Robert Brace, the Santa Barbara attorney representing the class action lawsuit filed against Southwest Exchange and others, brings up a good point in his filing. Why didn't anyone Google Don McGhan?
Let's say I own a frozen custard stand. For years I've poured my heart and soul into frozen custard and now own the most popular custard stand in Arizona. One day I'm approached by a group of investors who offer to purchase my custard stand for a large amount of money. What is the first thing I do before I consider any offer? I hop online and Google their names, the names of their children, the neighbors, the dog, etc. There is no way I would ever consider selling something I built from the ground up without thoroughly researching those involved.
Capital Reef Management (Don McGhans company) purchased Southwest 1031 Exchange and Qualified Exchange Services. When Betty Kincaid was approached in 2004 to sell Southwest 1031 Exchange, did she take five minutes to pop the names of the major players into a search engine?
I did. One of the first things I did when Don McGhan's name was mentioned was to run his name through Google. The first question that came to my mind was "why does the 'father of the breast implant' want to jump into the 1031 exchange industry?" The second thing I wondered was "why was he investigated by the SEC?". I also ran a search on Capital Reef and came up empty. In this day and age, a search with absolutely no results is as much concern as one with bad results. If someone offered me millions of dollars to buy my company and I could find absolutely nothing about them, my 'something's fishy' detector would be sounding all the alarms.
When Qualified Exchange Services (QES) was purchased, Betty Kincaid had already accepted the additional $3 million to give up her remaining interest in Southwest 1031 Exchange. Did Kyleen Dawson (owner of QES) not think to give Kincaid a call even to only ask her if she received her money in a timely manner?
I'm sure in the coming weeks and months Kincaid, Dawson, and the others involved will asking themselves the same thing.
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