Behind the Scenes of an Alleged $35M Fraud: The Matt Onofrio Story

10, Dec 2022

Behind the Scenes of an Alleged $35M Fraud: The Matt Onofrio Story

The Hyperfocused Entrepreneur
December 10, 2022
Read time: 8 minutes

3 years ago I met this goofy kid at a local real estate conference just starting out on his journey.

I never would’ve guessed that over the next few years, that kid would go on to create the fastest growing real estate portfolio in the industry.

His growth shattered everybody’s perception of what was possible.

Just six months ago, this guy was hanging out with the likes of Alex Hormozi, Ryan Pineda, Ed Mylett, Lewis Howes, and Brandon Turner.

He wrote a book a book for the largest platform in real estate (BiggerPockets).

And his social media following exploded.

But most impressive of all was his claim that he’d built a net worth from $0 to $150,000,000 in only 3 years.

Today, that man is being indicted for allegedly defrauding banks of $35,000,000.

This is the behind-the-scenes story of a potential rags-to-riches-and-back-to-rags-again entrepreneur named Matt Onofrio.

I’m sharing this story to equip you with tools that’ll help you distinguish hucksters from rockstars.

There’ve been so many high profile scandals in the past few years:

Sam Bankman-Fried (FTX)
Elizabeth Holmes (Theranos)
Kwon Do-Hyung (Luna)

Your ability to separate the wheat from the chaff might prove to be your most high value investing skill.

Most people have poor judgment when it comes to trusting these sorts of characters, but it’s not their fault.

A ton of factors work against the average investor seeking solid returns. The most notable problem is that of information disparity.

See, the person on the other side of the table simply has more information than you about all the things that could go wrong.

Unfortunately, you often have no choice but to trust their expertise and judgment.

This makes you vulnerable.

Which doesn’t sit well with me, so in this week’s newsletter we’re going to learn:

If it seems TGTBT, it is
How to use numbers to tell a lie
The power of social manipulation
What to do when the Story Math doesn’t add up

If you want to develop a finely tuned bullshit detector, improve your judgment, and become a better investor. Read on.

A Brief Backstory

I have a confession to make…

Matt was not just a passing acquaintance.

At one point, I even considered him a friend.

In fact, I built out his website, designed his logo/company name, and created his marketing funnel.

In the beginning, I never could’ve guessed how he’d put those tools to use in the coming years, however.

But, over time, red flags started to appear.

Though his stories grew ever more outlandish, I assumed he was just exaggerating.

I didn’t think much of it at that point, but I also don’t make space for people like that in my life, so we went our separate ways.

Over the next 3 years we scaled Invictus Capital’s portfolio to $70M.

In that same period of time, Matt grew his company to over $500M.

I’ll be honest, his outrageous growth bothered me. It all just seemed so unlikely, but I had nothing to go off except my gut.

Eventually, I noticed myself harboring these negative emotions and realized they weren’t serving me.

So I tweeted about it and then I moved on:

Well… as it turns out, I should’ve trusted my gut.

With Matt’s indictment for alleged bank fraud, this is a good time to reflect on 4 red flags that, in hindsight, were obvious to anyone willing to look.

4 Investing Red Flags

Red Flag #1: TGTBT

Matt’s meteoric rise through the industry was inspirational to most.

It felt as though were were witnessing someone who’d cracked the code to generating ridiculous wealth through real estate.

Now, the thing I always say about real estate is it’s the best get rich slowly, but surely plan in the world.

I stand by that.

Sure, it’s possible to hit some grand slams and generate massive returns in only a few years, but those are the exceptions. Not the rule.

Unless you were Matt.

This kid was landing “deal of a lifetime” one after another, at a pace far superior to anybody else in the industry.

And that’s the first red flag.

When somebody outperforms other “outliers’ by orders of magnitude, then you should take a step back and ask, “Is this TGTBT?”

Or, rather…

“Is this too good to be true?”

In my experience, if you ever find yourself asking that question…

Then you already have your answer.

Red Flag #2: The Numbers Lie

The most highlighted line in my last book (Passive Investing Made Simple) is this:

Numbers don’t lie…

But I can make them say whatever I want.

Which means that to avoid getting duped, you should develop an understanding of underwriting, financial modeling, and return projections.

You don’t need to become an Excel wizard or start dreaming about complicated financial formulas in your sleep.

But at a minimum, you must understand industry norms.

See, the most peculiar thing about Matt’s incredible rise is that he did it in a very conservative asset class.

(Triple net lease industrial, for the nerds out there.)

Investors look to these assets as a safe haven for predictable moderate passive returns (~6-10%).

Compared to the returns Matt projected to me in past conversations (~25-30%), and you start to see the next red flag.

The full red flag appeared after sitting down with Matt to walk through his underwriting.

Even as an industry expert, I couldn’t make heads-or-tails of his complicated structures.

And here’s the truth… I felt stupid and assumed it was just over my head.

Here’s the important takeaway:

Don’t invest in anything you can’t wrap your head around.

Even if it’s the most brilliant legitimate strategy in the world, if you can’t understand it, then you’re not making an informed investment decision.

You’re making a bet on the charismatic operator pitching you the opportunity, and that is a bad basis for any investment.

Red Flag #3: The Power of Social Manipulation

Despite having reservations about someone’s legitmacy, the more you see them rubbing shoulders with icons of the industry, the more you beging to doubt yourself.

Which is when FOMO starts kicking in.

The fear-of-missing-out is what makes social proof an incredible tool of persuasion. You can only find yourself on the opposite side of popular opinion for so long before you begin to have a deep seated sense of “wrong-ness”.

This tracks back to our ancestors living in tight-knit tribes out in the wilderness. Back then to find yourself at odds with the “popular opinion” ran the very real risk of getting kicked out of the pack.

Which, practically speaking, is a death sentence.

Best to conform and buy into the “common wisdom”.

Which is why Enron and Bernie Madoff and FTX and Theranos grew to scale they did.

It’s simply monkey-see, monkey-do.

If you think you’re immune to this, think again.

I personally began doubting myself when I saw one social media post in particular. In it, he was out to dinner with somebody I hold in high esteem: Alex Hormozi.

And just like that, my trust in Alex’s judgment got conferred onto Matt (despite all the red flags I’d seen).

It was in that moment I posted the tweet linked earlier. I decided that instead of harboring feelings of resentment and making excuses, that I was going to study Matt and learn from what he was doing right.

Ultimately, this mindset shift served me well, but never underestimate how vulnerable you are to the powers of social proof.

Red Flag #4: Story Math

Over the past 5 years I’ve interviewed hundreds of job applicants. In each conversation I ask, “What’s integrity mean to you?”

I ask this because 92% of companies list things like Integrity or Honesty as one of their core values.

In fact, we had Integrity in Everything, as a core value in one of my companies.

But what does Integrity actually mean?

First, I discovered pretty much everybody believes they have integrity.

More interesting, though, is that everybdoy defines integrity a little bit differently.

There is one through-line, however.

It’s this: Most people believe integrity is about being reliable, consistent, and following through on what you say.

Put another way: Your word is your bond.

(On a side note, this is why one of our core values at Invictus is: We do what we say.)

This is actually linked to one of the six weapons of persuasion Robert Cialdini writes about in his book Influence: Consistency.

The power of Consistency traces back to our ancestors. Relying on an inconsistent person is a great way to wind up dead.

This was the biggest red flag for me.

I couldn’t ignore the glaring inconsistencies in the stories Matt would tell over the years.

At one point he told the world he’d amassed a net worth of $50M in a single year…

A couple months later, the story morphed into $100M in 3 years.

And then it went stratospheric, and morphed into $150M in 2 years

Simply put, the Story Math didn’t add up.

The truth is, the world is full of corrupt players. My hope is this newsletter has helped better equip you to sniff’em out so you can avoid getting taken for a ride.

As we enter into the next macro-economic cycle, there are going to be incredible investment opportunities to 2x, 5x, and maybe even 10x your net worth.

Check out this video we made detailing exactly how you can use the impending recession to get rich.

How To Use The 2023 Recession To Get Rich

Whenever you’re ready, here are some ways I can help you:

1. Unleash your hyperfocused mind to dominate life, business, and everything in between? Here’s how:

→ The Hyperfocused Masterclass: the exact system I used to overcome ADHD, write 12 books, build 4 businesses, and acquire $70M of real estate.

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2. Learn to passively invest in commercial real estate with better returns, less risk, and zeo hassle.

→ Invictus Capital: my real estate private equity firm.
→ Multifamily Investing Made Simple: Top Apple Podcast.
→ Passive Investing Made Simple: Amazon Best Selling Book with 100 5 star reviews.

3. Want more like this? Check out these 3 popular articles from the vault:

4. The Amplified Impact Podcast: A daily podcast for those in relentless pursuit of Less, but Better: