X-Message-Number: 6065
Subject: Re: CryoNet #6057 - #6064 
Date: Fri, 12 Apr 1996 11:52:20 -0400
From: "Perry E. Metzger" <>

I would not normally note any of this -- I'm not an Alcor member any
longer so what happens to your patients isn't my business. However,
what you've done really does smell *bad*.

> From: dave <>
> Subject: Alcor's building
> I want to clear up a small error in Brian's posting where he said Alcor 
> has a large mortgage on our building.  The amount is large about $500,000, 
> but the relationship to value is no longer as large and we don't owe money 
> to an outside company anymore.
> Since the building is now worth about twice what we paid for it

Thats of necessity misleading. Real estate is so illiquid and volatile
that it is almost always impossible to assess its value
accurately. The worth of any object is how much someone is willing to
pay for it, not how much someone claims it is worth, so you can never
really know the value of a piece of real estate until you've sold it,
at which point you only know what it *was* worth. I've had people very
close to me skirt bankruptcy when they held lots of real estate that
was putatively worth far more than their debt. We all know of plenty
of large lending institutions that got into trouble in similar ways a
few years ago, and those folks were reputedly experts.

It is also far from clear, given national demographics, that real
estate will continue to rise in value at a particularly steady
rate, if necessarily at all.

It is also far from clear that investing so large a fraction of your
patient care in a single "investment" is safe. The patient care money
is now heavily invested in a single illiquid investment.

It is also far from clear that this sort of self dealing can ever be
done objectively, which is a reason that most organizations that have
fiduciary responsibilities prohibit it outright.

> and the mortgage has stayed about the same amount, I feel the
> mortgage is now only about 1/3 the present value of the building.
> And, we no longer owe the money to an outside company, we only owe 
> money to Alcor.  Alcor now holds the mortgage.

This is also misleading. Your patient care trust now has bought a
mortgage as an investment (not the same as prepaying a mortgage by a
longshot especially since the price of the note is usually different
from the outstanding principal balance -- the future value of money,
you know). If Alcor's current income fails to be enough to pay off the
interest owed, then presumably the patient care trust (which
unfortunately for Alcor's patients isn't really a trust) loses the
interest and any premium that was paid for the mortage. Every time
that the board decides not to pay back the patient care funds because
'they only owe the money to themselves' more real money has been
robbed from the fund, but of course now the temptation to do this is

Now, I'm not saying outright that this sort of thing is going to of
necessity hurt the long term welfare of your patients. However, you
guys should be extremely ashamed of having done this, not proud of
your fiscal acumen.

I must say that all this makes me glad not to be with Alcor.


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