No one home

Ike Tiner, a respectable-looking man with gray in his beard, stood while his clients and potential clients took seats around a table at the El Camino Avenue headquarters of Group One Properties in Sacramento.

Those around the table made up a diverse-looking group of business people. A young, married Latino couple sat across from a retirement-aged Japanese lady and next to a clean-cut black man, ex-military. Groups like this, assembled through friendships, religious connections, business contacts and small ads in papers like the PennySaver, were coming together regularly to hear Tiner’s pitch, delivered by PowerPoint presentation and punctuated by the musical theme from Mission Impossible. On the projection screen flashed a message: “Make up to $100,000. … Why rent when you can own?”

Like lots of pitches promoting money-making ventures, this one played to those low on skepticism and high on the American dream: “The wealthy own real estate! Homes, condos, time shares, office buildings, shopping centers, etc. Why don’t you?”

People around the table learned they could take two main roads to financial independence. On the first, for a fee of $495, Group One would teach potential homeowners, known as “buyers,” to find a discounted property that would become their own home-sweet-home with the help of Group One’s investors.

Buyers would be trained to find a house that was selling for approximately 50 percent of its potential value (foreclosures, homes owned by divorcing couples, neglected properties, etc.) and would submit a profile to Group One that included all the important details, such as the seller, the price and any repairs needed. If Group One approved of the profit margin, according to Tiner, its group of investors would make an offer on the property. The investors would put up the down payment and finance repairs, and the buyer could move in and take over the mortgage payments. Between six months and two years later, the home would be refinanced, and Group One would split the added equity with the buyer, which could add up to thousands of dollars for both parties, according to Tiner’s presentation.

That was the pitch for people like the young couple who wanted their own home but probably didn’t have the money to buy one the conventional way.

The second road to financial independence cost an extra $200, according to the presentation. People interested in a real-estate career could pay $695 and learn how to find lots of these properties and use the Group One model to buy low and sell high—with the help of Group One’s investor pool. But “partners,” as the company referred to them, had to realize that real-estate investment could take a while to pay off, Tiner explained. Deals could even fall through. Hence, the other benefit of partnership: Partners could earn commissions by recruiting other buyers and partners. They’d also make commissions from their new recruits’ commissions. Partners wouldn’t be employees, but would be company representatives who set their own hours and worked from their homes.

A third Group One opportunity also was mentioned: becoming an investor. But the presentation didn’t go into detail.

Tiner made the first two opportunities sound relatively simple. If a house potentially worth $100,000 was for sale for $50,000, and $25,000 were put into repairs, then Group One and the partner would have paid $75,000 for a $100,000 house. The remaining $25,000 in equity would be split between the partner or buyer and Group One. Tiner didn’t dwell on it, but the presentation also mentioned that before the equity split with both buyers and partners, Group One would take 30 percent of the equity for “administrative and investors’ fees.”

A few enthusiastic people stayed until the end of Tiner’s presentation, but one of those remaining, a real-estate agent, started asking questions. She sounded skeptical. Her inquiries about titles and mortgages may have gone over the heads of the others, but the questions soured some of the evening’s optimism. Potential buyers and partners began to dribble out of the room. One approached the real-estate agent politely before leaving. I can tell you’re not impressed by the pitch, he said. But then he asked her why not. Didn’t the program sound like it could work?

To a hopeful bunch of potential real-estate moguls, Group One’s program did sound like it could work. In conversations with more than a dozen past partners and buyers, SN&R learned that some bought in because they badly wanted to own their own homes. Others already represented other home-based businesses and wanted to expand and use their established client base to recruit new Group One partners and make recruitment commissions. Still others joined because they looked forward to helping people who couldn’t afford to buy property the conventional way.

Whatever their reasons for joining, interviews revealed their reasons for leaving were pretty similar. Partners thought they were purchasing the opportunity to own their own homes and to work with Group One as partners in the buying and selling of property for profit. Most paid Group One $695 for that opportunity, took the training, submitted profiles for the homes they hoped to own or to buy and sell, and waited for Group One to provide the funding while they continually recruited new partners. Not one of the more than a dozen partners we interviewed got a house through Group One. Nor, to the best of their knowledge, did any of the people they recruited. And those who brought in new recruits said they were still waiting to be paid the majority of their commissions.

In recent months, Group One has shut down its offices on El Camino Avenue in Sacramento and disconnected its business phone. Tiner’s personal phone was disconnected, as well. Past partners, who still get phone calls from Group One representatives wanting to bring them back into the fold, believe that Group One now operates out of borrowed offices and living rooms. But according to these past partners, Tiner left Sacramento for Florida in January. (The Baptist church where Tiner usually teaches Bible-study classes confirmed that he would be gone through the month of February.)

Other principals, including founder Bruce C. Marshall, declined to comment or answer questions.

On the company’s Web site, Group One’s pitch was distilled into a thrilling, if somewhat misleading, proposition: “Why rent when you can buy your home or investment property for just $495! Bad credit OK!” The Web site, which explained elsewhere that the company was selling educational programs, and not properties, for $495, also referred Web-site visitors to a hefty disclaimer that expanded on this one, used in the slide show: “[Group One Properties], LLC does not guarantee that you will be successful at being a Real Estate investor nor do we guarantee you to be successful at securing your personal home. Success in this program, as in others, is an individual matter. We are not Bankers, Real Estate brokers, Attorneys nor Accountants. We are a group of private Real Estate investors.”

According to Tiner’s pitch, this group of real-estate investors was under a parent company, GOI, or Group One International. Tiner’s PowerPoint presentation, narrated by Marshall, claimed that GOI had been started in San Francisco in 1982.

There is a GOI doing business in San Francisco, but it stands for Group One Investments, and the company’s out of Chicago. The only Group One International on the attorney general’s lists of registered California businesses was started in 1982 in Southern California and was dissolved a few years later. SN&R has no reason to believe that the now defunct Group One International had anything to do with Tiner, Marshall or Group One Properties. And when contacted, the founder of the defunct Group One International claimed he’d never heard of any of them.

There may be an explanation for why Group One International is not registered with the attorney general, but Marshall and his lawyer chose not to respond to questions submitted by SN&R, including questions about Group One Properties’ history and where it is registered to do business.

Whatever the history of GOI, the attorney general’s Web site does list a limited liability company named Group One Properties, started by B.C. Marshall in 2002. Most of the partners SN&R interviewed joined Group One in 2003.

Joan Hall, a true believer in Group One, claimed that the company really took off in January and February of last year. The pretty, blond mother of four, who now holds down two jobs in social service, had seen similar real-estate-training programs advertised on cable. But the fact that Group One claimed to have its own investors who were willing to provide a down payment and pay for repairs on distressed properties really excited her.

Joan said she met Tiner in 2001, while they both worked for International Credit Repair (ICR), a company that sold services to repair bad credit. In April 2003, she and her brother-in-law, Michael Hall, quit their regular day jobs to form their own Group One team. They began identifying undervalued properties not just in Sacramento, where the housing market was soaring, but also all over the United States. They also started signing up new members.

“The whole concept is really great,” said Joan recently, sitting in her tidy two-bedroom apartment with her daughter.

Joan estimated that as many as 200 people were partners or buyers with Group One, although that was her most conservative estimate, she said. An old list from the Halls’ Web site shows the names of close to 40 new recruits next to varying dollar amounts. Many people had the word “certified” next to their names, meaning they had completed Group One’s training program.

Partner Liz Jefferson explained that training consisted of viewing a training CD, completing a written test and providing Group One with a completed property profile.

When Joan and many enthusiastic Group One partners joined, they expected to receive $209 for each “partner” they recruited and $150 for each “buyer” (person who just wanted to purchase his or her own home) they recruited. They didn’t expect their commissions to be tied to certification. But within a few weeks of joining, a new rule was implemented that required Joan’s new recruits to get certified within 30 days or Joan would lose her commission. As the Group One Web site now plainly states, “No Certification-No Pay!”

Jefferson joined months after Joan and said that she received commissions on uncertified recruits for a month before she was told that she’d joined under a special promotion and that now her new recruits had 30 days to get certified, or she, too, would lose her commissions.

Later, according to Joan, the rules changed again. A partner could earn commissions for selling a mentoring program with Marshall and Tiner, but only, it turned out, if the partner bought the program first, according to Joan. It was particularly galling that this mentoring program, which cost her $1,495, was never, she claims, fully implemented. The $1,495 was deducted from her commissions, she said, and never refunded.

“I could sure use that $1,495 now,” said Joan.

Though the rules governing commissions are now clearly spelled out on Group One’s Web site, Joan and other partners said the certification process was just one example of how Group One changed the rules once people had joined already.

With the cost of certification and the need to purchase Group One products, along with the cost of PennySaver ads promoting the Halls as Group One representatives and the setting up of an 800 number, Joan estimates that she and Michael put up at least $5,000 of their own money—not counting their time—to try to function as a Group One investment-and-recruitment team.

Joan estimated that she was paid commissions for only about half of her certified recruits. She added that she’d recently received her tax forms from Group One, which reflected that she’d been paid only a total of $909 in commissions for the year.

Marshall and his attorney also declined to answer questions regarding the contracts and agreements they’d made with their associates.

In an effort to get information from the director of operations, we visited Tiner at his house in January. He stood outside his front door, jiggling change in his pockets and answering a few questions. The house he stood in front of was the same one used in his pitch as an example of how Group One works. Though there’s speculation about other Group One principals getting homes, Tiner’s is the only example Group One provided of a house purchased through the company.

Tiner didn’t directly address whether partners received commissions on all their certified recruits. Instead, he defended the company’s practice of tying commissions to certification. He claimed that training was necessary if new recruits were going to work successfully with Group One, so commissions weren’t due unless a new recruit had been trained to use the Group One model correctly.

“Most people get started,” he said, “but don’t finish.”

Regarding the history of Group One, Tiner claimed that Marshall had been in real estate for 20 years and that the Sacramento offices had been shut down so the company could relocate to San Francisco. Tiner provided a personal phone number for future questions, but like all available contact numbers we found for Group One, when we called, the phone number was inactive.

Company reps then identified 777 Campus Commons Road as the next Group One Properties office, but a representative of the office property said by phone that Tiner had requested information about renting space and then didn’t respond when she sent him an agreement about a month ago. As of press time, there is no phone number in Sacramento or the Bay Area for Group One Properties or Group One International.

Though Group One investors never purchased any of the approximately 50 houses the Halls said they profiled, Joan did say that Tiner had told her that 13 of their properties had made it to escrow. If that is correct, it means that Group One’s offers were accepted by the sellers and that the sales were on their way to closing. Joan said there were various reasons given for why none of the sales had closed, but she seemed vague on the details. Maybe the properties needed too many repairs, she said. Joan said she didn’t know how to check on the deals’ progress herself but heard of them falling through from Tiner.

After the initial interview, Tiner was not available for comment. Repeated visits to his residence found no one at home.

Joan believes that Group One was trying to keep its promise of buying homes and splitting the equity with its partners and that the rules changed a few times because the program was young and still under development, which is why commissions weren’t paid and the mentoring program was never fully implemented.

Her brother-in-law is more skeptical. “We had the biggest organization,” said Michael. “No one ever got a house.”

Carl Dexter buys and sells foreclosures and said he assisted Group One principals for a few months in 2003. He asserts that Group One did make offers on homes, but after submitting an offer, the company would just keep extending the purchasing process until eventually deals would just dissolve, often with lenders irritated at the company for failing to return their phone calls.

“I don’t think they had the money,” said Dexter, who added that some of the out-of-state homes identified by Group One partners could have been picked up with an initial investment of a few thousand dollars apiece.

Neither Marshall nor the company’s lawyer agreed to answer questions regarding whether anyone in Sacramento ever got a home through a partnership with Group One Properties.

Along with their own unsuccessful property hunt, the Halls had new members to train.

“The people who came to us,” said Joan, “were attracted to paying $695” to get a house and a career in real estate. But, she said, many of them were undereducated or computer illiterate or without resources like transportation. “They had not the slightest clue,” she said. “Mike and I ended up doing all the work.”

Group One set up computers in the El Camino Avenue office for those who didn’t have access to an office, phone or computer. But Joan claimed that many of her new recruits wanted the benefits without doing any of the work: “I’ve got a map, a flashlight and a shovel,” she said, speaking metaphorically. “But I’m not going to strap you to my back and show you the treasure.”

One couple the Halls brought to Group One did, eventually, buy a home, but that was almost in spite of Group One. “They pointed us to some lenders who flaked out,” said Julie Garcia, who paid Group One $695 for a partnership. Eventually, one of the lenders promoted by Group One pointed the Garcias to a different lender, who did help them purchase their home.

The Garcias chose not to bring in new partners, said Julie, because they were disappointed with the Group One program. Julie also said that the company didn’t make offers on any of the eight to 10 properties the couple profiled.

“They made [real-estate investment] sound a lot easier than it was,” said Julie.

The couple still hopes to buy and sell real estate, just not with Group One.

Because a number of partners and buyers said that neither they nor their recruits got houses through Group One, it appeared that the company may have survived through new recruits more often than through property sales. To gain new recruits, Group One employed a multilevel commission structure. Partner A got a commission for recruiting partner B and a smaller commission if B recruited C and if C recruited D, but this “downline” only went three levels deep. If D recruited E, A did not benefit.

Multilevel marketing programs like Group One’s are legal as long as commissions are tied to product sales, such as Group One’s training programs. However, if a company really is just offering person A a commission for accepting money from person B, purely so that B can accept money from more new recruits without selling them anything of value, that comes under the state’s definition of an “endless chain” or pyramid scheme. By this strict legal definition, Group One doesn’t appear to qualify as a pyramid, but one partner, Jefferson, claimed that partners were always encouraged to concentrate primarily on bringing in new recruits.

“New partners will feed you,” Jefferson remembers Tiner saying. “House profiles will eat you.”

Those who truly believe in the concept of pyramids, said Herschel Elkins, senior assistant attorney general for California, tend to believe in every pyramid that comes along. In some ways, those who believe they’ll make millions from home-based business ventures seem to be similarly faithful to the model, perhaps because they create their own networks of peers by recruiting and being recruited into various business ventures. Many of the people with whom SN&R talked came to Group One through their earlier association with ICR, the credit-repair service that introduced Joan to Tiner. Others were connected by previous business connections or by their faith in Christianity. Some even met in church.

An estate planner named Michie Lewis recently had met and been impressed by a man named Victor Cassells, who called himself a Christian and a minister. Lewis was fond of Cassells, and Cassells was enthusiastic about Group One.

As a test of Group One’s program, and as a favor to Cassells, when Lewis’ life hit a difficult patch, she chose to sell her own home to Group One’s group of investors.

“We will make an offer on your house in 48 hours,” the Group One presentation had promised, “guaranteed.”

Lewis’ husband was ill, and Lewis said she was fighting a quickly growing cancer that left her with a scratchy voice and scar tissue along her jaw. Previously a trained fashion designer and teacher who had taken up business after coming to the United States from Japan, Lewis said her experience and her business savvy kept her from joining Group One immediately. But her health was poor, and the couple needed a smaller house, a simpler life and to get out from under their mortgage.

For a property to fit Group One’s qualifications, it had to be available for 50 percent of its potential value, according to Tiner’s pitch. Lewis agreed to sell her home for $15,000 more than what the couple owed on the mortgage, for a total selling price of $135,065.

Lewis waited the requisite 30 days for Group One to buy the house. At the end of 30 days, the company’s representative asked for an extension, and Lewis signed a second agreement, giving the company another 30 days. This time, the contract quoted the price as $148,500, though the contract did not explain where the extra profit would go.

All this time, the Lewises were finding it harder and harder to make ends meet. “I think [Tiner] was just buying time,” said Lewis. “I don’t know if there are investors.”

After waiting for 60 days, Lewis came to the conclusion that Group One’s investors were not going to buy her house. She wrote a letter breaking off her association with the company and turned the property over to a traditional real-estate agent; he tripled her expected profit, leaving the Lewises with $47,000 after selling her house in four days, Lewis said.

When Group One lost the sale of Lewis’ house, Cassells said he lost the $4,000 commission he was expecting. Cassells, who has remained friends with Lewis, has stopped working with Group One since then. Like other partners, he gained faith in the program this summer after his first commission check arrived. He began making a lot of fliers and recruiting heavily. But when his second check, which he claimed should have been for $419, didn’t arrive, Cassells called Group One and was told that the check was in the mail. Many months later, that check still hasn’t arrived, said Cassells, and now he feels awful about recruiting new people into a program that didn’t pay off for him or for them.

As a Christian, Lewis doesn’t like to pass blame on to anyone, but she feels that the program appealed specifically to vulnerable people, including herself and her husband.

Michael Hall said the same thing: “I feel they preyed on low-income people, which I am now.”

Though partners we interviewed said they were told that information about Group One investors and their investments were proprietary pieces of information that couldn’t be revealed, SN&R did identify one investor: a female employee who worked with Group One throughout the summer of 2003 (she preferred her name not be used). The woman said she gave $25,000 to company principals for investment in a development project in Florida.

The project, she said, consisted of renovating and renting out a couple of duplexes. She invested $25,000 in order to earn 25 percent of the future rent. According to the former Group One employee, the properties were ready to rent months ago. She said she saw pictures but has yet to see a dollar of income. When she asked for her money back, her request was denied, she said.

“I’ve lost my 401(k),” said the woman.

The former employee took her concerns to the Sacramento County Sheriff’s Department. Al Henschel, a detective in the Hi-Tech Crimes Task Force who has copies of her contracts, said he’s just begun looking into the woman’s complaint.

Asked what convinced her to invest, the woman said of Marshall and Tiner, “I trusted these guys 100 percent. … They were both telling me they were men of God.”

When it wasn’t religion that held the network of marketers together, it was shared businesses. Numerous partners already managed other home-based businesses, and they were born networkers.

K.C. Brandt, an effusive redhead who now works out of her trailer, calls herself a “telemarketer extraordinaire.” She remembers when the El Camino Avenue offices were run by ICR, which recently changed its name to Federal Financial; it had been the subject of a series of class-action lawsuits and accusations of unfair and deceptive business practices, as reported by ABC News in 2002.

Brandt said Tiner called her in 2002 to say he had a marketing opportunity for her. In meetings, she agreed to start a telemarketing program for Group One Properties.

“I had to fight for my paycheck,” said Brandt, who said she was given a $695 partnership with Group One as partial payment. She brought in other ICR reps and clients, and when they didn’t get houses and started complaining of missing commission checks, she felt her own credibility slide.

“I feel about this big about it,” said Brandt, holding her thumb and forefinger an inch apart.

Brandt called the Better Business Bureau to see if she could get some help in getting the money she felt she was owed. As of press time, Brandt’s contact with the bureau appears to be the only official consumer complaint lodged against Group One. Other partners said they have been convinced that as a limited liability company, Group One is somehow immune to any legal action.

In Brandt’s case, she said Group One chose to resolve the issue by offering her $400. She accepted, though she now claims that the $400 was a small part of what she’s owed.

For partners who made commissions, tax forms began arriving from Group One at the beginning of the year. Of the $2,245 Brandt said she made from Group One, $500 was for working in the office for a month as a telemarketer, and $400 was for dropping her complaint to the Better Business Bureau, leaving approximately $1,350 in total paid commissions for the year. “I was the best marketer they had,” said Brandt.

“You know what else really bugs me,” she added later, contemplating Group One’s partnership program, “it would work! Can’t you see that it would work?”

The Better Business Bureau for Northern California lists local businesses when people begin requesting information about them. The bureau listed Group One on its Web site, but the page says simply that the

company hasn’t yet responded to requests for basic information. A bureau representative said that the most recent requests were made in December 2003.

Though the Better Business Bureau helped in getting unpaid funds to Brandt, there’s no regulatory agency in California in charge of investigating real-estate investment/education companies. The California Department of Real Estate concentrates on investigating licensed agents and brokers. California’s Department of Consumer Affairs can take what it calls “non-jurisdictional” complaints, but it, too, concentrates on its licensees in automotive repair, locksmithing, cosmetology, etc. The sheriff’s office does pass on investigated complaints to the district attorney’s office, however, and the attorney general’s office also investigates consumer complaints.

Though Brandt stopped working with the program in the fall, Group One apparently now wants her back. “They’re trying to romance and dance me back,” she said, but like other ex-associates, she and Group One have not come to an agreement.

Jefferson is another woman, like Brandt, who acts as a sales rep for home-based businesses and who joined Group One with the idea that her other business ventures would provide leads that could mean big Group One commissions.

Jefferson, a Polish woman with a velvety accent, seems like a bright, no-nonsense thinker, but that didn’t protect her from spending $695 in hopes of making a fortune in real estate.

After losing faith in Group One, Jefferson is still attracted to ventures such as a training program on how to freelance-write marketing materials, and she has gone to seminars on providing Web content. She even was looking into marketing pre-paid money cards to her potential online customers who might want to keep their naughtier transactions private.

When asked for the contract she signed with Group One, Jefferson provided a copy of an online printout that laid out the obligations that any new Group One partner was expected to meet, but it held the company to very few rules, including any commission structure. “It is your responsibility to keep up with the policies and procedures as changes come about,” stated the online contract. Jefferson said she never had access to a home computer, so it was hard to keep up with changing rules on the Web site.

The company’s policy and procedure Web pages are long and detailed, and because they exist online, and few people we interviewed printed them out or kept copies, there’s little evidence of how the program has been altered over the months, which makes it even harder to determine what partners actually paid for when they handed over $695.

Jefferson continues to meet with representatives from Group One when they ask, but now she sees the potential for losing money in every offer the company makes—none of which includes her actually being paid past commissions she claims are owed.

In a recent meeting with a Group One rep, Jefferson was asked what would improve the program. Besides suggesting the company pay past commissions, Jefferson said she offered idea after idea. One of the most interesting was her assertion that Group One should change its name and start over again. That’s how corporate America does it, she said, laughing with the Group One rep.

The company may not take Jefferson up on her suggestion, but just in case, consumers might want to keep an eye out for any company asking: “Why rent when you can buy your home or investment property for just $495!”