These property development scams tend to be hatched by opportunistic ex-pats as schemes to get a free property or sometimes to sell a property that they already own far above fair market value. Most of them are not dedicated to creating real value and just want to get something for nothing. Lots are often sold with improvements that do not yet exist and never materialize. Internet access is almost always way slower than advertised and sometimes only available at modem speeds via expensive satellite systems. Roads that the government is supposedly “going to pave” don't get paved and residents are stuck with having to use a dusty 4×4 trail. Inside the developments, poorly built roads and bridges often get washed out shortly after they are built and by then the developer is either long gone or tries to pass on the expense for fixing his lousy work to the individual owners. A community planned for some 20 units may only have 5 or 6 lots that sell within a year or two so the developer claims that they cannot afford to do any of the promised improvements (by this time the original owners of the land have quadrupled their money and can walk away happy). Promised potable water service often fails to materialize resulting in the occupants of the development having to truck in drinking water and shower with irrigation water or with sea water. More often than not the “investor” ends up being left with nothing of any real value in comparison to the money invested.

One of the reasons that all of these problems occur is that its rare for the person heading up one of these projects to have any successful track record either in property development or in construction. Sometimes someone who had an unsuccessful project in another country will try to re-write history. They may mention past development work in a first-world country but forget to mention that they came here to hide from their creditors after that project failed miserably.

The way I see it, just because I failed Algebra in a first-world country back when I was in High School, does not make me qualified to teach Algebra here in Ecuador. It would be like a Realtor who was a complete failure back in the states coming down to Ecuador and trying to use that failure to justify their ability to do Real Estate here, in Ecuador.

Of all the warning signs that indicate that a property development project will probably fail, the single biggest red flag indicator has got to be when those involved have a whole bunch of unrelated business ventures going on at the same time. This is as close to a guaranteed route to failure as you can get.

Although the people heading up such projects tend to put a lot of work into all of the things needed to attract the unsophisticated investor, they don't bother to do the proper pre-planning and due diligence necessary to make the project a success. It's rare that they have much of their own money invested; besides if the whole thing falls through they have several other “irons in the fire” i.e. other scams to fall back on.

It's amazing just how widespread this phenomenon is. There are dozens of these horror stories in Ecuador and only a small fraction of the victims ever go public.

Its not that these people necessarily set out to defraud others in every case, it's just that greed blinds them from recognizing their own insanity. Anyone who thinks that they can complete something having never successfully done it before, and do it on the first try, in a country where they do not speak the language or understand the culture, while working on half a dozen other things at the same time, is a nutcase period.

In case you have not yet noticed, there are a higher percentage of loonies and whacked-out perma-fried dreamers among Ecuador's ex-pat community than there were back home. While they can be great for a little entertainment now and then, they can also be very dangerous if you get under their spell.

Working at the Community Television studio in Eugene, Oregon for six months I met a lot of strange dreamer types who seemed to have a new scam going every week. Nobody ever took them seriously and I never imagined that people like that would be able to gather large crowds around them and have them listening intently while rattling on about scam after scam talking about things that they know nothing about.

Here's a question for you. What do you think causes normally intelligent people to disconnect from reality when they come down here, forget all of the tough lessons that life has taught them, and become as naive as 5 year old children?

For those of you that may not have had the experience of working in a Community Television studio as I have let's have a crash course in Lunacy 101 by taking a rare and unfiltered look into the mind of one of these dreamers.

Apparently the other money making ventures must all have fallen through because now his partner Dixie Davey is selling their version of the story about the Ayampe beach scam for 99 cents a chapter on the Kindle book reader platform!
www.retire-in-ecuador.com/framed.html

There are dozens of these types of people greedily scavenging through the ex-pat community for any scraps that they can get and it absolutely makes me sick. Even if it was the Ecuadorian partner that stole the money in this case, it was the wonton negligence of the Walkers that allowed it to happen.

Any one of those ideas could have made the Walkers plenty of money if they would have had enough respect for themselves and their customers to focus on doing the best job possible.

Let's not lose perspective here, the Ayampe beach scam was small potatoes compared to some of the things that have happened in other parts of the coast and in the Vilcabamba area. Most of them have never been heard about by the public because the victims have not been as vocal as in the Ayampe scandal but the monetary amounts have been higher in many cases.

Seeing how blind the ex-pat community has been to obvious cons, I don't suppose there's any point in trying to warn anybody about the sophisticated methods of the locals. Besides it would be hypocritical of us to criticize some of the darker aspects of the local culture when we have so much that needs to be straitened out within our own ranks.

Maybe it is wrong of me to feel bad for people who have chosen to make themselves victims; maybe they are not really victims at all. It could be that they are so bored, so desperate for social interaction, that they knowingly go along with scammers so that they have somebody to talk to. There is a whole class of con artists that victimize lonely old ladies in this manner, but I digress.

One important thing to consider, before you hand over your hard-earned money to some wild-eyed lunatic, is that even some experienced property developers have failed in their attempts at property development in Ecuador.

Property development is difficult to do anywhere and doing business in Ecuador is a lot more difficult than most people realize.

Take for example Lynn Hynage, a property developer from Florida, who moved himself and his family down here to Cuenca to do a housing project but it never got off the ground.

Or the more recent case of Bryan & Dawna Eaton, also professional property developers. They got a lot further than Lynn did; they got the land, partnered with a local builder, got permits approved, and even started construction just north of Chaullabamba. But now they have disappeared without a trace and the project sits unfinished.

It is possible for a foreigner to do Property development in Ecuador successfully; here are a couple of examples: One is the Portal del Ejido condominium headed up by Dek Tillett and his wife Valerie Klein, an American couple. All units are sold and the building is in the final stages of construction www.molacu.com

Another success story in the making is the Rio Juntas Ecological community headed up by an American named Michael Edwards. It has been steadily progressing despite enormous challenges and is quickly gaining momentum www.riojuntas.com

Let's look at these last two examples to see if there are any common denominators that we might be able to look for in other projects as likely indicators of success. One thing that strikes me right of the bat is that in both cases the American principals invested large sums of their own money. In fact in both the Rio Juntas Ecological community and the Portal del Ejido building, the principals have put up more money than all of the other partners combined. This is a significant factor because the typical hotshot developer plays with other peoples' money and has very little of his own skin in the game.

Another thing that they both have in common is focus. Their energy has not been diluted into a half dozen different things. They are not involved with training people on how to make websites, alternative medical quackery, giving music lessons, or even promoting Gringo insurance schemes. They are focused on producing the result.

One thing that I find really ironic is that the Ayampe beach scam managed to get more ex-pat “investors” to buy into it than Dek Tillett's condominium building which was purchased by over 80% Ecuadorian buyers. It appears that the ex-pat community places a much higher value on extravagant fairy tales than that which is real and concrete.

In Cuenca I've seen several people each fork over thousands of dollars (at $1,000.00 per percent) to buy minority stakes in a completely facetious business that only existed on paper. All parties involved on both sides of the transaction were ex-pats. The last time I ran into the founder was on the street a couple blocks from the office of the Superintendencia de Compañías. I was surprised to run into him because I heard that he had moved to the coast. It turns out he was here to start up a couple of new companies, on paper of course.

Watching these types of things unfold, it's no wonder that us Gringos are starting to get a reputation among the locals as being suckers.

Getting back to community development scams; the Ayampe project was originally promoted as an “ECO-FRIENDLY” community on the Eco-Ecuador-Living.com website. Be sure to look closely at anybody who makes a big deal of being “GREEN”. Is it just a gimmick or is there something behind the facade? Eco-friendly is often just a politically correct label applied to standard housing construction techniques, a relatively harmless exaggeration. Nevertheless beware that in Ecuador the “green” theme is a signature tactic that seems to be used by unethical and incompetent property developers over and over again. It may be that the only thing “green” about a project will be the dollars that you are going to lose in it.

The Ayampe Beach scam offered $75,000 lots of about half an acre each and came with “A free 300 square meter house with a pool or a large Jacuzzi”

It is now one AM and I have been staring at the above sentence for about the last half hour trying to figure out some kind of response but I'm still speechless. This is all just so insane; it's as if everybody involved with Ayampe in any way went out of their mind and was completely blinded by greed. I don't know what else there is to say.

Anyone who is the victim of a scam, any scam, has the moral obligation to be a whistle-blower. The man who blew the whistle on the Ayampe scam has saved thousands of dollars from being bilked out of additional innocent victims. I have tried to take his work a step further by profiling some of the typical characteristics of this type of perpetrator, whose crimes are all too often told to me in confidence by victims who are afraid to speak out.