The Grant Cardone Deposition: Defending Financial Track Records and Marketing Claims

This summary details the tense legal deposition of real estate investor Grant Cardone as he fiercely defends his marketing strategies, 40-year track record1, and business model against aggressive questioning from plaintiffs' attorneys.

(Note: This article was generated with artificial intelligence and its purpose is to provide information. To get a real and accurate understanding of the situation, watch the video from Grant Cardone's channel below.)

Sole Decision-Maker and Marketing Responsibility

Grant Cardone confirms under oath that he owns 100 percent of Cardone Capital and acts as the sole decision-maker for the company. He takes absolute personal responsibility for his YouTube videos and social media posts, stating he does not need to consult anyone else regarding their content or meaning.

Despite his singular control, he clarifies his role regarding the official offering circulars2 submitted to the SEC3. He emphasizes that as the CEO of a multi-billion-dollar company, he did not personally draft the 40-page legal documents. Instead, he hired inside staff and outside professional counsel to prepare them, although he fully approved and signed the final versions.

Defending the 15 Percent Return Claims

The plaintiffs' attorneys heavily scrutinize an April 2019 YouTube video where Cardone states investors would "walk away with a 15 percent annualized return" or earn 150 percent over a 10-year period. Cardone defends this by explaining the fundamental difference between Annualized Rate of Return (ARR)4 and Internal Rate of Return (IRR)5.

He criticizes Wall Street institutions like Blackstone and Starwood for using complex, short-term IRR metrics that prioritize fast exits and high management fees. Instead, he deliberately uses ARR because it is a much simpler and more transparent metric for the "common man" to understand. According to his calculations, achieving a 150 percent return over a 10-year hold is highly realistic when combining cash flow6, property appreciation, and tax write-offs6.

The Track Record Controversy

A major point of contention during the deposition is a spreadsheet listing 24 of Cardone's previously realized investments, which he uses to justify his future projections. The attorneys argue the document is inherently misleading because it displays only acquisition costs and sales prices, completely omitting critical data like operating expenses7, property taxes, and insurance.

Cardone aggressively counters this narrative, asserting that the spreadsheet proves a massive 356 million dollar net profit. He argues that the real returns for his investors were actually much higher because the spreadsheet does not even account for the additional cash flow and tax advantages they received during the holding periods. He heavily leans on his experience, stating that in his 40-year career executing 76 transactions, he has never experienced a bankruptcy, a forbearance8, or a lost property.

Business Structure and Risk Mitigation

To refute claims of unfair practices, Cardone details the unique acquisition structure of his funds. He initially purchases the massive real estate assets entirely with his own personal capital, absorbing 100 percent of the upfront risk. For instance, he committed 162 million dollars of his own money to secure the assets for Funds 4 and 5.

Once the deal is successfully closed, he opens the fund to everyday, non-accredited investors9. These individuals can buy into the exact same assets for as little as 5,000 to 10,000 dollars at the identical entry price he paid, with zero markup and no middlemen. His company only takes its 35 percent share of the profits after the investors have received their expected return of capital10.

Table: Key Disagreements in the Deposition

Scale and Target Audience

The attorneys attempt to minimize Cardone's past success by pointing out that his earlier, fully realized investments were smaller properties located in different markets like California and Tennessee. They contrast this with his current Funds 5 and 6, which consist of massive complexes with over 350 units concentrated primarily in Florida and Texas.

Cardone dismisses this argument, explaining that increasing the scale of the properties actually makes it significantly easier to generate high profits. He notes that raising the rent by just 10 dollars in a massive 2,000-unit complex produces millions of dollars in additional value for the investors. He reiterates that his ultimate mission since 2014 has been to educate everyday people on how wealthy families utilize real estate, allowing the general public to invest directly alongside him.

Original Source Title: Cardone DEPOSITION 1: UNDER OATH SUIT IS BULLSH*T TO EXTORT FEES

• 1. Track Record: A documented history of past performance. In this case, Cardone uses a spreadsheet of 24 previously realized real estate investments spanning a 40-year career to justify his future financial projections.
• 2. Offering Circulars / Offering Documents: Official legal documents (often around 40 pages) drafted by legal professionals that outline the details and risks of the investment funds to potential investors.
• 3. SEC – Securities and Exchange Commission – The government regulatory agency to which official investment fund documents are submitted
• 4. Annualized Rate of Return (ARR): A straightforward metric favored by Cardone to show average yearly profit, used to explain to the "common man" how a 150 percent return over a 10-year period equates to a 15 percent annualized return
• 5. Internal Rate of Return (IRR): A more complex financial metric used by Wall Street institutions (like Blackstone and Starwood). Cardone criticizes its use, arguing it prioritizes fast property exits and high management fees rather than long-term value.
• 6. a. b. Cash Flow & Tax Write-offs: Additional financial benefits for investors. Cash flow refers to the ongoing income generated by the properties, while tax write-offs provide tax advantages during the holding period.
• 7. Operating Expenses: The ongoing costs of running a property (including property taxes and insurance), which the plaintiffs argue were critically missing from Cardone's track record spreadsheet.
• 8. Forbearance: A temporary postponement of debt payments. Cardone emphasizes that he has never experienced a forbearance, bankruptcy, or a lost property in his 76 executed transactions.
• 9. a. b. Non-accredited / Retail Investors: Everyday individuals ("the common man") who do not meet high-wealth institutional requirements, but are allowed to invest as little as $5,000 to $10,000 into Cardone's funds.
• 10. Return of Capital: The milestone in an investment when the original money put in by investors is paid back. Cardone's company only takes its 35 percent share of the profits after this expected return of capital is achieved.
• 11. Institutional-grade Assets: Massive, high-quality real estate complexes (e.g., over 350 or 2,000 units) that are typically reserved for wealthy families or large firms, but which Cardone’s funds make available to everyday investors.