Behind the Boom and Bust Of Real-Estate Player Vesta

July 30 2008 - A firm that acted as a middle man in a popular real-estate-investment strategy has closed its doors, leaving investors scrambling to recover millions and pointing to flaws in the largely unregulated industry.

The latest problems in the industry involve Vesta Strategies LLC of San Jose, Calif., which closed its doors this month and has yet to return millions of dollars of client money.

Vesta was founded in 2004 by Chicago businessman John Terzakis and his partner, Robert Estupinian. Prior to starting Vesta, Mr. Terzakis had a history of failed real-estate deals and soured relationships — information Mr. Terzakis isn’t required to disclose to potential clients. Now the two men are accusing each other in separate lawsuits of diverting millions of dollars from Vesta for personal use.

The firm was involved in the real-estate-investing strategy known as 1031 exchanges, which gained popularity during the real-estate boom of recent years because they allowed investors to buy and sell properties without paying taxes.

REAL ESTATE: Behind the Boom and Bust Of Real-Estate Player Vesta
by KRIS HUDSON | The Wall Street Journal