Latest update: https://www.internationalappraiser.com/2019/07/tropical-american-tree-farms-update.html
I received many complaints about Tropical American Tree Farms (TATF) in Costa Rica, who did not sell titled land, but sold unenforceable "certificates of ownership" in individual trees, written in the English language and thus not enforceable in Costa Rican courts. Some investors claim that they are due payments in arrears for as long as 16 years. The owners of TATF were an American couple; the husband died about a year ago. It seems that no investor has received any payouts from this investment over the last two decades.
I sometimes get requests from readers to appraise their trees, but I have not yet been able to help. I have encountered investors who have no deed (known as the “escritura”) and cannot locate their trees on a map. Lacking that information, I cannot perform an appraisal for the IRS. I cannot state that their trees are worthless, either, because trees are not worthless.
If I have the relevant escrituras, I can appraise the investor’s ownership interest in the property, and if the escritura demonstrates that title has not been transferred to the investor, then the value of the ownership interest is likely to be zero.
Continued teak farm investment promotions
These are not necessarily fraudulent but are advertised with a large amount of puffery and unproven claims. For instance, in an issue last year of International Living, former congressman Bob Bauman, who normally presents sound legal advice for would-be expatriates, presented the new Panamamian residency visa for immigrants (such as Americans) wishing to pursue forestry in that country along with the unvetted investment claims of a Panamian teak farm investment promoter. (IL promptly removed the investment claims from its web site when I informed them.) The standard line from these promoters is that income starts coming from trimmings of teak trees at 13 to 14 years and that the trees can be profitably harvested at 20 years of age. No legitimate Latin American forester seems to agree with this.
"OLAT" -- Organizacion LatinoAmericana de la Teca, the trade organization for teak farmers, tells a different story. They considered a teak tree to be mature at 30 years of age, and immature teak has less value than mature teak, enough less that they did not even attempt to measure the value of teak less than 30 years old in their price surveys. Visit their web site at www.OLATgroup.org .
What are current teak prices?
Costa Rica's Oficina Nacional Forestal published average teak prices in June 2012 as 225 colones per pmt (pulgadas maderera tica) for standing trees and 326 colones per pmt for logs. A pmt is equivalent to 1 inch x 1 inch x 3.36 meters. Based on 504 colones per dollar and 364 pmt per cubic meter, this translates to a price of $162 per cubic meter for standing trees and $235 per cubic meter for logs. Bear in mind that the price per cubic meter increases as the tree matures.
My continued advice is to pursue all foreign investments with personal due diligence. If one's main goal is a Panamian residency visa, a forestry investment will help meet that goal, but don't expect to get rich that way, and make sure to actively manage your property.
In addition to being an appraiser, I have also been a Certified Fraud Examiner for the last 13 years. What TATF looks like is a confidence scheme from the start. The art of this con is that it takes 20 years for investors to find out that they have been defrauded.
Some of you have expressed doubt that the Brunners had bad intentions at the start, but that is how confidence schemes work -- they rely on your misplaced confidence by seeming like trustworthy people. When investment promoters or loan borrowers smile a lot and talk about Jesus, I have learned to view it as a red flag and an effort to manipulate me. I've been had before, too.