00:00.870 --> 00:02.640 Johny Fernandez: So for the final conversation today we're 00:02.640 --> 00:06.540 gonna to talk about Brendan Ross. This is the case that 00:06.540 --> 00:09.690 Sean, you've been following for the last three years, three, 00:09.690 --> 00:13.170 four years. This is something that I am just now following up 00:13.170 --> 00:18.690 on. So I don't have the other minute details like you may 00:18.690 --> 00:22.800 have. But to remind the people watching about Brendan Ross, who 00:22.800 --> 00:23.910 was Brendan Ross? 00:24.930 --> 00:27.840 Sean Murray: He was the founder and CEO of a hedge fund called 00:27.840 --> 00:29.220 direct lending investments. 00:29.340 --> 00:32.910 Johny Fernandez: Okay. So this came out a couple years ago, he 00:32.970 --> 00:36.510 he's now you know, he's, there's a couple of complaints filed 00:36.510 --> 00:40.830 about him defrauding investors. So we know that back in 2017, 00:41.190 --> 00:43.410 his firm had over a billion dollars in assets under 00:43.410 --> 00:46.800 management, he had directed it for them to be distributed a 00:46.800 --> 00:51.360 certain way. And you can take it away from there to see fully 00:51.360 --> 00:54.150 understand how it was distributed and who he lied to. 00:54.600 --> 00:57.660 Sean Murray: Okay. Yeah. So I'll keep you I'll keep you updated 00:57.660 --> 01:00.630 on what happened. So it's go ahead. You got some you got 01:00.630 --> 01:02.550 something you want to share? Alright, chime in Johnny. 01:02.580 --> 01:03.360 Johny Fernandez: All right, good. Now you first 01:04.410 --> 01:07.320 Sean Murray: No me first. You want it you want to throw 01:07.320 --> 01:07.800 something out? 01:07.800 --> 01:08.430 Unknown: You want it yet? Like, 01:08.550 --> 01:09.420 I got like a fact? 01:09.480 --> 01:11.400 Johny Fernandez: No, because I want I want I like to follow the 01:11.400 --> 01:14.430 timeline. So 2017 has happened. And we're talking about 2019 01:14.430 --> 01:16.380 When he resigned. Okay, that was about 2020. 01:16.390 --> 01:18.610 Sean Murray: So I guess you could say, I don't know if 01:18.610 --> 01:22.720 there's anything particularly about 2017. But he was a very 01:22.720 --> 01:25.690 well known hedge fund operator in the alternative lending 01:25.690 --> 01:29.860 space. He did provide his firm, his firm did provide capital to 01:30.280 --> 01:33.610 online small business lenders, peer to peer lenders, he was 01:33.610 --> 01:36.820 kind of the his firm is kind of the go to place if you were an 01:36.820 --> 01:39.790 onlines, small business, finance, online consumer 01:39.790 --> 01:44.770 finance. And, you know, they were at all the shows. I saw 01:45.220 --> 01:50.500 Brandon speak at some conferences, too. And then 2019 01:50.740 --> 01:53.890 headline comes out saying he's resigning, like all of a sudden, 01:53.920 --> 01:57.790 something had happened, he resigned. And then within like 01:57.790 --> 02:01.360 days scandal broke, that he was involved, or the company was 02:01.360 --> 02:05.320 involved in some type of mismanagement of investor funds. 02:05.470 --> 02:07.240 And it just kind of spiraled from there. 02:07.330 --> 02:10.210 Johny Fernandez: So in 2019, from what my understanding from 02:10.240 --> 02:14.440 from my reading it was, so he resigned. And then after that, 02:14.470 --> 02:17.470 there was an SEC filed a civil complaint for him 02:17.500 --> 02:19.300 Sean Murray: Yeah, so he was sued by the Securities and 02:19.300 --> 02:22.900 Exchange Commission. The result? Oh, no, there were various types 02:22.900 --> 02:27.190 of wrong wrongdoing, basically, you know, misstating things to 02:27.190 --> 02:35.350 investors, supposedly, there was some collaboration on, you know, 02:35.410 --> 02:38.650 cooking the books, so to speak, so that investor returns 02:38.650 --> 02:41.770 appeared to be better than what they actually were. And then 02:41.770 --> 02:46.750 also that funds were invested in a way that were counter to what 02:46.750 --> 02:49.840 he was telling investors that supposedly everything was 02:49.840 --> 02:52.960 supposed to go into alternative lending. But he had invested a 02:52.960 --> 02:56.560 significant significant amount of the money into what appears 02:56.560 --> 03:00.850 to be international telecom companies, for which a lot of 03:00.850 --> 03:03.790 that money seemed to have been lost and was no longer 03:03.790 --> 03:06.010 recoverable, we're talking about hundreds of millions of dollars 03:06.010 --> 03:08.980 of investor money, all of a sudden was lost in these really 03:08.980 --> 03:13.900 strange, seemingly undisclosed investments. And between that, 03:14.050 --> 03:18.040 and the the kind of the funny reporting that was, that was 03:18.040 --> 03:22.690 coming out. He was eventually, you know, arrested by the FBI. 03:22.720 --> 03:25.300 So there was there were two things he was sued by the SEC. 03:25.660 --> 03:29.530 And then criminal charges were brought against him as well. And 03:29.920 --> 03:32.140 the criminal charges are, you know, we're a few years ago, the 03:32.140 --> 03:36.280 SEC. Claim case was three years ago in 2019. 03:36.570 --> 03:39.000 Johny Fernandez: Okay, so some of the charges 10 counts of wire 03:39.000 --> 03:41.970 fraud based on the scheme that he executed back in 2013. And 03:41.970 --> 03:45.990 2019. He obviously defrauded investors and funds managed by 03:45.990 --> 03:52.980 his company. So at this point, Sean, we brought him up. Where 03:52.980 --> 03:55.110 is he? What's going on now? Yeah. 03:55.750 --> 03:58.300 Sean Murray: So I think what happens is, you hear the big 03:58.300 --> 04:01.900 headlines, arrested SEC, you know, FBI, blah, blah, blah, 04:01.900 --> 04:05.650 blah. And then the years go by, and it comes down to whatever 04:05.650 --> 04:09.190 happened with Yeah, you know, so and so. And it just kind of gets 04:09.220 --> 04:12.040 tossed by the wayside. And no one knows what's going on. And 04:12.040 --> 04:15.040 this was a very, very, very significant development, when it 04:15.040 --> 04:18.580 was all taking place. And obviously, you know, COVID, and 04:18.580 --> 04:21.010 other things have just kind of completely taken over the 04:21.010 --> 04:23.560 message. Right. So it seems like we've all forgotten about it. 04:23.890 --> 04:29.470 But the criminal case is still in the process. Yeah. And that's 04:29.470 --> 04:33.460 why, you know, that's why we're bringing it up. Brendon Ross is 04:33.490 --> 04:38.440 out on bail, okay. And his trial was postponed, I think, to July 04:38.470 --> 04:45.160 26 of this year. So he has still pled not guilty to the charges. 04:45.190 --> 04:49.000 It's very important that we that we that we emphasize that he has 04:49.000 --> 04:52.870 pled not guilty. His trial is scheduled for July 26. So if 04:52.870 --> 04:55.120 you're wondering whatever happened to Brendan Ross direct 04:55.120 --> 04:57.640 lending investments, the big hedge fund operator, but 04:57.640 --> 05:00.100 everyone seemed to know whether they used him or not. He was on 05:00.100 --> 05:04.300 CNBC as a guests, we quoted him in some of our stories. Yeah, I 05:04.300 --> 05:06.370 have to I have to tell you that it's up there on our site 05:06.370 --> 05:09.460 already. Yeah. Anyone can see it. We quoted him in some of our 05:09.460 --> 05:12.910 stories. He was a guest on CNBC spoke at the conferences, and a 05:12.910 --> 05:15.790 lot of people borrow it from him. And his trial is scheduled 05:15.790 --> 05:19.480 for July, July. So that's what happened with Brendan Ross. I 05:19.480 --> 05:21.670 have not spoken with him personally, since all this had 05:21.670 --> 05:24.160 happened. We've written you know, a few follow ups just kind 05:24.160 --> 05:27.430 of giving people like a rundown of what you know, here's what 05:27.430 --> 05:30.460 happened. Here's what happened. Here's what happened. But it 05:30.460 --> 05:34.180 seems like a lot of a lot of the information that people are 05:34.180 --> 05:37.450 seeking is still not, has still not been revealed that, in fact, 05:37.450 --> 05:40.060 the whole telecom thing I was just talking about before. Yeah, 05:40.720 --> 05:44.410 that never really got fully flushed out. I tried to look 05:44.410 --> 05:47.230 into a lot of that myself. And there were just a lot of 05:47.230 --> 05:51.880 confusing links, in that these investments appeared to be in I 05:51.880 --> 05:55.960 don't know, you know, businesses that were hard to find any 05:55.960 --> 05:59.920 information about. Yeah, all over the world. So I don't know 05:59.920 --> 06:01.840 what happened to the money. There were people out there that 06:01.840 --> 06:04.750 were hurt and financially impacted. Yeah, some very upset 06:04.750 --> 06:08.560 people. He was kind of a face for alternative lending for a 06:08.560 --> 06:11.770 while. And I guess we'll see what happens if the trial will 06:11.770 --> 06:14.020 take place, or if there will be some type of, you know, 06:14.680 --> 06:15.520 settlement. 06:15.930 --> 06:18.570 Johny Fernandez: So the one question I have for you, after 06:18.570 --> 06:21.840 talking about someone like Brendan Ross, is when something 06:21.840 --> 06:26.730 like this happens, you know, you know, a face to the alternative 06:26.730 --> 06:32.160 finance industry? What when things like this go down? What 06:32.160 --> 06:33.720 does it do to our industry? 06:34.020 --> 06:36.990 Sean Murray: It's terrible. Oh, it's really, really bad. Yeah. 06:37.170 --> 06:39.780 For those who did not borrow from him or have any business 06:39.780 --> 06:43.800 with him, it still impacted their business. Yeah. Because it 06:43.800 --> 06:45.990 creates a bad look right 06:46.140 --> 06:49.020 Johny Fernandez: A bad look, not only for people in our industry, 06:49.020 --> 06:50.010 but also for the out 06:50.010 --> 06:54.050 Sean Murray: Exactly. Yeah, more so for the outside than the 06:54.050 --> 06:56.210 inside. Because if you're looking to invest in the 06:56.210 --> 07:00.620 industry, and you see a big face, who's attached to it in 07:00.620 --> 07:03.380 some way, and they're being accused of all these, all these 07:03.380 --> 07:06.830 things, you're saying, Hmm, you know, is what I'm going to see 07:06.830 --> 07:09.710 is it exactly what it appears to be. Or there's something else 07:09.710 --> 07:14.330 going on here. And so yeah, it did, it did kind of, it really 07:14.330 --> 07:19.010 did hurt the kind of the value of of everything, because he 07:19.010 --> 07:20.810 wasn't not just business lending, he was consumer 07:20.810 --> 07:23.000 lending. And he was alternative lending, he was FinTech, he 07:23.000 --> 07:26.090 really made it a point to say, this is what I'm all about. He 07:26.090 --> 07:29.180 had all these theories for why it was a good investment. One of 07:29.180 --> 07:31.760 his big theories for small business lending, and MCA was 07:31.760 --> 07:34.430 that he would go out to conferences and say, small 07:34.430 --> 07:38.390 businesses are overpaying for credit. He's like, That's why it 07:38.390 --> 07:41.720 makes so much sense. Because if the if they're going to go and 07:41.720 --> 07:45.050 get a loan from the SBA, there's gonna be a few percentage 07:45.050 --> 07:48.380 points, right. But if they go to the online, small business 07:48.380 --> 07:51.260 lender it's going to be significantly more, there's all 07:51.260 --> 07:55.040 this margin. And that's where they're gonna to make big 07:55.040 --> 07:58.940 returns for investors. And I think people really listened to 07:58.940 --> 08:02.990 that believed it soaked it in, and I guess, ended up not being 08:02.990 --> 08:03.680 completely true. 08:03.710 --> 08:06.920 Johny Fernandez: Yeah. So for someone watching this right now, 08:07.130 --> 08:11.870 and they are doing similar tricks. You know, they're trying 08:11.870 --> 08:15.260 to like, you know, they're being wise and they're like, oh, like, 08:15.260 --> 08:17.720 you know, I'm just gonna do this here, do this. They're 08:17.720 --> 08:19.640 Sean Murray: a little a little fraud here. A little fraud here 08:19.640 --> 08:21.680 came here. And they know what's 08:21.680 --> 08:23.450 Johny Fernandez: Wrong, but they're like, I'm not gonna get 08:23.450 --> 08:25.340 caught. What would you say to that guy? 08:26.310 --> 08:28.650 Sean Murray: I mean, my advice to anyone is, you know, always 08:28.650 --> 08:32.400 do everything the right way. It doesn't matter how small you 08:32.400 --> 08:34.860 are. There's some people who go with the with the impression 08:34.860 --> 08:37.800 that oh, you know, I'm small, nobody's gonna care about me. 08:37.920 --> 08:41.130 Yeah, make a couple million, you know, be off the radar. It's 08:41.160 --> 08:45.060 never gonna come back on me. I think it will. I think. I think 08:45.060 --> 08:47.880 what we're gonna see in a couple other cases that are happening 08:47.880 --> 08:50.610 right now, unrelated to the one we just talked about, is that 08:50.610 --> 08:55.380 someone else got in trouble. And now you have all these people 08:55.380 --> 08:58.410 who are saying, you know, I'm too small for anyone to ever 08:58.410 --> 09:02.130 care about my little scheme. And the person that they kind of had 09:02.130 --> 09:05.400 a business relationship got in trouble for something else, is 09:05.400 --> 09:08.850 now desperate to turn all the other people around them in for 09:08.850 --> 09:12.990 something as bargaining power, right? And this person saying, 09:13.380 --> 09:16.710 Oh, no, yeah, you don't I mean, yeah, this person knows what I 09:16.710 --> 09:19.290 was doing. Yeah. Even though it's small. Now. They're trying 09:19.290 --> 09:22.590 to save themselves. I'm going to get found out so I think the 09:22.590 --> 09:25.680 lesson here is you're never too small. Always do things the 09:25.680 --> 09:28.530 right way. It's the best way to do business. There's no reason 09:28.530 --> 09:31.830 to do you know, to, to, you know, cut corners or do anything 09:31.830 --> 09:32.490 illegal ever. 09:32.550 --> 09:33.750 Johny Fernandez: Yeah, that's good advice.