Image Credit: The New Republic article on Grant Cardone

Grant Cardone is on Twitter claiming he won a lawsuit. Specifically, he is referring to Pino v. Cardone in which the late Luis Pino sued Cardone for violations of securities laws such a promising a 15% Internal Rate of Return (IRR) and other claims. After his passing, Pino’s daughter took over as the plaintiff.

The case went back and forth and Cardone lost part of the case in the US Central District Court of California Appeals Court. After further litigation, the same Court issued an Order Granting Defendants’ Motion to Dismiss Second Amended Complaint.

Grant Cardone claims this as a legal victory, which it is. When we read the Court’s Order, however, what we see is the Court giving Cardone’s investors a precise legal roadmap on how to properly sue Grant Cardone and Cardone Capital. The Court’s instruction describes how to properly plead a complaint against Cardone. Scroll down to read the Order. Comment if you agree or disagree.

We see the Pino lawsuit dismissal as Cardone having dodged a bullet because he had a great lawyer in Lisa Bugni of King & Spaulding. The dismissal was based upon deficiencies in the pleadings of Pino’s Second Amended Complaint.

Grant Cardone lives to hustle another day: Caveat emptor.

We share Grant’s Tweet here because we are not haters. Indeed, Grant Cardone follows our blog and we watch his videos. One observation on the tweet: As a writer we felt the tweet came across as Grant saying he beat the charges. We think a better play would have been for Grant to say that the case against him was dismissed with prejudice. That is a much better way to stick it to your opponent.

Grant Cardone WINS Lawsuit AGAIN

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
On October 4, 2023 rule in
Christine Pino -v- Cardone Capital, LLC,

the Court rules as follows

The first and second claims for relief in the SAC are DISMISSED without leave to amend,… pic.twitter.com/SAxVr3yOTG

— Grant Cardone (@GrantCardone) October 5, 2023

The Pino case was an existential threat to Grant Cardone. Since the case was filed, Cardone has tightened up on what he says online and how he solicits money from investors. And to be precise, the debt does not belong to Grant Cardone; the debt belongs to whatever Cardone fund owns it. Indeed, Cardone’s entire strategy is to shift the debt onto his investors.

Another question: What happens when Cardone’s five and ten year interest only loans end? Interest rates have increased significantly and that, in turn, increases the amount of money needed to pay refinanced loans and still pay investor distributions. The premise of Cardone’s model was based on cheap money and interest only loans which allowed immediate cash flow to pay investors on a monthly basis. What happens now? Does Cardone have to sell a few properties to service his debt load and pay investors?

Update: Cardone claims in a May 2023 video that he has 36 fixed rate loans and five adjustable rate loans that he will need to fix. He also says he has $2 billion in loans. However, due to Cardone Capital’s lack of transparency this information remains unsubstantiated. Further, this claim is at odds with what Grant Cardone said in his Covid-panic era video which he has erased and deindexed. In that video he said he uses ten-year interest only loans. An additional discrepancy is that Cardone claims to have $4.4 billion real estate portfolio. He also claims to have $2 billion in equity in his funds. However, in a typical Cardone Capital fund prospectus (Fund V), Cardone states that the properties can be leveraged to an 80% loan to value ratio:

 The Manager expects the Properties owned by the Partnership will have leverage not to exceed a 80% loan-to-value (“LTV”) ratio. If the then appraised values of the Properties show all Members may receive: a) their return of capital, and b) realized appreciation on the properties, the Company may elect to refinance the properties and return capital and any remaining appreciation

For the foregoing reasons we urge people to never rely upon any verbal statements made by Grant Cardone in social media and instead read his contracts. Indeed, at the heart of the Pino v. Cardone lawsuit was this question: Do Cardone’s social media statements make him a statutory seller of securities as defined under SEC rules? Cardone had to make the Pino case go away at all costs so that a court did not rule that his social media statements were legally binding upon his funds nor him personally. And yet this matter is still not settled. What we are watching is to see if Grant Cardone withdraws his Writ to the US Supreme Court to rule on whether or not social media statements are the legal equivalent of the statutory selling of securities.

Cardone’s contracts call for his investors to submit all disputes to binding arbitration and allow Cardone to suspend all distributions at any time on an indefinite basis. The fine print in his sales literature also states that there are no guarantees and that you can lose some or all of your money by investing in Cardone Capital.

We have seen Grant Cardone make many inconsistent statements online and his financial statements are private. The only thing that can be relied upon are the stated terms and conditions in his contracts which give Grant Cardone all of the power and his investors no power.

The New Republic article on Grant Cardone’s Hustle Culture is well worth reading. There are also reports online of Cardone’s aggressive use evictions and rent increases. Cardone has said many times that he does not invest in states that make it hard to evict tenants. This is what is required to cash flow in this world.

Grant Cardone lives at the intersection of Capitalism, Social Media, and Scientology.  If his Empire of Debt ever collapses, Cardone has the advice of L. Ron Hubbard to fall back on:

“When you move off a point of power, pay all your obligations on the nail, empower all your friends completely and move off with your pockets full of artillery, potential blackmail on every erstwhile rival, unlimited funds in your private account and the addresses of experienced assassins and go live in Bulgravia and bribe the police.” — “The Responsibilities of Leaders” (February 12, 1967)

Hubbard’s advice above is colloquially called the Bulgravia Policy by OG critics like us. Bulgravia is an old Cold War era term formed by combining letters from Bulgaria, Greece, and Yugoslavia. Bulgravia refers to an unknown hideaway used when a leader is deposed; an oligarch targeted to mysteriously fall off a building; or other dire events which occur when one falls from power. Grant Cardone has a private jet so he is prepared should he ever need to fly off to Bulgravia.

The Court Order dismissing Pino v. Cardone:

The SEC’s 2018 letter to Grant Cardone which was introduced into Pino v. Cardone: