The Real Estate Investor

The Real Estate Investor.

There are many ethical issues in this case. Things had not turned out the way Rabbi Horowitz had promised when he convinced Howard Katz to make the investments of the food processing plant. Katz had taken out a personal loan for $82,500 of the $132,500 he had invested. The rabbi's promises that there would be a six-month flip of the property at a 100 percent profit. The rabbi's claim that the property was worth more than $700,000 which he had backed up with an eight-year-old appraisal, he insisted they can get it for $265,000 because the property is in distress. The rabbi proposed that Katz come up with half the money and he would come up with other half. After they purchased the property two realtors who took a look at the food processing plant said to Katz, that the property was worth only $300,000, not $700,000 that the rabbi claimed. Katz suggested that the realtor take a look at the appraisal. He explained to Katz that the property worth $700,000 depends on its being in operation, but the factory has been closed for more than five years. Katz was getting worried and began to press the rabbi for clarification of the deal. When Katz pressed the rabbi for the reason the rabbi told him that there were four investors three addition to Katz and that the rabbi was not

one of them. When Katz made the investment in January1996, he had insisted that the rabbi sign a written contract. The rabbi dismissed the contract. Look like the rabbi try to take advantage of verbal agreement. The rabbi made many promises which none of them was truth. He had raised money from four different investors, telling each that the property would be in his name, and then put the property in his daughter's name. Then he claimed that the property was worth $700,000 but the appraisal turned out to be fraudulent. Also, the rabbi insisted that Katz only give him $99,000 and that he purchased