The OCG Debt Validation Fund II is a fund that focuses on accounts receivable financing, collateralized by pools of receivables. Investors share in the fund by lending money to Resolution Processing, which uses legal processes to invalidate consumer debts, especially credit card debt.

The fund generates a 20% annualized return for investors, paid quarterly over a 36-month term. The returns come from Resolution Processing’s efforts to invalidate debt and collect payments on accounts receivables.

The minimum investment for OCG Debt Validation Fund II is $50,000, with an average investment around $100,000.

The investment is collateralized by accounts receivable contracts with a UCC filing. The receivable balances are typically $6,000 with a cost of $1,500 per contract, offering a loan-to-value ratio of about 25%.

Debt invalidation is a legal process where Resolution Processing helps consumers invalidate their credit card debt. This often occurs when creditors or collection companies fail to follow the Fair Credit Practices Act or other consumer protection laws.

Resolution Processing specializes in invalidating consumer debt and manages the legal processes required to relieve clients of their debt obligations. They use funds to cover attorney retainers and administrative services needed for debt relief.

Payments are made quarterly, with 5% paid each quarter. The returns are based on the performance of the accounts receivables, so while the structure is designed to provide steady returns, no investment can be fully guaranteed.

Investors are paid quarterly interest payments, starting after the first quarter of their investment. They receive 5% quarterly, which adds up to a 20% annualized return. At the end of the 36-month term, they receive a balloon payment for the full principal amount.

Yes, although the expected term is 36 months, there is the possibility of an early payoff if Resolution Processing chooses to repay earlier due to the higher interest rate.

The historical collection ratio for these receivables is around 80%, offering significant protection due to the diversified pool of receivables.

Conducting a full forensic audit is a massive undertaking. While we haven't done a detailed forensic audit, we have thoroughly reviewed their financials, confirmed contract purchases with attorneys, and ensured that payments are made. We also receive monthly reporting and UCC filings to maintain transparency and oversight.

Clients make payments on their accounts receivables, on average around $300 per month, of which $250 goes to the administrative costs, and $50 covers legal services.

The fund helps consumers get out of credit card debt, often reducing their balances by half or more and lowering their monthly payments. It aims to provide financial relief and stability for individuals burdened by high-interest debt.

The investment is structured for a 36-month term, though there may be opportunities for early repayment.

Investors who invest over $1 million qualify as Class A1 members and receive a 25% preferred return, while those investing under $1 million receive a 20% return as Class A2 members.

No, investors are not charged any upfront fees. The fund's legal and overhead costs are covered by charging 2% to the borrower, not the investors.

Marketing partners identify clients with $20,000 or more in credit card debt. Once clients sign up for debt resolution services and make their first two payments, the contracts are allocated to the fund and backed by UCC filings.

The fund is diversified against thousands of accounts receivable contracts, reducing risk through the size and scope of the receivables pool.

Investors receive a K-1 at the end of the year, and the income is considered interest income. We could have structured this to be 1099-INT, but that means a smaller pool would be collateralized, causing risk to be much higher as the result. With this structure as a fund, the fund’s risk and performance is distributed among all collaterals and investors, so it is much safer and diverse.

There are no tax benefits like depreciation as with real estate investments. This is investing into the equity of a fund that lends money to Resolution Processing in order to perform debt invalidation, so there is no real estate asset owned by the fund to depreciate.

Investors can subscribe via the OCG Properties investment portal, where they can complete documentation and commit to their investment.

A UCC filing (Uniform Commercial Code filing) is crucial because it establishes a public record of the lender's legal interest in a borrower's collateral, such as accounts receivable. This filing ensures that the lender has priority over other creditors in case the borrower defaults or declares bankruptcy, providing greater protection. It also prevents the borrower from selling or transferring the collateral without settling their debt. UCC filings offer transparency, allowing other potential creditors to see the lender's secured interest, and help secure the lender’s investment by legally protecting their claim on the assets. In the OCG Debt Validation Fund II, the UCC filing secures the fund's investments by ensuring that the receivables used as collateral are legally protected, reducing the risk of loss.

We get reporting on all contracts directly from the attorney.  The personal info of the client needs to be redacted because it is illegal to share their personal name and tax ID on legal contracts.  But we do get this information directly from the attorneys, and we have access to them, as well as UCC filing against the contracts once they are allocated to us. We have not enacted a spot checking procedure since we got all of the contracts required sent to us, and we do see payments coming in from those clients.  With the attorneys we are working with, seeing the list of contracts and data and getting the UCC filing (using a 2nd attorney) and then seeing the monthly payments coming in on those contracts as well as payments going out weekly for the purchase of new clients from the marketing partners, no foul play has been observed.

While the fund is collateralized and based on legal processes to invalidate consumer debt, there is always the risk of lower collection rates, defaults, or changes in consumer behavior. However, the fund has a historic 80% collection ratio, mitigating risk. The margin is also very high ($1,500 cost vs $6,000 receivable), so the additional margin allows for strong risk mitigation when bundled with a large pool of contracts.

The UCC filing protects your investment by giving the fund a legal claim to the receivables, ensuring priority over other creditors if a default occurs.

Investors receive regular reports on the fund's performance, including updates on receivable purchases, collections, and UCC filings. This ensures full transparency.

The balloon payment allows Resolution Processing to reinvest excess money into new contracts throughout the 36-month term. This creates a snowball effect, growing the pool of contracts and increasing returns for both the investors and Resolution Processing. This also means lower risk and higher margin for the same amount of invested capital.

Yes, an audit of their operational systems, collection practices, and sign-up procedures has been conducted. They passed with flying colors, showing compliance with the law and operational efficiency.

Quarterly payments provide a more consistent and manageable schedule for both investors and Resolution Processing. Structuring the fund this way allows for efficient reinvestment of funds and ensures the capital is working to generate returns consistently.

We align interests by ensuring that Resolution Processing is focused on the back-end profits after paying investors preferred returns. This means they prioritize successful collections and contract management, as their profits are realized after investors have received their returns. We do not make anything until investors make money.

We can coordinate meetings with the Resolution Processing team. Feel free to reach out for any additional information or assistance you may need.

Legal changes are a potential risk, but Resolution Processing works closely with legal teams and ensures compliance with current regulations. Any significant changes would be evaluated, and strategies would be adapted to continue delivering results for the fund. Legal compliance is a top priority for long-term sustainability.

The primary challenge is managing the volume of contracts and ensuring timely collections. To mitigate this, Resolution Processing has established an efficient system, using in-house and state-specific attorneys to manage legal compliance and collections. Additionally, the team has operational oversight to prevent delays and ensure smooth contract handling.

If a marketing partner provides clients who don’t make their initial payments, the fund has a clawback mechanism in place to recover the $1,500 marketing cost. This ensures that Resolution Processing is not burdened by non-performing contracts and maintains a high-quality pool of receivables.

The fund’s diversified pool of contracts ensures that a few payment defaults won’t heavily impact the overall performance. Furthermore, the collection process includes checks to ensure clients can meet their reduced payment obligations, which are designed to be manageable even in tougher economic conditions. The 80% historical collection ratio offers additional assurance.

OCG Debt Validation Fund I began in May 2023 and has been performing fully but with a different structure. In DVF II, there's a 36-month term with interest-only payments and a balloon payment. DVF I had no payments for 6 months, then principal was returned from month 7-16, followed by a 30% profit in months 17-18. The new structure allows for more contracts acquisition with the same capital, increasing our  collateral and extended 20% returns.

Yes. About 20% of the income goes to overhead costs. For example, on a $250 average payment, $50 goes to overhead, $25 to interest ($1500/contract x 20% / 12 months = $25), leaving $175 to purchase new contracts. With $5M in capital, this model allows purchasing 389 new contracts monthly. ($5M / $1500 x $175 / $1500 = 389 additional contracts)

The investment runs for 36 months. The 2-year proforma reflects typical contract lengths (24 months). However, reinvesting in new contracts after the first round allows for additional 24-month terms, extending returns beyond the initial investment cycle.

If payments from Resolution Processing stop, we can take over the contracts under our UCC filing and collect directly or through a new  servicing company.  As explained in the math above, our funds are protected by those contracts that are producing $833k of monthly payments. After deducting 20% overhead to collect, that leaves $666k of monthly payments to pay back investors. We would not have a problem collecting 100% of investors funds back.

The $250 is separate from the legal fees. The total payment to the consumer includes both the legal fee and the $250 combined.

The main risk is operator performance. If Resolution Processing can’t purchase contracts, we would return capital and stop the investment. That's why we invested first to ensure that they can purchase contracts. If Resolution Processing goes out of business, we would step in, but risks are minimized with the collateralized contracts and the 25% cost-to-receivable ratio.

A Capital Call might occur if payments from Resolution Processing stop and we need to cover legal fees to take over the contracts or engage in legal pursuit, but that would not be a significant cost. However, since there's no debt and minimal overhead, a capital call is unlikely.

No, all investors have always gotten their money back. Even if deals go bad, we ensure investors are protected, whether we have to step in to pay them back or not.

No, we’ve never had a syndication where investors didn’t receive a return on their investment.

No, we’ve never been sued, and none of my managed deals have faced lawsuits. We can provide references if you'd like to discuss with past investors.

Trump's proposed 10% credit card interest rate cap could impact DVF2 but not harm its core business model, which focuses on helping consumers reduce or invalidate their debts, including high-interest credit card debt. The fund targets legal invalidation when creditors violate consumer protection laws like the Fair Credit Practices Act, with many debts having interest rates over 30% before resolution.  If enacted, the cap could reduce the number of consumers with high-interest debt, potentially shrinking the market for debt invalidation services in the long term. However, in the short term, given the existing volume of credit card debt, it is unlikely to cause significant disruption. Also, most contracts are purchased at the beginning of the investment, lessening the need for new consumers as the fund nears its 36-month maturity.  While the cap might affect broader credit markets, it doesn't challenge DVF2’s model, which relies on legal debt relief, not credit issuance. Additionally, the proposal would need Congressional approval, making its passage unlikely.

We first invested $2.4M and then waited until all accounts were purchased and we saw performance over approximately 6 months.  Then we raised the other $2.6M for this fund after and waited until we saw these being purchased and started DVFII.  We have seen great performance with all payments being made and clear communication the entire time. We also first invested $250k of our own funds before DVF I and saw the entire cycle as well before raising capital for DVF1.

The promissory note has a 36-month term but may be paid off early, potentially as soon as the end of the second year, though it is unlikely to exceed 36 months.  The investment is structured as an interest-only promissory note with a balloon payment due at the end of 36 months. Returns remain fixed, unaffected by market conditions. The fund operates on an interest rate arbitrage model without management fees, ensuring all investor returns (20-25%) are prioritized before the fund's profits

This is accounts receivable financing where our funds are invested at a cost of approximately 25% of the value of the asset.  It has a much higher interest than most funds out there with a 3 year term.  In addition, any profits above the 20% return that the borrower receives is being used to purchase more receivables which then increases our collateral and lowers risk.

Yes no problem here.  There are no tax implications because we are not borrowing any money.  This is interest payments on a note.  So no UBIT or UDFI taxes on SDIRA or Solo 401k investments.