Transcription
We are now on the record. The time is 9:23 a.m. This is the video recorded deposition of the corporate representative. This deposition is being taken on Wednesday, July 15th, 2026.
"I will swear the witness in now, Mr. Cardone, if you raise, I'm going to give you an oath."
"Sure."
"Do you solemnly swear that the testimony you are about to give will be the true, the whole truth, nothing but the true self?"
"Yes."
"Thank you. Witness board record is open."
"Good morning, Mr. Cardone."
"Good morning."
"You're the founder and CEO of Cardone Capital, right?"
"That's right."
"I'm going to mark this as exhibit 229. This is the amended 30B6 notice to Cardone Capital in this case. Have you seen this document before? And Mr. Cardone, you have to answer yes or no. Um, nods won't be captured by the court reporter."
"I haven't acknowledge what I'm what what you're asking me. Yes, I to"
"Yes, I've seen this. This was part of the package I studied over the last weekend."
"Do you understand that you have been designated by Cardone Capital to testify as a corporate representative on every topic in this amended deposition notice?"
"Yes, I I designated myself."
"No."
"You are also a named individual defendant in this action, correct?"
"Yes, ma'am."
"And you understand there's going to be a separate deposition of you later this week in your interview."
"I'm looking forward to it."
"Okay. But for today, you're here as Cardone Capital's representative. Understood?"
"Yes, ma'am."
"Okay. You own 100% of Cardone Capital, correct?"
"Yes, ma'am."
"Cardone Capital's offering statements identify you as the controller and sole decision maker of Cardone Capital. Correct."
"Yes."
"So, when you testify here today about Cardone Capital's knowledge, that includes your personal knowledge as CEO and sole decision maker. Correct?"
"Yes, ma'am."
"Is there any person at Cardone Capital whose knowledge on the topics in here is greater than your own?"
"There is a forum."
"There is no one."
"Okay."
"That has more knowledge on this topic than I do."
"You personally made many of the statements that are at issue in this case, including statements in YouTube videos, Instagram posts, and other social media. Correct?"
"Well, yeah, of course. I mean, if I was the person doing the video, it would have been me personally doing the video. So for those statements, you don't need to rely on anyone else's knowledge to explain what you meant or what basis you had for making them. Correct?"
"Objective form."
"What does that even mean? Objective form."
"It means that there's a in my in my view a problem with her question the way she asked it."
"Uh yeah. No. Um and despite the fact that you object to form, I could I still want an answer?"
"Yeah."
"No, I don't need to check with anybody else about what I said."
"Do you understand that the testimony you provide today as corporate representative is under oath?"
"Yes. And everything you tell me today reflects both Cardone Capital's position and your personal understanding and belief. Correct?"
"Absolutely."
"If at your individual deposition later this week, you were to give an answer about any of the topics today that differs from what you tell me today, one of those two answers would have to be inaccurate. Correct?"
"Objective form."
"Say that again."
"If at your in if I change my mind tomorrow on something I said today. No, it doesn't have to be incorrect."
"No."
"No. Absolutely not."
"So something you say later this week could conflict with something you say today."
"So something you testify to in two days that's different from today. You believe that those two answers could be both correct? Is that right?"
"Yeah. I can't predict the future. It's it's an impossible question to answer. Every possible thing you asked me today, you ask me a different variation of it two days from now. I said it's ridiculous."
"What did you do to prepare for your deposition today?"
"Oh my god. I have a college degree in this. I have spent at least I don't know 60 or 70 hours on this without without exaggeration."
"Did you meet with Mr. and Mr."
"I love spending time with these guys."
"For how long did you meet with them?"
"I met with them yesterday. I met with them Friday. I met with them Thursday. I met with them Wednesday. I talked to them on the phone. Like"
"Right. And you reviewed documents to prepare for the"
"Stack. I did"
"About"
"Stacks. I'm sure you'll show all to me. There's probably nothing you you you have in there I haven't seen. Be shocked. I'll be shocked if you if you guys in your firm pull up something I have not seen before."
"Did any documents refresh your recollection as to the topics in this notice?"
"Refresh it. I don't I mean I don't know. I studied the material so I don't know if I'm refreshed."
"Did you speak with anyone other than Cardone Capital's lawyers in order to obtain facts that you needed for today's deposition?"
"I don't think so."
"Did you read the amended complaint in this case?"
"What would that be? I I don't I don't know your legal terminology. What's the amended complaint look like?"
"It's the operative complaint that's on file in this case."
"Can I see it though?"
"Can I see what I'm talk"
"I don't have a copy of it with me today."
"Is that the binder? Is that would that been the binder?"
"No, it's a document that looks in form. It looks like this one in the sense that it has the same names and the name of the case."
"I can't I can't answer if I've seen it or not if I don't know what."
"Did you read any other materials that have been filed in this case like as part of the lawsuit? Any of the briefs, any of the motions?"
"Again, you I'm not a I'm not a lawyer. Don't ever want to be a lawyer. So, you have to tell me show me what a brief is."
"Show me what a motion is cuz I don't know what those things are any more than I know what objection to form means."
"Okay. But I'm happy to if you show it to me, I can tell you if I I've looked at it or not."
"All right."
"Cardone Capital is the manager of Cardone Equity Fund 5. Correct?"
"Yes."
"And as the manager, Cardone Capital has complete control over Cardone Equity Fund 5. Correct?"
"Total absolute control."
"Okay. And Cardone Capital is the manager of Cardone Equity Fund 6. Correct?"
"Yes. And as the manager, Cardone Capital has complete control over Cardone Equity Fund 6."
"Absolute and total control."
"And Cardone Capital in turn is fully controlled by you, right?"
"Absolute and total."
"Cardone Capital is the class B member of funds five and six. Correct?"
"If you say so. I as I am class B. Yes. Let's go with a yes."
"As the class B member, Cardone Capital is entitled to a 35% share of the operating profits, right?"
"Yes. After return of capital."
"After return of capital. That's right."
"Oh, you talking about we talking about fund five or fund four?"
"We're talking about fund five."
"Okay. So, keep in mind I have Sorry, Denise. I have and this is why your earlier question about today or Friday. Okay. So, fund five we have a we get a 35% promote. It's an optional, by the way. I don't know if you guys know that. I don't have to take it. Not I'm not required by the law to take it. It's up to me. So, if the asset were to make return capital is our plan to the investor, then we would share in 35% above that. We're entitled, however, by the by the operating agreement. 35% of all cash flow, 35% of all profits. So, yes."
"What percentage of Fund 5's total capital did you personally invest?"
"I think I'm on a as a member for about somewhere between5 and $8 million. I I don't know what the percentage is right now."
"Sorry. Go ahead."
"But but there was a point in time where I own and we do this on every one of our funds. The asset we we locate the asset. I go purchase this asset with my money. So there was a period of time where I owned 100% of fund four, fund five, fund six. What's the other fund? that that that that lays with fund 68 all 47 assets that we purchased and the 29 previous before that I owned 100% before I offer this to any family members extended family customers partners or investors. So on fund five that was a raise fund four and fund five were a raise of about 162 million. At some point I owned 100% of the entire fund four and fund five. We close that transaction. We then offer it to our public at which time the nonacredited fund that you're interested in fund five would have then purchased positions after my $162 million commitment to the asset. They would have then come in at 10,000 or5 or $10,000 investments to take a position at which point we trade them membership shares at the same price. by the way that I entered that project at with no markup and no middleman."
"And so after you offered fund five to investors, what is the total capital that you had in fund five?"
"Somewhere between5 and $8 million."
"And how about for fund six?"
"I don't know. As I sit here, I can't. It would be documented, but you don't know the answer today."
"As I sit here, I can't give you a number. Any more than the $5 to 8 million probably isn't the right the answer you want either."
"Okay."
"Cuz it's not exact, but it's documented."
"I'm going to mark as exhibit 230. This document I'm going to have to share over Zoom because I don't have it printed."
"Do you recognize this document?"
"Do I recognize I mean I I recognize f the first page."
"These are interrogatory responses from defendants including Cardone Capital. Correct?"
"I have no clue."
"It says at the top here, defendants amended objections and responses to plaintiff's first set of interrogatories. Correct?"
"Yes. I see that."
"And Cardone Capital is a defendant in this lawsuit, correct?"
"Yes."
"So, these are interrogatory responses from defendants, including Cardone Capital. Correct?"
"I believe you. I'm not looking at the whole thing, so I can't."
"Okay. Are you able to scroll down to page three where it says interrogatory number one?"
"Man, I really wish this was paper, guys."
"Most of today will be paper."
"Okay, I see three, but let me just check on two so I know what I'm looking at. So why don't I ask my question and then if you want to read back through that."
"That's a great idea."
"So if you can look down at interrogatory number one. Interrogatory number one. Identify each person involved in preparing or offering or approving the offering circular for Cardone Equity Fund 5 and for Cardone Equity Fund 6. Right."
"I see that."
"Okay. And the response is subject to the general objections, defendants state that the persons responsible for preparing and approving the offering circulars for Cardone Equity Fund 5 and Cardone Equity Fund 6 were Susan and outside council Jillian Esquire. Correct?"
"Okay."
"Does Cardone Capital agree that's an accurate response? You signed the offering circular for fund five. Correct?"
"Yes. You also signed the preliminary offering circulars for fund five, correct?"
"Okay. You signed the offering circular for fund six, correct?"
"Sure, I did."
"And you also signed the preliminary offering circulars for fund six, correct?"
"I think I would have had to sign all that in order for us to be here today."
"Mr. Cardone, you of course reviewed the offering circulars that you signed and submitted to the SEC. Correct?"
"Yes. And you of course approved the offering circulars that you signed and submitted to the SEC, right?"
"Yes."
"So this response here in interrogatory number one, it should also include you. Correct?"
"No, I I didn't prepare it. I didn't prepare this."
"You didn't prepare what, Mr."
"The offering circuit. You know, I didn't prepare them. No. No. No one would expect a founder of the company, a guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy guy running a company a $5 billion company to to to prepare the offering that's why we have lawyers that's why I hired Jillian that's why I had Susan on staff you know that m"
"Mr. Cardone, the question is identify each person involved in preparing or approving the offering circulars."
"Yeah."
"And you told me that you approved the offering."
"I said I prepared it."
"No, I said I approved it and I said someone else prepared it."
"Right. So if you approved the offering circulars for fund five and for fund six, your name should be included here in response to"
"I don't agree with that. You know,"
"Even though the question is identify each person involved in preparing or approving the offering circulars for fun five and for fun six,"
"you have to have more than that. I mean, this you guys can't be down to this. I did not and you know it and no one everybody in the world is going to know. I didn't sit down. How many how many pages was the circular"
"30 or 40 pages? I Nobody expects me to prepare that."
"Mr."
"I signed it. I approved it."
"Okay. You approved it."
"Yeah. Susan or worked for me at the time and Jillian was hired by us as a pro as a professional third party outside council."
"Think you answered my question, Mr. Cardone, that you approved the offering circulars. Thank you."
"Let's talk about We can go back to the amended notice of 30B6. That's exhibit 229. Do you have that in front of you?"
"I mean, I wouldn't know. I wouldn't know if I have it in front of me or not. Actually,"
"There's going to be a couple exhibits today that I show you that I refer back to throughout the deposition. So, if we can keep them in front of you. Do you know that?"
"Yes."
"That this is exhibit 231."
"It's defendants objections and responses to plaintiff's fourth set of interrogatories. So, if we can look at exhibit 229, the amended notice."
"Yes, ma'am."
"And we can go to topic 39. And topic 39 is the basis and support if any for the following Tesla water communications targeting investors in funds five and six. And then there are a number of different subp parts. Correct?"
"Um I'm not up with you yet. 39."
"Mhm."
"The basis of support. Okay. Communications with"
"And if we can go now to defendants objections and responses to plaintiff's fourth set of interrogatories. So exhibit 231. Have you familiarized yourself with the responses in this document?"
"I'm sure I have, but at some point all this starts to look the same."
"I understand."
"Yeah. Thank you."
"If you go to page 20 of this document"
"To the last page. That's interesting."
"You signed this document, correct?"
"Yes."
"Okay. And you swore that you believed these responses in this document to be truthful and accurate, right?"
"100%. And these are responses that were submitted on behalf of defendants, which includes Cardone Capital. Correct?"
"Yes."
"Can you turn to page five of this document?"
"I'm on it."
"Okay. Interrogatory number nine. It says, and are you there? Interrogatory number nine."
"I love this one."
"Okay."
"This is an awesome interrogatory."
"Great. It says, "State the factual bases for and any assumptions made in connection with Grant Cardone's representation in an April 22, 2019 YouTube video that investors would walk away."
"Okay. What what what would help me is if you use the numbers on the side cuz then I'll know where to go to."
"I'm a numbers guy."
"Come on."
"And we'll talk numbers today. Line two, it says, "State the factual basis for and any assumptions made in connection with Grant Cardone's representation in an April 22, 2019 YouTube video that investors would quote, "walk away with a 15% annualized return. If I'm in that deal for 10 years, you're going to earn 150%." And that's from the second amended complaint, paragraph 1 and 56, including citations. to documents including citations to documents that support this representation. If there are no such documents state that there are none. Do you see that?"
"I do."
"Okay. You are familiar with the YouTube video referred to in this interrogatory. Correct?"
"I would need to see the video again to under Yeah, I put 12,000 videos on YouTube. I'll probably put as many on Instagram and another 12,000 on Snapchat. So probably 12,000 on Tik Tok. So for you'd ask me if I remember this one video. I would need to see it."
"Mr. Cardone, today you are here."
"I would say though if I could finish."
"Go ahead. Finish. Mr. Cordon,"
"that if I did a video on YouTube, it was either it was probably an instructional video. You guys think that every video that I do is about a fund or a raise. If I remember correctly on this video and again I would have to see it. I think I was doing an instruction to people how they could produce a 15% annualized by the way ARR which would be very very easy to accomplish. I've done 76 transactions in my lifetime since I was 31 years old. Every one of them has achieved that. A r a"
"ar a r and many of them have achieved 10 times that and even sometimes 30 times that. So what I'm saying here and again I'd have to see the video to to testify that that's what exactly what I was saying. If I'm in a deal for 10 years you're going to earn 150% on your money. That would include cash flow, profits, write offs, capital protection, and it was probably a that video was probably 45 minutes long. So, it would have been more than just one statement."
"Mr. Cardone, you are here today as Cardone Capital's representative. Correct?"
"Yes."
"And as part of today, you were received a notice of the deposition topics for today's deposition. Correct?"
"Yeah. Did I receive a deposition notice?"
"Yeah, that's exhibit 229."
"Okay."
"And it asks you, it asks the witness to be prepared to discuss in topic 39 the basis and support if any for the following Tesla water communications targeting investors in funds five and six. And the very first communication in notes here is the representation in an April 22, 2019 YouTube video that investors would walk away with a 15% annualized return if I'm in that deal for 10 years. You're going to earn 150%."
"Yes."
"Correct. But in preparing for your deposition today, you did not go back and familiarize yourself with that video. Is that right?"
"I didn't say that,"
"Mr. Cardone."
"I said Wednesday morning, 10:00 in the morning. You're asking me about one of 12,000 videos. Let me look at the video. I have a YouTube channel. It's still public data, by the way. We haven't taken any videos down. They're all available. That's how you pulled it."
"Mhm."
"So, all my data is public. We're very transparent. I I have done for since 2014 been producing educational content for the regular everyday person so they could simply and easily understand how wealthy institutions and families have used real estate for years to invest their money rather than leaving it at a bank or 401k or an IRA or just simply buying a house. I have spent dedicated my life to helping people."
"Mr."
"know what I know. Let me let me I am going to cut you off here."
"Yeah, but you cannot ask me about one of 12,000 videos."
"Yes, I can because we have asked you in this deposition to be prepared to discuss."
"I am better prepared than you are"
"certain topics, Mr. Cardone."
"And so we expect that you are prepared to talk about the specific videos and social media posts that are referenced in this notice."
"And I'm happy to talk about it. Okay. I and and it is not fair though for you. I look I understand your goal. You have a job and I appreciate that and respect you for art. Your job is to somehow make me look like I've done something wrong here today and I haven't. I have paid out $600 million to the $2 billion that we have raised. I have paid $600 million to our investors. I have done for investors what has never been done before at scale. And you think I'm a target? If you simply show me the video, I'll take one minute to look at it and say, "Oh, yeah. I know exactly what I was saying in this video, but without context, was it educational or was I raising money?""
"Mr. Cardone, you stated in this video,"
"was it educational or was it raising money? That's all I'm asking."
"Mr. Cardone, your attorneys can ask questions at redirect, but I am in this deposition going to be asking you questions. And this deposition will go very long time if you are not if you were for student responsition."
"5 days, 8 hours a day."
"Understood, Mr. Carter. But"
"we're not going to do that for eight hours."
"Yeah."
"Yeah."
"So, I'm going to ask questions and this will go a lot faster if you respond to my question. This has been four years. I spent over $3 million defending myself in a case. Okay? So, if you if you if you want to come in here today and say, "Let's go faster." I'm like, "What are you talking about? This has been four years of my life. I've spent tens of thousands of wasted hours on a case that should never be brought against me. I've done nothing but help people."
"Mr. Cardone."
"So, you you but you trying to push me to go faster is completely, you know, it's unprofessional. What I'm asking you to do is listen to my question."
"I heard your question"
"and respond to the questions that I ask. And if that is something that you are not able to do today, then I will have to call the court. Understood?"
"Call the courts."
"Mr. Cardone,"
"I just want to see the video. Morgan, it's it's only fair. I have a YouTube channel. It's a public channel. It would take 60 seconds to pull it up."
"Okay, Mr. Cardone, let's go back to interrogatory number nine."
"Okay. And that"
"same thing we were on"
"exhibit."
"Yes, exhibit 231."
"Okay. And the response here says in the second paragraph, like other IRR and cash projections for funds five and six, the reference statement was and continues to be supported by Cardone Capitals and Grant Cardone's extensive experience, history, and track record of success in the real estate industry. Correct?"
"Yes, I see that. So this response states that part of the basis for your April 22, 2019 YouTube video is Cardone Capitals and your track record. Correct?"
"What it says is my extensive experience, 40 years history, 76 transactions. Well, at that time it wasn't 76, but it was probably 60. the track record of success never having a failed project never not hitting our expectations never having a forbearance never having a bankruptcy never losing a property my discipline it also goes on to say my disciplined property selection very"
"Mr. We will get there."
"I agree with that. I agree with that."
"And if we go to down just a little on this page five in bold, it says successful track record, right?"
"Mhm. It says 30 years. That's not true."
"So that's false."
"That's false."
"Yeah. It's 40 years. It's it's not false. It's a it's 30 of the 40."
"So it this response should have been 40 years."
"Should say Grant Cardone has over 40. I I should have I missed that. No, but you know what? It's not false because it says Grant Cardone has over over 30 years. So, my bad."
"And it says I'm just going to read what it says here. Prior to launching funds five and six, Mr. Cardone had purchased over 40 multi-million property multif family properties comprising over 4,500 units with a total purchase price exceeding $650 million."
"Of those purchased properties, Mr. Cardone has sold approximately 24 of them by the time funds five and six were finalized. The amounts for which these properties were purchased and sold are reflected in numerous produced documents including Cardone"
"The amounts in which these properties"
"were purchased and sold are reflected in numerous produced documents including Cardone cap 00547821 which is captured in relevant part below. As indicated in this and other similar produced documents, the properties were sold at appreciated values, often at significant durations. Sorry, often were sold at appreciated values, often at a significant premium, even when holding the properties for a shorter duration than anticipated for funds five and six. Correct?"
"Mhm."
"Okay, let's take a look at the document that's cited in there."
"Yeah, I love this. Cardone cap 00547821."
"Mhm."
"Our worst performer was the first the first property on the on the list."
"Can you please mark this as exhibit 232?"
"It's 00547821."
"547821. This is exhibit 232."
"Thank you."
"Doesn't matter. Yes, you can give it to the witness."
"Okay. Yeah, I'm looking at it. Thank you, Denise. Now, this document here, I've printed it, but it's a spreadsheet that has three different tabs. And those tabs are separated by this blue sheet of paper here. But the first tab of this spreadsheet, it says prior and current portfolio as of February 20, 2020. Right. Okay."
"Do you see that, Mr. Cardone? Your the exhibit is to your"
"Yeah, I'm looking at it right here, though."
"Yeah,"
"this right here."
"Okay. But let's look at the actual exhibit itself. Do you recognize this document, Mr. Cardone?"
"Yes, I I rep I recognize this."
"And it says prior and current portfolio as of February 20, 2020. Right. Yes. Are there any properties that are not included on this spreadsheet that Cardone Capital asserts supports your statement on April 22nd, 2019?"
"Are there any properties?"
"Yeah, yeah, there probably are."
"What are those properties?"
"1117 Sheffield, Belair, Texas. 5422 Brayurn."
"Oh, sorry. You know, Denise, that's not right."
"1117 Sheffield FF"
"Belair, Texas."
"Belair, Texas. I think the purchase was 1983. Put $3,500 down on that piece of property. Then there's 5422 Brayurn. B R A E B U R N."
"And where was that property? There would also be, this is so good, 6450 Camino de la Casta. Four words 50 Camino de la Costa. Put no money down on that one. It made $6 million. That's in La Hoya. There would also be this not on this list. What's that? 141 Oral Drive, Los Angeles, California. I'm just working off of memory here, Morgan."
"I understand"
"that property we made like $11 million on. And let's see. Am I missing anything else? I think that's it."
"Okay. So, Mr. Cardone, you said 1117 Sheffield."
"Yes, ma'am."
"5422 Brayburn."
"Yes, ma'am."
"6450 Camino Deacosta."
"Yes, ma'am. I think that address is right."
"Okay. And 1401 Oral Drive. Correct?"
"Are those all single family properties?"
"Uh, they are, but they were used as rentals for the record. I think it's oral like the bird and not Oreo like oral."
"Yeah, Oral. O R I O L E."
"Like the Baltimore Orioles."
"Yeah."
"And are these all properties that you had purchased and sold by the time that you were fundraising for fun five?"
"What year was Yes. Yes. Absolutely. By the way, a lot of people get their start in single family Morgan as you might know and that's where I got my start buying small single family homes."
"Okay. Let's start on this second page here after this blue sheet. This is a tab of the spreadsheet titled prior properties."
"Were these investments all fully realized by the time fund five closed?"
"Would they have been fully realized? Because I don't have dates here, but we would have these dates 2020 2019. This is a different, you know, this is a different sheet, right? One's February 2020 and one the other one's June almost eight months earlier."
"Yeah."
"So these are these are properties that would have been fully realized by the time fund five closed in September 2019. Right?"
"I'm not sure about Haron Point Realm. I'm sorry."
"Yes."
"As I sit here right now."
"Second. Okay."
"Okay. Go ahead. I'm not sure about"
"I'm just the the first three. I was just just mentioning the first three owner. I'm not sure about the these three."
"Okay. right here."
"The oranges."
"Okay."
"So, I'm not Morgan."
"I forget the closing date of Haron Point realm and I'm not sure what year the Tennessee portfolio happened, but I would think that they had already happened, right? Because the date of this document says as of June 30th, 2019, right?"
"Mhm."
"Okay."
"Different than the previous."
"And these are all investments that you held for 2 to 6 years, right?"
"No, that's not true,"
"Mr. Cardone. a a column here that says years held."
"Yeah, you see that"
"there's one, forgive me, there's one property here that says 1.5 years, but everything else is 2 to 6 years. Correct?"
"There's another one in here that was only held for 3 months."
"Which one is that?"
"That would be Damn, what was the name of it? I went blank. That's not on here."
"Okay, well,"
"hold on, hold on, hold on, hold on. Oh, yeah, there it is."
"Which one?"
"Yeah, Montelena. The last one. It was I had that property three months and I made $4 million. It was 100% return made in 90 days."
"Okay. So it says here"
"that that's 30% a month."
"It says here years held for the Montilena property was 1.5. Is that inaccurate?"
"That's inaccurate."
"Okay. So it should be 3 months."
"Yes, ma'am."
"Okay. And"
"and we we state that in all these documents that we sent out that not everything had been audited or should not be dependent upon is exactly accurate. and we do our best to make sure the data, but we're human beings, too. So, that was off by it actually got better, not worse."
"The spreadsheet includes the name of the investment, the location of the investment, the total units, the total acquisition cost, and the sales price. Right?"
"Yes, ma'am."
"This doesn't contain any information about what the operating costs are were of these properties. Right?"
"You're exactly right. In fact, the profit showed here, doesn't it? It doesn't doesn't it show it on the other one, though? Yeah. See, the previous one shows our cost going in and what we sold it for."
"That's right."
"That's the one that shows the unbelievable profits on recorded properties. All these are documented, by the way, by the city and state and county that they're located in."
"Well, what I'm trying to understand, Mr. Cardone, is it has the acquisition price and the sales price,"
"but you said it doesn't include the operating costs."
"Correct."
"Yes. And it shows the profit and it shows how long we held it. But what it doesn't show is the cash flow."
"It also doesn't show the operating costs. Correct?"
"Yeah."
"Okay."
"That's right. But do you understand how operating cost works in a property?"
"Yes. It doesn't tell us whether there were any improvements that were made to these properties. Right?"
"Well, it doesn't show you property taxes either,"
"right?"
"It doesn't show you insurance cost."
"Correct."
"What's the point?"
"My point is that this spreadsheet, it doesn't tell us what the net profits were for any of these properties, right?"
"Sure it does. Look at the first page."
"I am looking at that, Mr. Cardo."
"Okay, good."
"It tells me the acquisition cost. Look, Morgan, we we under we underpromised to our investors and overd delivered. And we have on every property I've ever owned. I've been buying I've been doing this since I was 31 years old. I have underpromised my family and overd delivered on every single transaction. The realm property, Boca Raton, we paid 12 million. They wrote articles up on me saying I had overpaid for the property. Mr. 10X had been 10xed. We sold it for We sold it for $4 million. We made $4 million in three years. That's a million $1.1 million a year plus the cash flow. Plus plus we wrote we we bought the the uh debt down. Okay. So did does this show that we powerwash the property or we fixed the units? No, of course not. You would never show that."
"Mr. Cardone, you are claiming and Cardone C and Capital is claiming that the performance of these prior properties support your statements."
"No."
"No, you're not claiming"
"it exceeds any statement I've ever publicly made. Okay."
"Every one of these transactions,"
"I understand. However, there's no information that's been produced about what the costs were of these properties, what the net profit of these properties."
"Morgan, again, you guys don't understand real estate. Like I don't I can't even believe you guys took this case. These are the net profits let short of cash flow and short of tax deductions in short destruction of money. So th this is showing you I made uh 300 356 million of profit on those deals before cash flow before write offs before tax advantages. It's right there. I I don't I don't even uh it it's y'all need y'all need a real estate department if you're going to you're going to bring a professional in here. I know you guys hired a professional and they're going to they you can audit all this, do all the auditing you want on it. You're going to see the numbers turn out to be the numbers, but they're going to be better than the actual numbers because this does not show the true benefits to our investors, which would be three other things if you care about them."
"Mr. Cardone,"
"do you"
"if we wanted to understand what the costs were of operating these properties, including things like taxes, as you said."
"Yes."
"And to understand what your net profit was, Mr. Cardone, I'm asking the questions."
"Okay."
"If we wanted to understand what Cardone Capital's net profit was from these properties and what the cash distributions were from these properties, what could we look at? Because it's not in this document."
"You would have to pull the you'd have to pull the uh the taxes filed of each one of these properties."
"Mr. Cardone, do you have those records?"
"I file taxes with IRS. I've been audited four times, won all cases. So,"
"did you produce those"
"documents, Mr. Cardone?"
"Would I produce the documents on these?"
"Yes."
"I I don't know. I didn't think that I don't I don't know how these have anything to do with the the the case."
"Well, Mr. Cardone,"
"nobody made a decision to invest in these new assets based on what I've done in the past. The circular even says past performance has nothing to do and should not influence your decision."
"So you'd agree past performance is completely irrelevant to the statements that you made. Is that what you're saying?"
"Absolutely."
"Absolutely not. My past performance is the thing that I rely on. My ability to make a good decision, pick a good asset, be able to predict with some certainty what future rents look like. Will that asset be a good location in the future? three years, five years, seven years, 10 years or if I have to go longer. This is what I relied on my experience doing this. When I started doing this, I did not have this experience for me to deny in this case 2 4 6 8 10 12 14 16 18 20 22 24 another 28 positive experiences. You know how much I learned here? This is a billion dollar billion dollars worth of practical education. And so you think I'm not going to rely on that? Of course I am. Now the investor should not rely on my past performance in order to make a decision. But I have to. And also let me say that when I'm buying properties, Morgan, the fact that I did these 24 transactions that you see listed here successfully without a forbearance, without a bankruptcy, without a loss, also positioned me to be able to buy the assets that are contained in fund five and six because without this experience, this very in-depth experience and this track record, I wouldn't be able to get the asset and I wouldn't be able to acquire the debt."
"Mr. Cardone, you agree that this chart here doesn't give us all the information we need to understand the investments that you assert in interrogatory number nine supports the factual bases and assumptions that were made in connection with your assertions that investors would walk away with a 15% annualized return. Right?"
"If you can if you can do basic math, it gives you everything you need. Like basic I'm talking fifth grader math right here. You take the number of years, you divide the profit by the number of years and you will see returns here 130% a year, not 15% annualized or internal rate of return. So I I don't Yes, this contains everything you need in order to say, you know what, Grant Cardone has is a an experienced, seasoned real estate investor with a history of exceeding his predictions."
"Mr. Cardone, the spreadsheet gives me the sales price and the acquisition costs. Are you saying that if I subtract the acquisition cost from the sales price, you took home all of that 100%."
"That's what I'm saying, Morgan. Okay,"
"Morgan, we make a lot of money here. Okay, if you hold real estate, exit at the appropriate time, you're going to make money. Everybody, almost everybody knows that, by the way. If you just hold the real estate, it's why real estate is the largest asset class on planet Earth, bigger than gold, silver, bonds, money markets, and the stock market. Can you calculate irr using the information in this spreadsheet?"
"I can."
"Can you"
"tell me how, Mr. Cardone?"
"Well,"
"IRR with the information that is in this spreadsheet."
"Yes, I can."
"Can you explain?"
"You take the cash flow plus the exit, add the cost of money, and you'll come up with your RL."
"Where is the cash flow represented in this document?"
"Well, I mean, I know the cash flow, so I could take cash flow out, by the I don't need cash flow in this to hit to hit a north of a 15. I would I would be in the if you take if you take let's take random Camelot. See it $3.5,70,000. We put $750,000 down. I put $750,000 down. I had I think one partner on that deal, maybe two. We made $4,750,000 on that deal."
"Which property are we looking at, Mr. heard um Camelot."
"I'm looking at Camelot."
"Okay."
"Okay. I put $750,000 in. I made $4 million. I'm doing this just basic. 4,800,000 was the profit divided by $750,000 equals 640% return 6.4 multiplier. If you divide that by the time I own the property, three, that means I made 213% a year. I don't need to to even worry about my cash flow. By the way, my cash flow is plus plus. So, this is what I tell you. I underpromised our investors and I crushed it. I overd delivered. So, now if you need to get down to some formula to figure out 15 you I'm at 213% a year. I don't need to have the cash flow to be to to say I achieved a 15. Every single one of these, by the way, will achieve something north of a 15 except for one Haron point. H E R O N."
"Mr. Cardone, what does annualized return mean?"
"And can I just can I just cover the Haron Point exception?"
"No, you don't want me to."
"No, not"
"what does annualized return mean, Miss"
"Annualized return"
"is different than internal rate. And I like the ARR better. By the way, the reason I like the annual annualized better for my investors is because they're in it for a longer period of time. Typically your short fund, Blackstone, Starwoods, KKRS, Carile, sorry, Denise, they will use these are Wall Street institution. They'll use a shortterm margin because they have they want to exit the property faster. so they can achieve their fees. We we I would prefer to use an ARR because I think it's more representative to the investor. You put a 100 grand in, you got $150,000 out. That would be considered a an ARR plus your cash flow. Now, some people like to use adjusted for inflation."
"Mr. Cardone, I'm going to cut you off for this one because you're going far past my question now."
"Okay. Is annualized return the same thing as a ARR?"
"No."
"Okay. So, when you say in interrogatory number nine that investors would walk away with a 15% annualized return, you're not talking about ARR, right?"
"Yes, I am."
"You are. So,"
"that's what it says."
"It says,"
"what does that say right there? A R. It says annual rate of return. Annual"
"I, Mr. Cardone, I just asked you, is annualized return the same thing as a arr and you replied no correct?"
"No, I didn't say that I said yes a r"
"Excuse me can you please read back the testimony that Mr. Cardone gave right after minute 32."
"ARR I said is not the same as IR."
"No, that's not that was not my question."
"Okay. But then I misunderstood your question."
"Okay. So, it is your testimony that annualized return and ARR mean the same thing."
"Annualiz return."
"Yes."
"And"
"ARR mean the same thing. That's your testimony."
"Yes. It is an abbreviation for annual ass rate of return."
"Okay. Morgan, I think the issue is just that he'd misheard."
"I understand."
"I understand. I'm That's I'm just trying to get clarity on what the answers are here. Okay, Mr. Cardone, these properties that are in exhibit 232 that were full the fully realized investments down here, these were not part of an equity fund, right?"
"You said the fully"
"the fully realized investments. Yes. Yes, they were. Sorry."
"They were part of an equity fund."
"Of course, they were. They had subscription agreements and members. The the Howard Tenbomb invested in Wilma Vista."
"Okay. Let's let's let me ask a question and you can respond to it."
"But you did ask a question and I was answering."
"Okay. For becoming very conversational."
"Yes. For how many of these properties were you the only investor?"
"I don't think any of them. How many of these properties had more than five investors?"
"I don't know. They all had investors. They all had subscription agreements. They were all partnerships."
"Did any of these properties have more than 10 investors?"
"I I maybe I'm not sure right now as I sit here."
"None of these were properties for which you had thousands of investors. Correct?"
"No."
"Okay."
"They weren't big enough to support a thousand investors. They were smaller deals. What is there's a difference between project irr and investor irr, right, Mr. Cardone?"
"I don't ever use that term or rarely use project IR. I don't don't even know if I've ever heard it. Actually,"
"the overall IRRa for"
The project is different than what the investor IRR is. Right.
Not necessarily. We'll come back to that. That you know, Mr. Cardone. Okay. Can you please tell me where the Fund Five and Fund Six properties are located? Where they're located.
Yes, sure. 10X Delray is located in Delray. 10X Delray is located in Delray. 10X Addison, by the way, the 10X Delray property, we're probably up, you know, we're way over the 15 right now on that. My question here is really simple. 10X Addison is in Naples, Florida. Unbelievable location, phenomenal, pristine, perfect real estate. 10X Sawgrass is located 30 minutes right from here. This is the property we returned $14 million this week to our investors on 10X Mon. You can do it. 10X um, if it's easier, Mr. Own. Just generally speaking, we don't have to go property. Stella's in Sugarland. Okay. It's in Sugarland, Texas. Unbelievable location. And then 10X Breakfast Point is in Panama City Beach.
These properties are, you want the ones in six? Sure. Good. Uh, let's see. We would have, I'm not sure they're all listed here. They might be. Let's see. Yeah, those are great, too. Um, Mr. Cardone, what are you using? 10X PCB, 10X Columbia, 10X Addison Place. Oh, I'm sorry. 10X Columbia, that's in Maryland. I'm sorry. 10X Columbia is in Maryland. 10X Retreat is also Panama City Beach.
So, these properties, they're almost all in Florida and Texas, right? No, one's in Maryland. Right. And there's one in Maryland. Out of the 24 fully realized properties that are on exhibit 232. She's saying fully. I was here. Yeah. Out of the 24 fully realized investments that are here, only two are in Florida, right? Yes. And out of these, you want to know why or you don't care? I'm just asking my questions, Mr. Cardone. Okay. Out of the 24 fully realized investments, only one is in Texas, right? That's right. Well, but there was two more on not on the list. The single family properties, right? Yes, ma'am. Yes, ma'am. And none of these properties are in Maryland, right? That's right. We only own one one asset in Maryland. We've been trying to add to that market, but been unsuccessful doing so. The remaining 21 properties here, they're located in markets like California, Arizona, Tennessee, and North Carolina, right? That's right. Which are different markets than where most Fund Five and Fund Six properties are located. Correct. Yeah, they are different markets. And prior to Cardone Equity Fund Five, Heron Point and Realm, those are the only Florida properties that you invested in. Is that right? Prior to what? Prior to Fund Five, Heron Point and Realm, those are the only two Florida properties you'd invested in. Yeah.
What other properties in Florida had you invested in? Question. Fund One. Fund One made 47% annualized rate of return to our investors nine years in a row. And the investors still own the asset. That is a 490% return on the equity. It's in Stuart, Florida. It was a $19 million purchase that's worth $47 million today, 9 years later. Mr. Drake, that answer is, you asked me what, what else is in Florida. Fund Two is another property in Stewart. It has achieved a 25% annualized rate of return before and the investors still own the asset. Plus, I had another 1100 units in Florida before we started raising money on Fund Five, 1100 units that have returned investors 300% on their money in 12 years.
Which property are you referring to with the 1100 units, Mr. Herd? The Harbor Portfolio. Okay. Stewart Breeze, Stewart Point, Harbor Breeze, Harbor Point, Harbor K, Harbor Palms, Harbor Pines. Oh, sorry. I'm sorry, Denise. I keep forgetting about you and that is so wrong with me. Harbor Bay. Harbor Stewart. Yeah. Uh, Harbor Bay, Harbor K South, Harbor Palms, Harbor Pines, and Harbor Breeze. There's also Trellis that I bought from Fidelity.
That's not in Florida, right? Yes, it is. Trellis. It says Savannah, Georgia. Oh, I'm sorry. You're right. You're right. You've been doing your homework. They should give you a promotion. Reading the spreadsheet, Mr. Card. So, that is Savannah, Georgia. We, cuz we didn't have Savannah on the list earlier. By the way, you asked me about where I bought. We also own Integra Shores, which is the Fidelity. I bought from Fidelity, the institution.
Okay. That was one of our first deals that we raised for investors. At the top of this. There's one more. Okay. Go ahead. Wellington Club, institutional quality asset that we bought in Wellington, Florida.
Is Wellington Club part of Fund Three or is it its own individual property? It's, we weren't numbering funds at that time.
How many investors did Wellington Club have? I'm not sure right now. It wasn't thousands of investors, right? It wasn't big enough to support a thousand investors. See what happens is when I buy the asset, and I said this earlier, I buy it, close it, and then investors come in. So if one investor, one investor could take up the whole spot or a thousand could come in and take it.
At the top of this spreadsheet, there's, you know, it includes some of the Fund Five and Six properties that we talked about earlier when we were just going over the locations of those. Right. There's a column in this spreadsheet that says units, right? Mhm. And 10X Living at PCB has 288 units, right? That's what it says. And then Addison Place has 294 units, right? Which one? 10X Addison. Okay. Yeah. Yeah. That, I don't know if that's right, though. That's what it says here on this. Yeah, no, I know. That's what it says. I think it has 29. Yeah, I think it has 294 units. I think that's right. And every other property in Fund Five or Six that's listed in this spreadsheet has 350 units or more. Right.
There are a bunch of Well, no. Reserve at Ormond only has 272 units. There is Reserve at Ormond Beach. O R O N D. That property is not part of Fund Five or Fund Six. Oh, right. Oh. Oh. I'm talking about the Fund Five and Six properties. They all have, I'd have to see the list. 350 or more units. The ones that are listed here in this spreadsheet, 10XL Delray has 346. They're slightly under 350.
Wait, what are you what are you asking me right now? What I'm trying to understand, Mr. Cardone, is most of these properties here that you invested in for Funds Five and Six. Yeah. They are larger, correct, than the fully realized investments at the bottom on the whole. Right. In some cases. Look, there's 320 units at Somerstone. There was 826 units in Tennessee. There was 336 units. I'm sorry. There was, no, that's not true. What you're saying, Claremont, 306. I'm sorry, Summerstone, 360 units. Right. There are there are a couple units here. Nashville, 826 units. Tennessee, 826. There is Catalina Mission 336 units. There's Arcadia Park 288 units. One second. There's Cat, there's no way I'm going to get this. I know. Catalina. Catalina. There's Catalina, 336. And there's Arcadia Park at 288. Montalina at 232. There are four properties. Montalina 232. I'm sorry, Denise. So there are four properties here that have 288 or more units from the fully realized investments, right? And the rest are smaller. Correct.
Sure. I don't know what that means, but you understand when you get bigger, you get scale. Gets easier to make money on the properties because every $10 in rent produces a better return for the investor. So if I have two units, I make $20. If I have 2,000 units, it produces $12 million of profit every time I raise the rents $10. So, our investors benefit. And what's really cool is we offer the people that live in the property to actually be investors in our properties.
I'm going to strike that answer as non-responsive. None of these 24 properties had the 65% 35% Class A Class B profit split that governs Fund Five and Fund Six. Correct. It's not true.
Which ones had that 65% 35% Class A Class B profit split? Probably half of them had a half of them probably had a 65/35. Third of them probably had a 75/25. I'm just going off of memory. And some of them had an 80/20. Some of people would put money in and just get a loan and own none of the property. I had 100%. It was like an 8 and zero. I got 100% of everything, all the profits. There was an investor once that didn't want to be an investor, but they were willing to loan me money. So, the different people wanted to do different things.
If I wanted to know which of these properties had a 65% 35% profit split, what would I look at? You would look at the formation of the partnership.
Have those documents been produced in this case? I have no clue.
Did any of these properties involve an acquisition fee? Of course.
Which of these properties involved an acquisition fee? Hopefully all of them, just like they had broker fees, insurance fees, tax assessments, escrow, due diligence, broker loans, debt, debt fees. Everybody knows all these assets have to be purchased and every homeowner in America has fees when they buy something.
None of those fees are reflected in this spreadsheet, right? I don't see them here. Yeah.
That would have impact matter. It would it wouldn't. No, it wouldn't. These these are such crushing returns. It would have nothing to do with it. It'd be minute, minus school, like. I have no way of understanding that because that hasn't been. Because you don't understand real estate. So that's not like I don't know what to tell you. You can always do more due diligence on this. Our investors, anybody that invested in these assets had full transparency at everything.
Mr. Cardone, we've requested these types of documents in this lawsuit, but you have not produced them. Okay. And you're saying I, I've given you everything you wanted, fully. Yeah. Sorry, I want this on the record. Full trans. Mr. Condo, we requested documents in this lawsuit and you have not. Yes. If you ask me for a document on any of this, we have provided it to.