Learn From My Mistake: A 1031 Exchange Gone Wrong.

I hope as many of you read the following and talk about it as possible. 1031 exchange fraud is costing investors millions! We need to stop this now!

Amid all the financial turmoil of the recent months, you may have missed a front page story in the Wall Street Journal about the scandal surrounding one of several Section 1031 Qualified Intermediaries that has recently gone bust. In thiss case, it has managed to tie up more than $100 million of their client’s money.

A qualified intermediary (in case you don’t know) is a company that is licensed to perform 1031 exchanges. As a third-party that holds onto your money during the 180 days of the 1031 exchange process, they have COMPLETE DISCRETION how to use this money, subject only to the agreement you sign with them. For Vesta, it seems this meant unsound investments.

The case of Vesta Strategies is not an isolated incident. I sincerely hope you are never unfortunate enough to discover the heartache of an experience like this.

1031 abuse is a disturbing trend that all real estate investors should be aware of. Staying alert to deception in the market is our best chance to avoid becoming a victim. The next time you consider working with a Qualified Intermediary, please take the effort to find out where your money is really going. And before you give put your money at risk, make sure you are working with a company that deserves your trust.

Thank You,


As I understand the Vesta case, the company owners embezzled or misappropriated their clients’ money for personal or family use. The issue was not unsound investments. Since Vesta only held between $10 million to $30 million of their client’s money at any one time, the $100 million number may be an exaggeration.