Land banking in Georgia, USA

I received an e-mail from this concerned citizen of USA. I am posting the e-mail with all reference to the land banking promoter removed, but indicated below as X. This is to avoid being sued for defamation. Those who have invested in this project will know which is X. If you have been misled into investing in this project, and you wish to take join a group to lodge a complaint collectively, please send an e-mail to kinlian@gmail.com.

For other people, do read the statements presented below carefully. Most land banking schemes follow the same pattern, i.e. the land plots are offered at 10 to 20 times of their actual value.

Dear Mr. Tan Kin Lian,

I live in Jackson County, state of Georgia, USA. This is a small, very rural county about 60 miles from the city of Atlanta. X has been buying up some big tracts of land here and is proposing to develop them for housing and industrial sites, but the land CANNOT be developed -- it's against local zoning laws, and there is no water or sewer service available.

I recently learned that X sells fractional interests in these tracts of land to small investors in Asia through sales offices in Singapore, Tokyo, Kuala Lumpur and Hong Kong. These sales are at crazy prices!

As you probably heard, we had a housing and property bubble here up till 2007, but the bubble popped. Jackson County now has about a 20-year supply of building lots available, and they can be bought for $6000 - $10000 per acre. A 37-acre piece of land next to mine recently sold for $4000/acre. From a brochure I found, it says X is selling these lands to small investors in Singapore, etc. for the price of over $82,000 per acre! 

In Georgia, it's hard for us to believe people would pay stupid prices like this, but here is the data from our county's own tax records showing that over 1,600 Asian investors bought this land at the price of $82,500/acre: 

Here is my question: How can X do this? How can these buyers be so stupid? They will never get their money back. If these investors pass this land on to their grandchildren, it will still never be worth what they paid for it--the county has huge amounts of land that is already zoned for housing and has water and sewer available. These lands are available for MUCH less than the Asian small investors paid.

What is X telling these people, that they will be able to sell at a profit in a couple of years? Or is this a Ponzi scheme, where money from new investors is used to pay off prior investors?

In Georgia, we would like to hear your reply because we are afraid X's landbanking schemes are very harmful to our community, and they may also be harming small investors in your country.

Thank you for your help,
James 

Dear James 

Thank you for your valuable information.

There were many similar land banking schemes sold in Singapore, and the investors have been stuck with the investments. They were probably told that the developer would get approval for re-zoning and the land would be worth 2 to 3 times of their investments. The land never got developed.

Some have complained to the authority, but the authority could not prosecute the promoters. Perhaps, the authority did not have evidence or sufficient resources to investigate the complaints.

There was a recent case involving another promoter who made paid interest at 2% a month and promised to pay back the invested sum after 1 year, and it is linked to some land purchase. This type of arrangement is a ponzi scheme, and the operations were closed by the authority, probably on this account. We have not heard of the case coming to court.

I was threatened with defamatory suit by a prominent legal firm in Singapore acting on behalf of a promoter. I posted an article in the British newspaper about a land banking scheme sold in Singapore. The legal letter alleged that I had defamed their client and asked me to provide evidence to back the allegations that were posted in my blog - which was just a repost of the newspaper article. This matter was settled without any payment from me, and I will not go through the history of that case.

In your particular case, I will post your article and remove all reference to the land banking company. I will also think of some way to give the information to the authority to see if they can take up the matter. 

Tan Kin Lian