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October 7, 2010
Translation: Bruce Ratner Wants To Swindle 498 Chinese Millionaires?
Noticing New York
The deal Ratner (with Prokhorov) is offering the Chinese millionaires is that they put up $538,000 apiece and, after five years, if they are lucky they will get $500,000 back. That’s right; they get back less money. So overall the Chinese lose and are out-of-pocket financially: They’re down that initial $38,000 difference; they’re down the presumed inflation loss on the money, perhaps another $55-60,000, and they are down the lost investment earnings on the original $538,000. At a mere 8.9% annually (not 17%, 11.7%, 11%, or 10.3%) the foregone annual investment earnings on $538,000 compounded annually for five years come to: $285,989. (A lower return or reduced final figure should probably be used to avoid double counting the inflation loss.)
(* It is also a pretty safe guess that the Chinese will not get any tax benefits from having their money finance the arena which is sometimes a compensating factor when taking a negligible or nonexistent investment return. Our guess is that any tax benefits, such as they may be, will all be assigned to other REAL investors.)
That means that, all tallied, each of these Chinese “investors” are walking away and leaving about $324,000 to $380,000 or more in the Ratner/Prokhorov pocket. It’s obviously not an “investment” at all and the Chinese are not “investors”; they are simply, merely, and nothing more than, the purchasers of green cards and if green cards are worth about $324,000 to $380,000 per each individual and their family then perhaps Mr. Ratner hasn’t swindled these Chinese millionaires . . . yet.
Click through for the "yet" explained — Bruce Ratner's "collateral" damage.
Posted by eric at October 7, 2010 9:54 AM