Veronica goes to see Pope to ask him about real-estate fraud. He tells her that it's generally tough to pull off, because people rarely buy property sight unseen, and even in the case of a REIT, a local assessor makes sure that all properties are sold for fair market value. That makes no sense to me, and the forum posters are quite clear that this is not the case: the assessor appraises the market value of the property when it changes hands, but the appraisal is of little practical value, and isn't even made public for months after it's been made. Also, as was pointed out, how did Big Dick handle the assessors of his other far-flung properties, and what did he do about the one in Japan? The rest of the REIT scheme, the consensus seems to be, is credible (and this part I'm much more familiar with and agree could happen), but the assessor part looks like pure fantasy. Anyway. Pope -- without a ghost of an idea that this is more than just an intellectual exercise -- tells Veronica that if the REIT were to borrow against the wrongly-perceived value of a property, it could use the loan to buy more property, similarly inflate its value, and keep going..."like building a house of cards," Veronica finishes. Veronica advises Pope to sell his interest in the Casablancas company, and tells him all about the scam and how she's going to expose it. She urges him again to dump his stock, but he gently tells her that if he did that, he'd just be sticking someone else with the impending loss, and he can't live with that. Veronica: "Then I guess you won't be taking your early retirement." She looks a little pissed off here, but what Pope is doing is absolutely the right thing, and not just from an ethical standpoint. No one's legally allowed to trade his stock based on information that's yet to become public. That's the definition of insider trading, and if he is in fact an officer of the company, he'd be under a lot stricter scrutiny that anyone else. Of course, given the cushy minimum-security cribs insider traders usually get set up in, if he wants that early retirement, maybe that's the way to go after all. Pope looks wistfully at the picture of his sailboat. Aw.
Episode Report CardCouch Baron: A- | 629 USERS: B-
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