In June 2018, a slickly-produced video began making rounds on social media, promoted by self-made businessman Jay Morrison and celebrity economist Dr. Boyce Watkins. The bold vision? To raise $50 million from African American investors nationwide and "rebuild Black Wall Street" in Tulsa, Oklahoma through transformational real estate development projects. This ambitious Tulsa Real Estate Fund, structured as a community-led real estate investment trust (REIT), sought to catalyze economic growth and opportunity in Tulsa‘s historic Greenwood District – site of the devasting 1921 race massacre that destroyed generations of hard-won black wealth.
Morrison‘s natural charisma and Watkins‘ enthusiasm proved contagious – the valiant mission attracting over 1,600 predominantly middle-class investors in the first year alone, contributing $9.6 million in capital. However, fast forward three years, and this once-vaunted Tulsa Fund has collapsed in outright scandal – facing allegations of brazen mismanagement and fraud leaving investors reeling. As assets dwindle below $2 million, dreams of uplift replaced by nightmares of deception, fund leaders find themselves in the crosshairs of lawsuits and criminal investigations.
So how did this purported vehicle for black empowerment devolve into such a cautionary tale? As a real estate professional myself, what critical lessons can aspiring investors – and our communities – take away from this moral failure and breach of trust? Let‘s analyze what transpired with the Tulsa Fund fiasco to equip ourselves to build wealth smarter moving forward.
The Masterminds Behind the Tulsa Pitch
To grasp how thousands of upright citizens found their savings ensnared in this slowly unfolding debacle, we must first understand the profiles of its central figures – Jay Morrison and Dr. Boyce Watkins.
Jay Morrison enjoyed meteoric success in real estate investing in his 20s – personally netting $10 million in profits. Though lacking a college education, he leveraged charisma and relentless drive to build his portfolio. After a stint in prison for fraud, he refashioned himself into an inspiration for black and brown youth – delivering speeches advocating economic empowerment through entrepreneurship. His against-the-odds narrative and bold proclamations attracted visibility and followers.
Dr. Boyce Watkins wields equal influence as a visible black voice with abundant media exposure. Holding a PhD in Finance, he provides commentary on wealth-building and markets to his extensive audience. While his doctoral credentials engender credibility, his specialty resides in financial theory – not operational expertise.
Together, this duo conceived an alluring concept – a real estate fund for black empowerment, rebuilding Greenwood as a symbolic apex of achievement. The strengths differed, yet complemented – Jay‘s real estate acumen and showmanship fused with Boyce‘s elite credentials and reach. But did the preparations match the ambitions?
The Makings of a Seductive Pitch
The initial Tulsa Fund marketing blitz tapped into profound hopes and dreams, visions of uplift through collective economics. For black Americans seeking stability amidst an uneven recovery, the chance to redirect resources back into their communities resonated powerfully. The noble context, combined with Jay‘s personal magnetism and Boyce‘s credentials, primed the landscape for resonance.
Populist language invoked securing justice:
"They bombed Black Wall Street in 1921…On June 1st 2018 we take our steps toward rebuilding it through the Tulsa Real Estate Fund"
Aspiratory branding sparked intrigue:
The Tulsa Fund logo sparked intrigue among target investors (Image credit: The Black Wall Street Times)
Lasers focused attendees at events:
Theatrics and laser light shows electrified crowds at promotional events (Image credit: My Cutting Edge Events)
Yet for all the orchestrated excitement, tangible details about the structure and operations of this $50M enterprise remained scant. When prominent finance personality Marcus Barney recently investigated, he discovered primarily empty office spaces despite swift capital raises.
Where were the diligently constructed feasibility studies? Registered auditors vetting procedures? Bank statements validating robust cash flows? Formidable advisory boards overseeing activities? Facts took a backseat to emotive storytelling.
And the seated crowds, intoxicated on inspiration and possibility, neglected to demand the proof.
Raising Millions Yet Racing Towards Collapse
In 2017, the Tulsa project incorporated as a limited liability company (Tulsa Real Estate Fund LLC), but with intentions to convert into a regulated real estate investment trust (REIT). Thispasoage never transpired. Assets ballooned swiftly, yet without formal accountability mandated.
By mid-2021, the fund attracted:
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1,600+ investors
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Total capital raised: $9.6 million
Despite millions collected, only 2 out of 20 promised properties were ever purchased. Instead, exorbitant salaries and vague "administrative fees" consumed inordinate portions, while high-level perks flowed freely to founders and associates behind closed doors.
Diverted Cash Breakdown:
- Salaries and benefits paid to directors: $600,000 annually
- Administrative and marketing fees: Over $2 million
- Personal purchases by Jay Morrison: Luxury homes and vehicles totaling nearly $3 million
In 2021, invested capital had withered to under $2 million in value – while directors lived lavishly on inflated paychecks extracted directly from the communal trust.
Red Flags Emerging Years Prior
Troubling signs permeated for years, even as unknowing capital continued pouring in:
- 2019 – Tulsa Real Estate Fund hit with complaints alleging unethical business practices
- 2020 – Widespread non-payment of investor dividends commences, violating expectations
- 2020 – Despite economic fallout, directors pay themselves $600,000 from remaining reserves
- 2021 – Jay Morrison accused in active civil litigation & fraud lawsuit involving $2 million
Yet even as the house of cards teetered internally, co-director Boyce Watkins continued publicly heralding the fund‘s prospects externally. This false projection only served to facilitate the ongoing hijacking of hard-earned savings into a soon-to-be carcass of an operation.
Deceit & Exploitation: The Toxic Combination
In June 2022, the levee finally burst. Renowned Youtube finance personality Marcus Barney delivered a scorching exposé unraveling the rampant allege financial improprieties sustaining the scheme. His assessment? A "scandalous real estate scam" designed to systematically enrich its directors – nothing more.
Investments intended to uplift Tulsa had instead quietly lined the pockets of the charismatic Jay Morrison. By cloaking himself in the robes of a community advocate, he successfully gained access to the life savings of those moved by his words – proceeds promptly diverted to furnish his personal real estate empire across Southern California. A lifestyle brimming with $250 shirts and luxury whips.
Boyce Watkins now himself faces criticism. The PhD economist failed to detect glaring red flags and gave no pause to keep backing the initiative publicly, even amidst others‘ non-payment. This tacit endorsement lent unwarranted credibility, influencing legions of his followers to stay financially entangled absent better judgment.
In the aftermath, over 1,600 families – the economic lifeblood of the black community – find their funds and futures drained. Squandered by the ultimate bait-and-switch. Though Tulsa needed more ethical investment, instead her people received only fresh wounds reopening the old ones. Where there could have blossomed fields of new bounty, now lies fallow yet another barren and painful reminder that progress indeed walks a ragged road.
My Take: How Aspiring Investors Can Protect Themselves
As a real estate developer myself, I share the mission to enrich my community through strategically nurturing property investments. However, idealism absent proper diligence court catastrophe, fracturing the very people meant uplifted. This whole debacle could have been mitigated with greater transparency and accountability. Yet the quick buck lures even the well-intentioned into ethical compromise.
In hindsight, some aspects may appear as obvious red flags:
- Founders historically shown lacking integrity
- Jay Morrison: convicted fraudster; Boyce Watkins: links to exploitative "black wealth bootcamps"
- Finances administrated sloppily
- Vehicles to shield operators from scrutiny
- Verbalized community intentions belied by actions
- Lip service to heritage used as a tool for personal gain
However, in the moment, the human tendencies towards trust, confirmation bias, and appeal to authority prevail. Combining legitimate systemic barriers facing black investors with greedy schemers weaponizing righteous anger for exploitation proves highly combustible. The vulnerable eagerness from a community both underserved and thirsty for change can readily blind itself to parasitic opportunists within its ranks.
The accused men alone rightfully deserve condemnation, but investors too must endeavor towards greater discernment. When confronted with spectacular opportunities, we must temper emotions with analysis by asking ourselves:
- Does leadership have skin in the game?
- i.e. are THEY investing substantial personal capital along with regular folks?
- What safeguards exist to ensure ethical compliance?
- Audits, published reports, external oversight
- Can the promoters prove prior legitimate ventures created wealth?
- Evidence track records matter more than captivating stories
Relatedly, a common misconception pervaded around the Tulsa Fund – that a crowdsourced real estate investment vehicle promises quick and easy profits. Effective real estate investing remains a long game – not a get-rich-quick scheme. Growth unfolds over years and decades, through patient capital allocation. My most successful developments evolved over a full 18-month search period before even breaking ground!
True community investing also appears less glamorous, often engineered by groups you‘ve never heard of. Yet they do the painstaking work of aggregating resources, getting structured appropriately, then deploying funds into tangible bricks and mortar advancements that gradually transform geographies.
Rather than chasing hype – no matter how alluring – I encourage everyday investors to instead proactively search out established co-ops already achieving demonstrable economic impacts over the past 5-10 years. A few examples across North America:
Examples of Ethical Real Estate Co-Ops
- Boston Ujima Project
- LA Eco-Village Co-Op
- Opportunity Co-Op (Upper Manhattan)
- NorthEast Investment Cooperative (Minneapolis)
The journeys of wealth and salvation for entire peoples prove lifelong and winding. While we all occasionally trip or need course correcting, perhaps the flesh wounds sustained here can better instruct us on how to walk wisely together moving forward.