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.