It was all a fraud.
John Henry Brandt was never a financial consultant — he did not act as a broker, money manager or money manager, and he did not have a license to do any of those things, or to sell anything of value.
But when the dozens of investors who believed they were backing his real estate fortune in Las Vegas or real estate development or money manager fell for his fast and flashy promises — the big diamond ring would come with 20 percent returns in just five weeks; the first 20 percent would come in a few minutes — they lost everything.
Then, one investor after another, asking if there was something they could do about it, felt consigned to a litany of fees and regulatory compliance actions they never paid, as they were now bound to comply with regulations that no one believed they were responsible for.
On the day when the federal regulator in the United States, the Securities and Exchange Commission, shut Brandt’s business down, Sept. 14, hundreds of thousands of dollars were still missing, from investors who had lost more than a million dollars with the Westcott Realty Company, an investment firm Brandt managed from his office in Hamilton, Ontario.
“I was hoping for a settlement,” Don Henderson, 65, a retired executive recruiter, said of negotiations that ended without an agreement from the federal regulator. “But I was resigned that I would be stuck with an FTC settlement.
“It’s the only thing you can do. I have financial problems,” Henderson said. “This is nearly 100 percent refunded to me, but I only invested a small fraction of that amount.”
Six months ago, Henderson had a client ask him about a real estate property he had invested in. On the investment website at the time, that site had no relevant information about the owner of the property. Henderson, who talked to the agent on the property, discovered it had been sold as a joint venture — a kind of “house flipping,” whereby buyers buy the property, flip it and then flip it again.
Henderson said he had twice heard through the grapevine that the property was owned by Brandt, who by then had ceased to be a salesperson. The property was still listed for sale, though it was listed by a new company. Henderson’s client said she wanted to put $250,000 in. Henderson said the woman had $225,000. He told her, “No,” that Brandt controlled the property, and that there was no way he could help. The woman put up $30,000.
A few days later, a sales rep called Henderson and told him to send the sale proceeds via a wire transfer. He made the transfer; about two weeks later, Brandt sent over $120,000. Henderson was perplexed that he still had not received the rest of the money. “I told the agent on the property the trouble,” he said.
The sales rep said Brandt said he would send the remaining $30,000 in another 20 days. Henderson sent the money, but the sales rep said that was no longer possible. “I told her that he must have a change of heart,” Henderson said.