund IX, LLC (the “Company”), we hereby submit
this letter to notify the Securities and Exchange Commission (the “SEC”) its intent
to withdraw the Offering Statement on Form 1-A, all exhibits thereto, initially filed
and as subsequently amended on March 17, 2020 (Acc-no: 0001477932-20-001372)
(“Offering Statement.”)The Company submits this request for withdrawal as it does not intend
to pursue the contemplated offering at this time. Since the Offering Statement
was not declared qualified by the Commission, the Company hereby confirms
that no securities have been or will be sold or monies collected according
to the Offering Statement.Sincerely,
/s/ Grant Cardone
Managing Member of Cardone Capital, LLC
Manager
Cardone Equity Fund IX was disposed of quietly and without sorrow on May 5, 2020.
What happened? Why couldn’t Grant Cardone, the man who thinks he’s the greatest salesman in the world, sell out a small $50 million fund?
Cardone talks out of both sides of his mouth. On May 26, 2020 Cardone was telling Yahoo Finance: “This becomes the moment to buy things, not get rid of things.” If he believed this, it seems, Cardone would not have withdrawn Cardone Equity Fund IX. Instead, he would have raised the $50 million and went out and purchased some distressed properties for bargain prices.
Cardone Capital’s website still shows Cardone Equity Fund IX being offered. It needs to be taken down. Cardone Capital is also showing its new goal of seeking distressed assets:
We have a few distressed assets in mind in Hollywood that Cardone Capital should definitely consider. These are boarded up properties that have had very low occupancy rates for decades:
The prospectus for Cardone Equity Fund IX suggested a definite shift in strategy and focus within Cardone Capital (emphasis ours):
The Company has been formed to acquire various real estate assets throughout the United States. Although the Manager intends to initially search for properties located in Arizona, Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee and Texas, the Company will not limit itself geographically… It is expected that the Company will focus on Class A and B multifamily properties, but will also, under certain circumstances, consider commercial real estate assets such as self-storage, warehouse and industrial, office, and retail properties.
Grant Cardone has incessantly preached to his followers that retail and office real estate investments are the kiss of death. And yet he reserves to himself, as Manager, the right to purchase these deadly assets wherever they may be located. This is a contradiction between what Mr. Cardone preaches and what he reserves the right to do. There is no consistency here.
From a Scientology perspective, we are hereby assigning Grant Cardone the Ethics Condition of CONFUSION. From Scientology’s website:
The lowest condition is a Condition of Confusion. In a Condition of Confusion, the being or area will be in a state of random motion. There will be no real production, only disorder or confusion. In order to get out of Confusion, one has to find out where he is.
Categories: The Scientology Money Project
” who runs a religious cult”
Who runs a criminal organization disguised as a religion while trying not to appear as an obvious destructive cult.
There, fixed it for ya
You say: “If this were true, Cardone would not have withdrawn Cardone Equity Fund IX. Instead, he would have raised the $50 million and went out and purchased some distressed properties for bargain prices.”
Or, if this were true, and if Cardone were actually flush and had access to all the debt he brags about, then why would he even raise a fund? He ought to just go out and buy all those distressed properties that are sure to be available for pennies on the dollar and keep them for himself, because that ought to be a once-in-a-lifetime buying opportunity. Why share half the profits with a bunch of limited partners? After all, if the real estate market collapses and bargains are everywhere, then you don’t need to raise a ton of money to get into the game.
Great questions JPC.
Cardone’s answer would be his own magnanimity about which he endlessly reminds us: He’s giving the little people a chance to have access to the big deals they (meaning the ultra-wealthy) don’t want the little people in on.
Grant’s magnanimity even extends to the fact that he does all the work for the little people who are so stupid as to believe that owning their home is a good thing. No sir. That is the stupidest thing in the world according to Grant. Likewise, the stupid little people also believe saving money in the bank is good. According to Grant it’s a horrible idea.
The only hope for the stupid little people is to invest with Grant Cardone. The little people need to invest with Grant because they’re too stupid to possibly figure out how to put a deal together. They’re also too lazy to manage apartments, collect rents, and fix stuff. Sure, Grant’s property management company gets paid to do all these things so the little people don’t have to. They just write Grant and check, kiss their money goodbye for 7-10 years (or more), and wait for their distribution check every month from Cardone Capital. Easy as pie.
Grant once said that while he couldn’t guarantee anything, his deal were 99% certain to make money. How can you lose? Listen to these pearls of wisdom flow from the Mighty OT8:
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my guess is that the small fish Grant was trying to raise money from aren’t biting under current circumstances, especially when he can’t do big in-person events to put the hard sell on.
looking for news i ran across this video by a guy who says he got a lot of Cardone SEC docs and went through them, makes what looks like a legit case that 3 of the newer funds return only a half to a third of promised, in the range of 2-3%:
Grant Cardone LIES about Cardone Capital (FOUND PROOF) https://www.youtube.com/watch?v=x0ug26YEzPE
and it sounds like Cardone has promised to make a payment that i think covers 3 months since he stopped, presumably across all funds:
Grant Cardone called me out and announced a $6.3 Million Distribution (w/ Spencer Cornelia)
https://www.youtube.com/watch?v=-B1BFX7SFCo
this is not my area of expertise but if i have it right and Cardone is managing 1.2 billion that’s a .5% payout or 2% annualized. you can get about that rate at a bank with no risk.
Renee, your analysis is in line with what others have said. Tom Nash crunched the numbers and showed Cardone’s first two funds had excellent returns. However, Cardone’s subsequent returns appear to be mediocre at best.
While we took Cardone’s having withdrawn Equity Fund IX as a sign of his weakness and indecision, perhaps a first crack in the dam of Cardone Capital, we also looked at it in terms of the likely inability of his sales team to sell the offering to Reg A investors in the present economy. There are just no buyers who want to let go of liquid cash for up to ten years in exchange for a “maybe” distribution check each month. That is a sucker’s bet. Cash is king right now. Lots of liquid cash in exchange for little monthly distribution checks that are subject to being suspended at any time is, in our view, a proposition only a fool would invest in at this time.
Even with the ups and downs of the stock market, our Amazon stock opened today at $2733 per share and is kicking ass on anything Cardone ever offered in his life. Last year at this time, Amazon was trading at ~$1900 and we kept buying. Hell, we were buying back at $1400 (and lower) and kept using dollar cost averaging to buy more AMZN and other tech stocks. Cardone is so wrong about the fundamentals of investing in the stock market over time; having cash in the bank; and home ownership. He preached against this and wanted his investors to take their money out of the bank and stocks and invest with him. He wanted them not to own homes and invest with him. Grant Cardone is an idiot and his embrace of big debt is hurting him now. That’s his Karma.
On Equity Fund IX, Cardone wanted to sell 50,000 Class A interests at $1,000 each and take in $50 million. If he fronted 20% for a down payment, he could purchase a $60,000,000 property. However, in the current financial climate and its uncertainties, Cardone apparently doesn’t have the cajones to pull the trigger on even a $60,000,000 deal. He claimed the offering was to buy distressed assets at bargain prices, but even that is a crap shoot with a resurgence of COVID-19 cases in the Sunbelt states where Cardone likes to buy. Evictions are still legally problematic and Grant Cardone just doesn’t know how to navigate this complex terrain as an investor in apartment complexes.
In the larger picture, Cardone Capital has to continue to acquire properties that cash flow from day one in order to service its debt load and pay distributions. That only happens when Cardone uses his trick of 5 and 10 year interest only loans. This is a heavy bet on the upside of appreciation over a ten year time horizon. This, in turn, assumes a growing economy when the economy is headed towards Great Depression territory. Cardone’s magical rainbow unicorn was ~$1300 a month rents where he thought he couldn’t lose. In a post-pandemic Great Depression economy, that rent could becomes $750 because people have no money. The market will drive down rents whether Cardone likes it or not. He knows it.
Grant Cardone, formerly Mr. Cock of the Walk, now looks like an over-leveraged gambler who was dealt snake eyes by the pandemic. Brutal cards to be dealt, but those are the risks of capitalism. The market could care less if Cardone can hold his mediocre and over-hyped apartment empire together. We still think Cardone Capital gets bought up by bargain hunters with Cardone hoping he can make some money on the way out. If his investors lose then they can’t say they weren’t warned about illiquid Reg D and Reg A investments.
I enjoy reading all the comments on Grant C & his money. I am clueless as to all the financial finagling he creates, but I do know one thing. Grant is a Scientologist who has paid through OTVIII, how much more Crooked can he get?! What he does to scam all comers is criminal in my humble opinion. Thank you Jeffrey for all the work you do . 💛
thanks Jeffrey for your extensive reply.
i may not understand the banking math, but in the 4th paragraph $50 mil would be 80% down on a 60 mil property. so is he doing 80% down, or is he doing 20% and buying $250 mil — or am i missing what’s going on entirely? if he’s 80% leveraged then that leaves me with other questions (and like GPB, are his salespeople and maybe he taking up-front commissions, leaving investors with even less equity?)
it seems to me that Grant lives off his over-hyped reputation and will want to save face at all costs so i can’t imagine him walking away from a fire sale unless he’s conceding to being ruined. though i would still expect a shameless huckster like him might try to make a comeback.
now that we know that Grant got something like a couple of million dollars in PPP money, i wonder if that was some of what he used to make a (delayed) distribution to investors around the beginning of the month? it might not quite be kosher, but it would put off his reckoning if he’s going bust, which would be a sort of typical desperate gamble.