culture, politics, commentary, criticism

Thursday, August 05, 2004
Wealth is divine. Today the Wall Street Journal published a profile of Leo Wells, whose business practices are legal but increasingly under scrutiny for their exorbitant fees and lack of liquidity. Leo Wells, a huckster who characterizes America's faith-based elite, oversees one of the largest real estate portfolios in America, yet
has never fully repaid investors in any of his funds over the last 20 years:
Shares in the Wells REIT [real estate investment trust] aren't traded on any major exchange -- so their value is difficult to determine. Investors pay a total of 14% in commissions and other fees, which effectively dilutes their capital. The REIT's management structure allows other Wells companies to pocket millions of dollars in management and other fees. And despite the goal of listing in 2008, the company could simply begin to liquidate its assets then, a process that could take years depending on market conditions. In fact, Mr. Wells has never fully repaid investors in any of his funds over the last 20 years.

Most large brokerage firms -- including American Express Co. and Merrill Lynch & Co. -- won't handle Wells, despite the hefty commissions. Mutual funds that invest in REITs don't buy Wells or other nonlisted REITs, saying their high fees and illiquidity make them a poor choice for investors. "We don't bother with those," says Steven R. Brown, portfolio manager for Lehman Brothers Inc.'s Neuberger Berman Real Estate Fund. "There's really no way to make those numbers work."


...a big drawback of the nonlisted REITs: Investors who want to sell their shares are often stuck. Mr. Wells's REIT, for instance, buys back 3% of outstanding shares a year on a first-come, first-served basis. The stock has careened around various secondary markets, trading at $5, $10.25 and $8.43 in May and June, the latest data available. At a gathering last year of real-estate executives at a posh private club in New York, Michael Fascitelli, president of Vornado Realty Trust, a giant public REIT, teased Mr. Wells on his stock's illiquidity, comparing it to a "roach motel."

"You can check in, but you can't check out," Mr. Fascitelli joked to raucous laughter, according to a person who was there. Through a spokeswoman, Mr. Fascitelli declined to comment.


Robert Beneda, a 64-year-old retired engineer in Stone Mountain, Ga., invested in a 1984 Wells limited partnership fund. The fund, Wells Real Estate Fund I-B, has suspended its dividend; its units, which originally sold for $250, traded at $105 as of May 30, according to Direct Investments Spectrum, a Dallas-based newsletter. Mr. Beneda says he asked Mr. Wells at an investor presentation several years ago when principal would be returned. "He gave me this thing about 'the corn not being ready to harvest,' or something," Mr. Beneda says.


Some planners refuse to sell Wells or any nonlisted REIT because of the fees and illiquidity. Indeed, one of two main financial-planning trade groups says its members mostly shun Wells and other nonlisted REITs. "What does it have? Incredibly high operating costs; lack of liquidity; and what disclosure exists makes me uncomfortable," says Gary H. Schatsky, president of the National Association of Personal Financial Advisors, an Arlington Heights, Ill., trade group of about 1,000 planners, known as fee-only planners because they don't accept commissions. "It doesn't make a lot of sense."
Sprinkled around the article above are these observations:
"In an interview at his office on the company's leafy campus in Norcross, an Atlanta suburb, Mr. Wells peered over wire-rimmed glasses, straightforwardly affirming his belief in prayer as an important part ofthe company's business practice. He compared his firm's role in investors' lives to that of the patriarch Joseph, who, the Bible says, served as steward to Potiphar, an official in Pharaonic Egypt. "His job was to run things," Mr. Wells says of Joseph. "It really is a higher calling."


...the rush to add employees also brought problems. Earlier this year, for instance, a candidate for an executive-level job sued the Wells organization, alleging that during job interviews Wells executives pressed for information about his "spiritual background" and made "very direct inquiries" about his religious practices. In the suit, pending in Atlanta federal court, L. James Richards, a Minnesota resident, alleges that his response -- that he and his wife had been raised Baptists but had stopped attending church -- cost him the job.
You see, Leo Wells is a Christian nut who fires his employees for professing atheism or even having facial hair (so much for biblical authenticity).

Leo Wells sells transactions of impossible optimism to people who think they're getting ahead even when they're not. He does it at the most exorbitant costs on a track record of zero success in a folksy Christian style. He doesn't care whose rights he tramples on to achieve his self-proclaimed mission of divine inspiration.

Remind you of anyone?

Greatest Hits · Alternatives to First Command Financial Planning · First Command, last resort, Part 3 · Part 2 · Part 1 · Stealing $50K from a widow: Wells Real Estate · Leo Wells, REITs and divine wealth · Sex-crazed Red State teenagers · What I hate: a manifesto · Spawn of Darleen Druyun · All-American high school sex party · Why is Ken Lay smiling? · Poppy's Enron birthday party · The Saudi money laundry and the president's uncle · The sentence of Enron's John Forney · The holiness of Neil Bush's marriage · The Silence of Cheney: a poem · South Park Christians · Capitalist against Bush: Warren Buffett · Fastow childen vs. Enron children · Give your prescription money to your old boss · Neil Bush, hard-working matchmaker · Republicans against fetuses and pregnant women · Emboldened Ken Lay · Faith-based jails · Please die for me so I can skip your funeral · A brief illustrated history of the Republican Party · Nancy Victory · Soldiers become accountants · Beware the Merrill Lynch mob · Darleen Druyun's $5.7 billion surprise · First responder funding · Hoovering the country · First Command fifty percent load · Ken Lay and the Atkins diet · Halliburton WMD · Leave no CEO behind · August in Crawford · Elaine Pagels · Profitable slave labor at Halliburton · Tom Hanks + Mujahideen · Sharon & Neilsie Bush · One weekend a month, or eternity · Is the US pumping Iraqi oil to Kuwait? · Cheney's war · Seth Glickenhaus: Capitalist against Bush · Martha's blow job · Mark Belnick: Tyco Catholic nut · Cheney's deferred Halliburton compensation · Jeb sucks sugar cane · Poindexter & LifeLog · American Family Association panic · Riley Bechtel and the crony economy · The Book of Sharon (Bush) · The Art of Enron · Plunder convention · Waiting in Kuwait: Jay Garner · What's an Army private worth? · Barbara Bodine, Queen of Baghdad · Sneaky bastards at Halliburton · Golf course and barbecue military strategy · Enron at large · Recent astroturf · Cracker Chic 2 · No business like war business · Big Brother · Martha Stewart vs. Thomas White · Roger Kimball, disappointed Republican poetry fan · Cheney, Lay, Afghanistan · Terry Lynn Barton, crimes of burning · Feasting at the Cheney trough · Who would Jesus indict? · Return of the Carlyle Group · Duct tape is for little people · GOP and bad medicine · Sears Tower vs Mt Rushmore · Scared Christians · Crooked playing field · John O'Neill: The man who knew · Back to the top

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