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Landing Real Estate Profits Is No Sure Thing

September 25, 1994

Regarding the lawsuit against the present TMI management ("A Hard Investment Lesson," Sept. 19), my wife and I have been longtime investors in Teachers Management & Investment Corp. We realized even in the heady days of real estate offerings that real estate, regardless of the market, is by its very nature the least liquid of all investments. Also along with high profits and some tax write-offs there will be losses. It should be obvious to investors that 100% investment of one's retirement money into real estate is not a balanced investment portfolio.

As to the current lawsuit, I have no reason to suspect the present management of TMI of fraudulent dealings. They are doing a good job of trying to clean up some of the poor purchases of raw land by the former TMI management. For example, when hotel purchases were promoted by the former management, I knew from personal business dealings that building hotels is a very high-risk operation. We stayed out of these investments. I feel that the former management of TMI was starting to spin out of control, not because of fraud but poor business decisions.

The lawsuit claims a Ponzi scheme is involved here. This would mean the older investors would be paid off by the new investors. In TMI who are the new investors? New properties have not been offered for four to five years!

As to the accusation of the commingling of investment funds, I have to believe if this is true, the examiners and auditors from the State of California will quickly discover this. The investors who are suing TMI are pressing very serious charges against TMI management. If the charges are true, it is not just a civil case but a criminal case.

What do the four dissident limited partners want out of this? They claim TMI is broke. They cannot really believe this, as I think their motivation is to recover as much investment money as they can.

I happen to believe that these people do not want revenge but rather a financial settlement. Now if this should happen, what about the other thousands of investors like me? I believe we would be left holding an empty bag. The old story--the attorneys and a few clients would get the money.

DAVE BAKER

Yorba Linda

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