1 00:00:00.870 --> 00:00:02.640 Johny Fernandez: So for the final conversation today we're 2 00:00:02.640 --> 00:00:06.540 gonna to talk about Brendan Ross. This is the case that 3 00:00:06.540 --> 00:00:09.690 Sean, you've been following for the last three years, three, 4 00:00:09.690 --> 00:00:13.170 four years. This is something that I am just now following up 5 00:00:13.170 --> 00:00:18.690 on. So I don't have the other minute details like you may 6 00:00:18.690 --> 00:00:22.800 have. But to remind the people watching about Brendan Ross, who 7 00:00:22.800 --> 00:00:23.910 was Brendan Ross? 8 00:00:24.930 --> 00:00:27.840 Sean Murray: He was the founder and CEO of a hedge fund called 9 00:00:27.840 --> 00:00:29.220 direct lending investments. 10 00:00:29.340 --> 00:00:32.910 Johny Fernandez: Okay. So this came out a couple years ago, he 11 00:00:32.970 --> 00:00:36.510 he's now you know, he's, there's a couple of complaints filed 12 00:00:36.510 --> 00:00:40.830 about him defrauding investors. So we know that back in 2017, 13 00:00:41.190 --> 00:00:43.410 his firm had over a billion dollars in assets under 14 00:00:43.410 --> 00:00:46.800 management, he had directed it for them to be distributed a 15 00:00:46.800 --> 00:00:51.360 certain way. And you can take it away from there to see fully 16 00:00:51.360 --> 00:00:54.150 understand how it was distributed and who he lied to. 17 00:00:54.600 --> 00:00:57.660 Sean Murray: Okay. Yeah. So I'll keep you I'll keep you updated 18 00:00:57.660 --> 00:01:00.630 on what happened. So it's go ahead. You got some you got 19 00:01:00.630 --> 00:01:02.550 something you want to share? Alright, chime in Johnny. 20 00:01:02.580 --> 00:01:03.360 Johny Fernandez: All right, good. Now you first 21 00:01:04.410 --> 00:01:07.320 Sean Murray: No me first. You want it you want to throw 22 00:01:07.320 --> 00:01:07.800 something out? 23 00:01:07.800 --> 00:01:08.430 Unknown: You want it yet? Like, 24 00:01:08.550 --> 00:01:09.420 I got like a fact? 25 00:01:09.480 --> 00:01:11.400 Johny Fernandez: No, because I want I want I like to follow the 26 00:01:11.400 --> 00:01:14.430 timeline. So 2017 has happened. And we're talking about 2019 27 00:01:14.430 --> 00:01:16.380 When he resigned. Okay, that was about 2020. 28 00:01:16.390 --> 00:01:18.610 Sean Murray: So I guess you could say, I don't know if 29 00:01:18.610 --> 00:01:22.720 there's anything particularly about 2017. But he was a very 30 00:01:22.720 --> 00:01:25.690 well known hedge fund operator in the alternative lending 31 00:01:25.690 --> 00:01:29.860 space. He did provide his firm, his firm did provide capital to 32 00:01:30.280 --> 00:01:33.610 online small business lenders, peer to peer lenders, he was 33 00:01:33.610 --> 00:01:36.820 kind of the his firm is kind of the go to place if you were an 34 00:01:36.820 --> 00:01:39.790 onlines, small business, finance, online consumer 35 00:01:39.790 --> 00:01:44.770 finance. And, you know, they were at all the shows. I saw 36 00:01:45.220 --> 00:01:50.500 Brandon speak at some conferences, too. And then 2019 37 00:01:50.740 --> 00:01:53.890 headline comes out saying he's resigning, like all of a sudden, 38 00:01:53.920 --> 00:01:57.790 something had happened, he resigned. And then within like 39 00:01:57.790 --> 00:02:01.360 days scandal broke, that he was involved, or the company was 40 00:02:01.360 --> 00:02:05.320 involved in some type of mismanagement of investor funds. 41 00:02:05.470 --> 00:02:07.240 And it just kind of spiraled from there. 42 00:02:07.330 --> 00:02:10.210 Johny Fernandez: So in 2019, from what my understanding from 43 00:02:10.240 --> 00:02:14.440 from my reading it was, so he resigned. And then after that, 44 00:02:14.470 --> 00:02:17.470 there was an SEC filed a civil complaint for him 45 00:02:17.500 --> 00:02:19.300 Sean Murray: Yeah, so he was sued by the Securities and 46 00:02:19.300 --> 00:02:22.900 Exchange Commission. The result? Oh, no, there were various types 47 00:02:22.900 --> 00:02:27.190 of wrong wrongdoing, basically, you know, misstating things to 48 00:02:27.190 --> 00:02:35.350 investors, supposedly, there was some collaboration on, you know, 49 00:02:35.410 --> 00:02:38.650 cooking the books, so to speak, so that investor returns 50 00:02:38.650 --> 00:02:41.770 appeared to be better than what they actually were. And then 51 00:02:41.770 --> 00:02:46.750 also that funds were invested in a way that were counter to what 52 00:02:46.750 --> 00:02:49.840 he was telling investors that supposedly everything was 53 00:02:49.840 --> 00:02:52.960 supposed to go into alternative lending. But he had invested a 54 00:02:52.960 --> 00:02:56.560 significant significant amount of the money into what appears 55 00:02:56.560 --> 00:03:00.850 to be international telecom companies, for which a lot of 56 00:03:00.850 --> 00:03:03.790 that money seemed to have been lost and was no longer 57 00:03:03.790 --> 00:03:06.010 recoverable, we're talking about hundreds of millions of dollars 58 00:03:06.010 --> 00:03:08.980 of investor money, all of a sudden was lost in these really 59 00:03:08.980 --> 00:03:13.900 strange, seemingly undisclosed investments. And between that, 60 00:03:14.050 --> 00:03:18.040 and the the kind of the funny reporting that was, that was 61 00:03:18.040 --> 00:03:22.690 coming out. He was eventually, you know, arrested by the FBI. 62 00:03:22.720 --> 00:03:25.300 So there was there were two things he was sued by the SEC. 63 00:03:25.660 --> 00:03:29.530 And then criminal charges were brought against him as well. And 64 00:03:29.920 --> 00:03:32.140 the criminal charges are, you know, we're a few years ago, the 65 00:03:32.140 --> 00:03:36.280 SEC. Claim case was three years ago in 2019. 66 00:03:36.570 --> 00:03:39.000 Johny Fernandez: Okay, so some of the charges 10 counts of wire 67 00:03:39.000 --> 00:03:41.970 fraud based on the scheme that he executed back in 2013. And 68 00:03:41.970 --> 00:03:45.990 2019. He obviously defrauded investors and funds managed by 69 00:03:45.990 --> 00:03:52.980 his company. So at this point, Sean, we brought him up. Where 70 00:03:52.980 --> 00:03:55.110 is he? What's going on now? Yeah. 71 00:03:55.750 --> 00:03:58.300 Sean Murray: So I think what happens is, you hear the big 72 00:03:58.300 --> 00:04:01.900 headlines, arrested SEC, you know, FBI, blah, blah, blah, 73 00:04:01.900 --> 00:04:05.650 blah. And then the years go by, and it comes down to whatever 74 00:04:05.650 --> 00:04:09.190 happened with Yeah, you know, so and so. And it just kind of gets 75 00:04:09.220 --> 00:04:12.040 tossed by the wayside. And no one knows what's going on. And 76 00:04:12.040 --> 00:04:15.040 this was a very, very, very significant development, when it 77 00:04:15.040 --> 00:04:18.580 was all taking place. And obviously, you know, COVID, and 78 00:04:18.580 --> 00:04:21.010 other things have just kind of completely taken over the 79 00:04:21.010 --> 00:04:23.560 message. Right. So it seems like we've all forgotten about it. 80 00:04:23.890 --> 00:04:29.470 But the criminal case is still in the process. Yeah. And that's 81 00:04:29.470 --> 00:04:33.460 why, you know, that's why we're bringing it up. Brendon Ross is 82 00:04:33.490 --> 00:04:38.440 out on bail, okay. And his trial was postponed, I think, to July 83 00:04:38.470 --> 00:04:45.160 26 of this year. So he has still pled not guilty to the charges. 84 00:04:45.190 --> 00:04:49.000 It's very important that we that we that we emphasize that he has 85 00:04:49.000 --> 00:04:52.870 pled not guilty. His trial is scheduled for July 26. So if 86 00:04:52.870 --> 00:04:55.120 you're wondering whatever happened to Brendan Ross direct 87 00:04:55.120 --> 00:04:57.640 lending investments, the big hedge fund operator, but 88 00:04:57.640 --> 00:05:00.100 everyone seemed to know whether they used him or not. He was on 89 00:05:00.100 --> 00:05:04.300 CNBC as a guests, we quoted him in some of our stories. Yeah, I 90 00:05:04.300 --> 00:05:06.370 have to I have to tell you that it's up there on our site 91 00:05:06.370 --> 00:05:09.460 already. Yeah. Anyone can see it. We quoted him in some of our 92 00:05:09.460 --> 00:05:12.910 stories. He was a guest on CNBC spoke at the conferences, and a 93 00:05:12.910 --> 00:05:15.790 lot of people borrow it from him. And his trial is scheduled 94 00:05:15.790 --> 00:05:19.480 for July, July. So that's what happened with Brendan Ross. I 95 00:05:19.480 --> 00:05:21.670 have not spoken with him personally, since all this had 96 00:05:21.670 --> 00:05:24.160 happened. We've written you know, a few follow ups just kind 97 00:05:24.160 --> 00:05:27.430 of giving people like a rundown of what you know, here's what 98 00:05:27.430 --> 00:05:30.460 happened. Here's what happened. Here's what happened. But it 99 00:05:30.460 --> 00:05:34.180 seems like a lot of a lot of the information that people are 100 00:05:34.180 --> 00:05:37.450 seeking is still not, has still not been revealed that, in fact, 101 00:05:37.450 --> 00:05:40.060 the whole telecom thing I was just talking about before. Yeah, 102 00:05:40.720 --> 00:05:44.410 that never really got fully flushed out. I tried to look 103 00:05:44.410 --> 00:05:47.230 into a lot of that myself. And there were just a lot of 104 00:05:47.230 --> 00:05:51.880 confusing links, in that these investments appeared to be in I 105 00:05:51.880 --> 00:05:55.960 don't know, you know, businesses that were hard to find any 106 00:05:55.960 --> 00:05:59.920 information about. Yeah, all over the world. So I don't know 107 00:05:59.920 --> 00:06:01.840 what happened to the money. There were people out there that 108 00:06:01.840 --> 00:06:04.750 were hurt and financially impacted. Yeah, some very upset 109 00:06:04.750 --> 00:06:08.560 people. He was kind of a face for alternative lending for a 110 00:06:08.560 --> 00:06:11.770 while. And I guess we'll see what happens if the trial will 111 00:06:11.770 --> 00:06:14.020 take place, or if there will be some type of, you know, 112 00:06:14.680 --> 00:06:15.520 settlement. 113 00:06:15.930 --> 00:06:18.570 Johny Fernandez: So the one question I have for you, after 114 00:06:18.570 --> 00:06:21.840 talking about someone like Brendan Ross, is when something 115 00:06:21.840 --> 00:06:26.730 like this happens, you know, you know, a face to the alternative 116 00:06:26.730 --> 00:06:32.160 finance industry? What when things like this go down? What 117 00:06:32.160 --> 00:06:33.720 does it do to our industry? 118 00:06:34.020 --> 00:06:36.990 Sean Murray: It's terrible. Oh, it's really, really bad. Yeah. 119 00:06:37.170 --> 00:06:39.780 For those who did not borrow from him or have any business 120 00:06:39.780 --> 00:06:43.800 with him, it still impacted their business. Yeah. Because it 121 00:06:43.800 --> 00:06:45.990 creates a bad look right 122 00:06:46.140 --> 00:06:49.020 Johny Fernandez: A bad look, not only for people in our industry, 123 00:06:49.020 --> 00:06:50.010 but also for the out 124 00:06:50.010 --> 00:06:54.050 Sean Murray: Exactly. Yeah, more so for the outside than the 125 00:06:54.050 --> 00:06:56.210 inside. Because if you're looking to invest in the 126 00:06:56.210 --> 00:07:00.620 industry, and you see a big face, who's attached to it in 127 00:07:00.620 --> 00:07:03.380 some way, and they're being accused of all these, all these 128 00:07:03.380 --> 00:07:06.830 things, you're saying, Hmm, you know, is what I'm going to see 129 00:07:06.830 --> 00:07:09.710 is it exactly what it appears to be. Or there's something else 130 00:07:09.710 --> 00:07:14.330 going on here. And so yeah, it did, it did kind of, it really 131 00:07:14.330 --> 00:07:19.010 did hurt the kind of the value of of everything, because he 132 00:07:19.010 --> 00:07:20.810 wasn't not just business lending, he was consumer 133 00:07:20.810 --> 00:07:23.000 lending. And he was alternative lending, he was FinTech, he 134 00:07:23.000 --> 00:07:26.090 really made it a point to say, this is what I'm all about. He 135 00:07:26.090 --> 00:07:29.180 had all these theories for why it was a good investment. One of 136 00:07:29.180 --> 00:07:31.760 his big theories for small business lending, and MCA was 137 00:07:31.760 --> 00:07:34.430 that he would go out to conferences and say, small 138 00:07:34.430 --> 00:07:38.390 businesses are overpaying for credit. He's like, That's why it 139 00:07:38.390 --> 00:07:41.720 makes so much sense. Because if the if they're going to go and 140 00:07:41.720 --> 00:07:45.050 get a loan from the SBA, there's gonna be a few percentage 141 00:07:45.050 --> 00:07:48.380 points, right. But if they go to the online, small business 142 00:07:48.380 --> 00:07:51.260 lender it's going to be significantly more, there's all 143 00:07:51.260 --> 00:07:55.040 this margin. And that's where they're gonna to make big 144 00:07:55.040 --> 00:07:58.940 returns for investors. And I think people really listened to 145 00:07:58.940 --> 00:08:02.990 that believed it soaked it in, and I guess, ended up not being 146 00:08:02.990 --> 00:08:03.680 completely true. 147 00:08:03.710 --> 00:08:06.920 Johny Fernandez: Yeah. So for someone watching this right now, 148 00:08:07.130 --> 00:08:11.870 and they are doing similar tricks. You know, they're trying 149 00:08:11.870 --> 00:08:15.260 to like, you know, they're being wise and they're like, oh, like, 150 00:08:15.260 --> 00:08:17.720 you know, I'm just gonna do this here, do this. They're 151 00:08:17.720 --> 00:08:19.640 Sean Murray: a little a little fraud here. A little fraud here 152 00:08:19.640 --> 00:08:21.680 came here. And they know what's 153 00:08:21.680 --> 00:08:23.450 Johny Fernandez: Wrong, but they're like, I'm not gonna get 154 00:08:23.450 --> 00:08:25.340 caught. What would you say to that guy? 155 00:08:26.310 --> 00:08:28.650 Sean Murray: I mean, my advice to anyone is, you know, always 156 00:08:28.650 --> 00:08:32.400 do everything the right way. It doesn't matter how small you 157 00:08:32.400 --> 00:08:34.860 are. There's some people who go with the with the impression 158 00:08:34.860 --> 00:08:37.800 that oh, you know, I'm small, nobody's gonna care about me. 159 00:08:37.920 --> 00:08:41.130 Yeah, make a couple million, you know, be off the radar. It's 160 00:08:41.160 --> 00:08:45.060 never gonna come back on me. I think it will. I think. I think 161 00:08:45.060 --> 00:08:47.880 what we're gonna see in a couple other cases that are happening 162 00:08:47.880 --> 00:08:50.610 right now, unrelated to the one we just talked about, is that 163 00:08:50.610 --> 00:08:55.380 someone else got in trouble. And now you have all these people 164 00:08:55.380 --> 00:08:58.410 who are saying, you know, I'm too small for anyone to ever 165 00:08:58.410 --> 00:09:02.130 care about my little scheme. And the person that they kind of had 166 00:09:02.130 --> 00:09:05.400 a business relationship got in trouble for something else, is 167 00:09:05.400 --> 00:09:08.850 now desperate to turn all the other people around them in for 168 00:09:08.850 --> 00:09:12.990 something as bargaining power, right? And this person saying, 169 00:09:13.380 --> 00:09:16.710 Oh, no, yeah, you don't I mean, yeah, this person knows what I 170 00:09:16.710 --> 00:09:19.290 was doing. Yeah. Even though it's small. Now. They're trying 171 00:09:19.290 --> 00:09:22.590 to save themselves. I'm going to get found out so I think the 172 00:09:22.590 --> 00:09:25.680 lesson here is you're never too small. Always do things the 173 00:09:25.680 --> 00:09:28.530 right way. It's the best way to do business. There's no reason 174 00:09:28.530 --> 00:09:31.830 to do you know, to, to, you know, cut corners or do anything 175 00:09:31.830 --> 00:09:32.490 illegal ever. 176 00:09:32.550 --> 00:09:33.750 Johny Fernandez: Yeah, that's good advice.