ustxtxb_obs_1976_01_30_50_00016-00000_000.pdf

Communication A warning Another “Big Scam” that will be in the headlines one of these days is the joint venture scheme to speculate in land. A land broker or promoter has a “fool proofer.” He first goes to a farmer or other land owner \(where development prospects may be good for his land such as $2.000 for $800 an acre land. The land owner must agree that he will only receive interest for the first five to ten years and then the principal will be paid off over another five to ten years. Finally, the land owner must agree that there will be no personal liability on the note but that the land owner will look only to the land for his security. The land owner is greedy and the high per acre value and good interest persuades him. Next, the promoter turns to the doctors, lawyers, and other like suckers with good incomes looking for ventures with tax write-offs as they are an easy mark for the promoter’s siren song that “here is a deal where you can buy into some land and you don’t have to pay on the principal for five to ten years and that interest you can write off on your income tax as an expense item each of those years. Since land is scarce and its value is going to go up before you ever have to put out any money on the principal, we will probably be able to sell the land and you will make a profit on your investment. If something should go sour, you are never liable on the note for the unpaid balance on the land.” Therefore, the investor buys himself a little land here and a little there figuring that if one deal goes sour that the other two will make up for it and Uncle Sam is helping him pay for the thing any how. Thirdly, the promoter in this deal is raking off a 20 percent to 25 percent interest from the top for himself for which he pays nothing except his ability as an “entrepreneur.” The doctors, lawyers and so forth pay the 100 percent value for the 75 percent interest in the land. Certainly, therefore. the promoter wins. Finally, if land does go up, everybody wins except Uncle Sam who has helped fi 16 The Texas Observer nance the deal in an inflated real estate market which must be borne by the consumer. If land doesn’t go up or goes down, another set of factors take over. The land owner finds that he has no strings on the joint venture and is handed his land back, sometimes badly depreciated, because the “sale” turned out to be nothing but a glorified “option” with the purchaser having all the options. Indeed, since one of the options gives the joint venture the right to subdivide the land and sell it off in smaller tracts, the land owner may get back only a part of his land promoter may reap the profits from the sale of the good end and any condemnation monies and other little goodies that may come along. However, at this point, the land owner realizes that he has a very short stick with which to bargain further with the promoter -who now says to him: “If you will extend the option another five years, we will pay the interest this year and, hopefully, will be able to pay the interest in future years. If you don’t we will have to give you your land back.” This poor farmer now sees his land coming back to him and becoming again $800 an acre land or less \(since the recession is $12,000 a year interest payment which came to him. Suddenly he zeroes in on that $12,000 and forgets that now the promoter is pushing those principal payments so far back into the future that he may never live to realize anything from his land except the interest if he can just get that promoter to keep paying it. Also, the doctors, lawyers, merchants and thieves in the joint venture with the promoter fora piddling 1 percent, 2 percent, 3 percent or 4 percent interest may find themselves along the line squeezed out because for every fractional interest that drops out of the venture for some reason, such interest must be picked up by the balance of the joint venture or else find a new man to buy in. In anticipation of this, the promoter \(who is in the bestindeed, often the onlyposition to these fractional interests as they drop out or sell out his 25 percent to a new promoter who in turn defaults and wipes out the limited partners. Sometimes the new promoter then starts over again with the same land owner. You see the possibilities for brother-inlawing between the promoter and land owner also exists if the promoter wants to give it any support. Since these security interests sold to the doctors and others are not policed by the Securities and Exchange Commission or the State Securities Commission, the promoter may, indeed, sell more than the 100 percent interest in this land that he has “bought” from the land owner to out -of -state people who one day will find the promoter gone and their money with him and their share interest reduced. The opportunities for an unscrupulous promoter are huge. Otto B. Mullinax, P.O. Box 47972, Dallas, Tex 75247. IDialogue Want a job? The Texas Regional Office of the United Farm Workers of America, AFL-CIO, is beginning a drive to recruit full-time volunteers to work in its Houston boycott efforts. The United Farm Workers, led by Cesar Chavez, is now preparing to wage an intensive new campaign in cities such as Houston. The campaign will be centered around a boycott of those labels whose companies continue to bargain in bad faith in the negotiations now being conducted in California. Under the new California Agricultural Labor Relations Act, more than 42,000 farm workers have voted for the union of their choice. There has been much irregularity in the election process, but in spite of the problems, farm workers are choosing to be represented by the United Farm Workers by a margin of 2 to 1 against the Teamsters. About 70 UFW election victories have been certified, and this means negotiations can begin between the UFW and the companies involved. But some of the companies are not going to negotiate in good faith. So a new and vigorous boycott is shaping up fast. Boycotts take full-time workers. Houston will be one of the battle grounds to help win contracts for the UFW. Interested parties should call me at 2370173 in Houston. Full-time volunteers receive $5 a week, room and board, and gas for their car if they have one. David Papen, regional director, UFW, P.O. Box 15415, Houston, Tex. 77020. Pen pals I’ve gotten involved in a campaign to find people to correspond with prisoners who have no one to write them, but I have gotten more letters than I can answer and keep up with grad school too. If you could possibly publish this I’d be glad to send names and addresses I have on to anyone who might be interested. They are men in their twenties and thirties, black and white and all letters I’ve gotten are well written; from Ohio to California. Betty Mershon, 1820 N. Ruddell, Apt. 115, Denton, Tex. 76201. Postmaster: If undeliverable, send Form 3579 to The Texas’ Observer, 600 West 7, Austin, TX 78701.