Jonathan Gould was already making money on traditional investments, but it wasn’t enough.
As the New Jerseyan, now 67, looked to juice his returns, he stumbled upon an advertisement in the Wall Street Journal for a hard-money mortgage lending conference in Las Vegas. He went, and met a partner who brought him in on some small deals. In short order, he caught the bug.
Gould eventually broke off and struck a couple of deals on his own, but the process began to wear on him. He was often frustrated with the red tape and compromise required in working with partners.
It all changed when he met Rob Buchanan.
Buchanan was the founder of Pride of Austin, a hard-money lender playing in residential, commercial and construction projects. It lent in fast-growing markets and promised conservative underwriting, despite the higher risk profile of its typical borrowers. Gould would go on to invest more than a half million dollars with Buchanan, and for a decade, it all seemed to be on the up.
But come 2023, disbursements stopped. Investors swarmed to recover their money, and lawsuits piled up as an outside analysis turned up startling evidence of an alleged Ponzi scheme.
The fund is now in receivership, with its carcass being picked apart. For a livestream of a recent hearing, dozens of spurned investors like Gould tuned in, hoping to understand how $60 million of their life savings and retirement nest eggs had dissolved into thin air. Judge Amy Clark Meachum checked the stream statistics and saw there were 85 viewers.
“That’s more than usual. It’s not just my usual fans,” Meachum said.
At first, the chances of recouping their losses appeared slim as they fought amongst themselves for pieces. But a group of investors has banded together to institute order and fight for their money — or at least what’s left of it.
Raising a “pitbull”
Gould first heard Buchanan speak at an American Association of Private Lenders conference about 10 years ago. Buchanan, who was a founding member of the trade group, sold himself as a boring money manager with a banking background.
“He was very low-key,” Gould said. “He was not going to be a hotshot, because you don’t need to be a hotshot.”
Even though investing in a manager rather than going directly in on deals meant less control, Gould felt it was worth it to avoid the hassle. “When I got to him, I was already sold,” Gould said.
Buchanan’s Pride of Austin extended residential, commercial and construction loans while also buying and selling some existing loans.
By 2016, his firm had seven employees. Some were Buchanan’s family: His then-wife, Drew, worked as a portfolio manager, while his mother, Allyson Bruner, directed operations.
Around that time, at the company’s annual holiday party in Austin, he promised investors a big announcement. Several, including Gould, gathered around a poster board on an easel to hear Buchanan’s surprise: He was rebranding to CCG, named for the initials of his three children. As part of the plan, he had new subsidiaries: CCG Capital, CCG Development and CCG Realty.
“I thought to myself, how is this a big gift for us?” Gould said. “Why are you doing that?”
Still, the numbers looked good. CCG’s high-yield fund reached 47 loans with $72 million in assets, according to an interview Buchanan gave at the time to the American Association of Private Lenders. He said the fund issued an 11.83 percent net yield to investors that quarter.
“He was not going to be a hotshot, because you don’t need to be a hotshot.”
Appearing on the association’s magazine cover, Buchanan was baby-faced with straight brown hair, a clean shave and an untucked plaid shirt under a grayish-blue blazer. He touted his accounting degree, and credited news anchor-turned-hard-money lender Leonard Rosen for his entry into the business. Buchanan first learned of Rosen from a mass email he received in 2007, when he was working in residential construction. Soon after, he attended three of Rosen’s “Pitbull Conferences” in 14 months, meeting lenders and searching for a way in.
None of the loans were particularly large, but they operated in a lucrative pocket of real estate, lending at high interest rates to borrowers who were hard-pressed to secure funding from institutional investors. A representative loan was an $11 million note to Hidden Oaks at Berry Creek, a master-planned community of single-family homes in the Austin suburbs.
Buchanan wasn’t always a great communicator, and sometimes it would take a month after the end of a quarter to receive his distribution, Gould said, but he still sent distributions every time.
About three years ago, Buchanan told Gould he was closing one of his vehicles, called the Opportunity Fund. Gould had about half a million dollars invested in it, and asked to cash out, he said. But as the day approached, Buchanan persuaded him to roll the money over into another fund.
That was when things started to get weird.
As time passed, it became more difficult to get hold of Buchanan. Sometimes, he would explain the delays away by saying he was in North Carolina attending meetings or reviewing construction sites for which he’d loaned money to builders, according to previous investors.
“It’s like a different Rob emerged,” Gould said. Then, last year, distributions stopped altogether. Gould revealed that he’s totally wiped out and applying for welfare. ”If I had money, I would be doing deals,” he said.
After investing with Buchanan for a decade, Gould doesn’t know where all the money went.
“I’d like to think the money is sitting somewhere,” he said.
Tooth and claw
Sajid Maqsood was beginning to grow concerned. Both he and his wife had invested with CCG for years — he took quarterly disbursements, while his wife rolled hers over. And like Gould, Maqsood sometimes bristled at the time it took to receive disbursements after they were due.
“It would be like pulling teeth to get reports from him,” Maqsood said.
He heard stories about similar issues from other investors, but it all came to a head in the second quarter of 2023. Buchanan said investors would not receive distributions for the rest of the year, and essentially stopped responding to worried investors. Their anxieties flowered into lawsuits.
At least 36 suits were filed in Travis County against Buchanan or his companies, seeking money and information about the fund’s performance that Buchanan had refused to provide. Buchanan ignored the lawsuits for months, and seven ended with default judgments, according to the receiver.
The lawsuits are ultimately what drove Maqsood to action.
“I figured that there was just no bloody way that he could pay off everybody and not show the books,” he said.
Maqsood met with lawyers, and became convinced that Buchanan was a bad actor. Meanwhile, several investors had started a Google Drive forum to share their stories. Maqsood formed a group of several significant shareholders, and laid out his pitch.
“The only way to get [Buchanan] out is to either get the business into bankruptcy or put it into receivership,” he said.
“I figured that there was just no bloody way that he could pay off everybody and not show the books.”
He and the group convened a Zoom call including around 50 other investors in which he explained what he thought had gone wrong with the fund. He wanted to hire a lawyer to sue for a receivership, but he also didn’t want to fund the entire thing himself. Ultimately, he said, about 40 investors agreed to contribute up to 1 percent of their stake in the fund to hire an attorney.
Then Maqsood launched lawsuits to stop the other suits from spurned investors hoping to recover their money. As the process proceeds, a receiver could salvage whatever funds they can and then distribute them to shareholders according to a liquidation plan. Maqsood felt others were trying to “skim off the top” to get their money back before the receivership could run its course.
As the lawsuits piled up, the fund brought on Harney Partners to review its books. After a month of requests, Harney had received most, but not all, of the documents it requested from Buchanan. But this April, Harney dropped a bombshell.
It issued a preliminary report saying it had unearthed significant issues with the fund’s operations, including “a Ponzi scheme type fraud” and breaches of fiduciary duty. Shortly after the report dropped, the fund agreed to enter receivership.
The report alleged that CCG had overstated its assets and paid out fictitious returns that did not come from net profits. In 2022, the fund distributed more than $1.6 million per quarter to its investors, pulling in part from loan payoffs and new capital contributions, according to the report.
Buchanan was also accused of self-dealing, issuing CCG Development loans at favorable terms and failing to foreclose when it failed to repay them. In one egregious example, the report claims, Buchanan lent his development arm more than $1 million to build a home for himself.
The receiver recently filed a lawsuit against Buchanan, CCG Capital and CCG Development, requesting that the court also appoint receivers over those entities. Buchanan has not responded to the lawsuit, the receivership or a request for comment.
As of March, the fund held about $36 million in assets, but the court-appointed receiver believes there is far less in recoverable assets.
Not all investors lost money: An estimated 142 members cashed out with $10.5 million in gains. Still, 227 investors weren’t so lucky.
The fund made distributions of about 11 percent per quarter in 2022 and the start of 2023. Upon review of some of the fund’s books, though, the receiver couldn’t find sufficient revenue sources to justify those distributions without rerouting investor capital back to members. Now the fund has just $22,000 in its bank accounts, according to the receiver.
In retrospect, it appears that the fund was extremely sloppy with its bookkeeping. It used Intuit QuickBooks, which is not well-suited to loan portfolio management, and kept some critical calculations, like interest accruals, in an outside Excel spreadsheet with manual functions. The company’s QuickBooks reflected a $2.7 million cash balance, compared to only $22,000 in the bank as of this past March. The receiver also found more than $12.5 million in loans on the books related to matured or sold loans, and many CCG Development loans are lacking documentation. The fund allegedly lent to CCG Development at low rates and on exceedingly favorable terms.
Maqsood thinks his wife might get 80 or 90 cents on the dollar back, as she rolled her equity over. He expects to receive nothing. By early June, as the receivership got underway in Meachum’s courtroom, Buchanan was still absent and dragging his feet on certain document requests.
Trip Nix, an attorney for the receiver, addressed the court and its dozens of livestream viewers, reviewing the fund’s six outstanding loans worth up to $16 million in principal.
One, the loan for Buchanan’s residence, had been matured for years with no payments to the fund. Taxes were still owed for 2022 and 2023, and a foreclosure sale was scheduled for July (the sale did not go through).
“I am disheartened by the fact that Mr. Buchanan is not here,” Meachum said. Nix added that the investor had made “halfhearted attempts at compliance.”
Nix hoped a contempt order might spur him to finally turn over all the books.
The process was slow — they would need to wait a month for a formal hearing on the contempt motion — but the judge was inclined to agree.