How to Avoid Project Funding Scams

Om May 21st Kurt, a referral partner of the Atlanta area, sent me an email that he had received from the president of a potential funding source.

I was suspect and forwarded the query to Greg, LP Source A, who has 18 years of investment banking experience and 12 years of traditional commercial banking experience:


Have you seen this? Does it appear legitimate?

May 21, 2009
Dear Business Associate,

My name is Bernard B, president of BDI, Inc., and my company represents an affluent Canadian Investor who’s interested in providing capital between $25 million and $1Billion USD/EUROS for large development projects worldwide.

I would like to explain to you what our Investor’s specific criteria requirements are and what is needed to get your project funded.

-The Investor requires the Developer/Principle to put 33% of project cost in Trust over the term of build out, 40% if a letter of credit or bank guarantee is used.

-An Executive Summary and a Proof of Funds of the 33% must be submitted at the same time for the Investors to “review” each project. If a letter of credit or bank guarantee is used, Developer must submit a Letter of Conformation of Readiness to Issue, from bank.

-Once Investors have reviewed Proof of Funds and Executive Summary, a decision will be made whether to move forward. If your project is accepted, a meeting will be set up in Montreal with Investors to discuss, negotiate, and close deal.

-Funding usually occurs within 10 days after due diligence and closing.

-Project build out- The Investor funds 100% of project cost.

-After completion of project, developer funds in Trust are released back to developer, plus any interest procured during this time.

– Investor may negotiate up to 20% of equity in project.

The Executive Summary must include financial forecast to determine the viability of the project. Please do not send us hundreds of pages to review. If you have a web site, please forward us this data because it speeds up our process.

Developer Funds- Our Investor requires the developer to place 33% of total project cost in Trust in an interest bearing account in the developer’s name over the term of build out. The Developer/Principle also maintains signatory rights on account. At no time does the Investor have access or control these funds.

Example- Project cost $100 million; developer puts up $33 million cash, or $40 million dollar letter of credit, or bank guarantee in Trust. Funds must stay in the account over term of build out. The Investor will fund $100 million dollars of project cost based on project schedule during term of build out. Once project is completed, funds in Trust are released back to Developer/Principle.

During meeting in Montreal, Investor and Developer/Principle will determine payout and length of project and negotiate any Investor equity in project. After meeting, Developer will be allowed to conduct complete due diligence regarding investor before moving forward.

This is not a loan, nor is there any interest to pay back. If your project is selected, you’ll just have to place the funds for a pre-determined amount of time in Trust in an interest bearing account in your name. Once the project is completed, these funds go back to the Developer/Principle. The investor may have an agreed upon equity in the project, which will be determined during the meeting in Montreal.

Our company is an agent for the Investor. We are not a broker, we are paid directly from the investors. There are no up front fees or charges. All brokers are responsible for negotiating, contracting and collecting fees from there clients after closing.

Please, only respond if you qualify to these standards regarding your project.

This is a response from our Large Project Source A that arrived Saturday June 6th at 9AM Pacific:



And even if it was real why would anyone place such a large amount in with such a high JV?

You can bring them to my Trust with 10% @100% w/10% JV

Or they can place the 10% invest with us and receive 10% each month.

Who is this?  Do they have a web site I would like to get this to my Secret Service Fraud Task Force?

FYI beware of anything coming from Canada-New Jersey and Georgia.

Joe’s comments:

As a service to you get the offers to me and I will have this seasoned, experienced banker validate the offers.

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