Grant Cardone: alleged fee stacking, refinancing fees, and failed IRR claims

Meet Kevin summarises documents and deposition testimony that, he argues, show Grant Cardone used intra-fund lending and layered fees in ways that favored management and exposed investors. Key factual anchors: Cardone allegedly had "$42 million" of loans to his own funds paying '6% interest payable on demand' (2019), while market 30-year/15-year mortgage rates were about 3.9–4%. Fund documents are internally inconsistent: one SEC filing states the asset management fee is '1% of the capital raised by the company' while another clause calls the acquisition fee '1% of the investments fixed asset purchase price.'

The most consequential pattern described is repeated fee extraction on refinances: Cardone publicly said he takes a '1% fee when we return your equity' on refinancing and then collects promote (a '35% waterfall' later noted as increased to '50%') on appreciation extracted via refinancing. Meet Kevin demonstrates a hypothetical where investors' contributed capital falls (e.g., $35m invested in a $100m asset, later $32.5m pulled out by refinancing) yet management continues charging 1% on the larger appraisal-backed basis, effectively compounding fees as capital is recycled.

Other documentary issues: deferred fees and footnoted payables appear in Fund Five's May 31, 2018 balance sheet — an 'acquisition fee totaling $1.366 million is due' and later reporting shows '$3 million of acquisition fees have been paid, but another $1.6 million remain to be paid.' Only Funds Five and Six are Reg A audited (not PCAOB), while Cardone reportedly runs '47 funds', implying many funds lack equivalent audit scrutiny.

The liability behind the lawsuit: an April 22, 2019 post promising investors they'd 'walk away with a 15% annualized return' led to a suit filed September 16, 2020 and SEC guidance to revise/remove the 15% IRR claim. In deposition Cardone reportedly hedged—saying 'I don't think we're going to hit that' in reference to a '17.88% IRR' and 'targeted equity multiple, 2.5 to 3 times.' Meet Kevin urges fact-checking, notes Cardone's public quips ('We might be. I don't know. I'm not sure at this time.'), and suggests auditors, regulators, and investors should scrutinise recycled loans, refinancing fees, deferred/footnoted payables, and marketing claims. He also briefly flags Cardone's Bitcoin exposure (average cost basis 'over 90k' or 'over 88k') as a risky hedge against legal and fund performance issues. "Ask AI" is mentioned as a suggested tool to analyse filings.