- A good sign of how you treat others is the response you receive
when you're in crisis. The McBrooms are facing
a financial crisis, and there are a lot of people
clowning them on social media. In today's video, you'll have a pretty good
understanding of why. Here's one of Catherine's
recent photos on Instagram with the comment section flooded with mean spirited comments. Catherine and Austin are
great at creating the mirage that their family is perfect and they're an inspiration to others, but look a little deeper and you'll understand why the haters come out when their family is in crisis. - And we will continue to grow, we're gonna continue to
inspire, change the world." ACE Family, we love you.
- I wasn't familiar with The ACE Family before the Social Gloves
event drama became public. Since then, I've been doing
quite a bit of digging, and this is a family surrounded
by constant drama, lawsuits, and most importantly, what appears to be a habit of screwing
other people over. On September 2nd, 2019, a house tour video was released
on The ACE Family channel, showing off their huge $10 million mansion in sunny Los Angeles. - But it's very calming and
it's just very good energy in our house.
- Good energy, positive vibes only the ACE Family house. - [Catherine] Positive vibes only. - When news first hit
Keemstar's twitter fingers that the McBrooms' house
was going to auction, I used Batch Driven to look into the loans taken out on the property. At the time, I found it really odd that they had two loans on the property, totaling nearly $10 million. It was a brain fart on
my behalf not to look at who 5 Arch Funding was. Funny enough, at the gym the other night, I had a thought that 5
Arch Funding sounded more like a hard money lender
than a traditional lender. Why I was thinking of
the McBrooms' house loans and not checking out the talent at the gym is probably why I'm crushing it on YouTube and not so much in my dating life. I googled 5 Arch Funding and found what I had expected to be true. They're a hard money lender. Since some of you may
not know the difference, hard money loans are expensive
loans used by house flippers that almost always have
a one year payback term. They're considered expensive because the borrower
typically pays multiple points at closing and an
interest rate of 10 to 12% on an interest only loan. A one year term means the borrower needs to repay the full loan back in
12 months or face penalties. Or even worse, you might
get put in timeout, like little T-Mart. At the end of July 2019, the McBrooms took out a hard
money loan of $8.85 million from 5 Arch Funding Corp
and another $1 million loan from TMK Development LLC, who I'm assuming is also
a hard money lender. What confuses me is why the
lenders would loan $9.85 million on a property that isn't worth that. Even hard money lenders will
only go up to about 75% of ARV, especially if you don't
have any experience in renovating houses. Let's say they had the value
of the home at $10 million, that would only be loans
totaling $7.5 million. These are interest only loans, which is why the amount
owed is high relative to the overall loan amount,
but I'm still shocked at how much money these
companies lent for this project. I'm sure the lenders were calculating risk and thought to themselves, hm, the odds of the husband
creating a boxing event that will lead to a $100 million lawsuit and the wife screwing
over her business partners and facing a lawsuit of similar size has got to be pretty low,
so we'll approve the loan. The amount owed is about $9.5 million. At 12% interest, the loan is $95,000 per
month interest only. Add on property taxes,
which for that property, are exactly $10,000 a month. Insurance and maintenance
gives you a total monthly cost of well over $110,000 every single month. And that doesn't include
the future therapy bills for their children. A few days ago, a channel
named Static Jon went to the auction for the ACE Family house and showed that no one
was interested in buying. - And then they would sell it here at an auction like this. Usually the opening bid for the house will be exactly what's owed on the house. So whatever the balance is of your loan will be the opening bid. Today, they set an opening
bid for the ACE Family house of a little over $9 million. No one here bought the house or no one here wanted to buy the house. - No one wants to buy the house because they would have to buy it in cash, it's incredibly overpriced,
and no renovations are needed, and because the McBrooms will probably still show
up a few times a week to film their videos. I hope you don't mind them
filming in your driveway. On a side note, I've made
a lot of videos detailing why famous athletes go broke. One of the reasons they do is similar to what the McBrooms did, which is spend an
exorbitant amount of money on a custom made house that no one else values the same as them. When tough times inevitably
hit, they can't sell the house, losing all of the equity
they supposedly had. Why are these two still in their house if they are facing foreclosure? Because the process of
getting them out of the house could take a long time. The title of the property is back in the hands of the hard money lender with the first position, my
assumption is 5 Arch Funding. 5 Arch will need to evict the
McBrooms from the property as they are now the official owner, but I don't see that happening right away. My guess is they're going to
list the property for sale soon and hope to recoup as much of
the money owed as they can. I'm not familiar with the
foreclosure eviction process in California, but given
that it's California, the McBrooms will probably have
free rent for a few months. - [Catherine] All right,
Elle, you're not going in the pink car today,
you're going the Lambo. (vehicle droning)
(upbeat music) Is that okay (laughs)? - The McBrooms rose to
prominence on YouTube within the "exploiting
your kids for views" niche. It's a weird niche because clearly people enjoy this content, the McBrooms have 4.3 billion
views on their channel, but they also are only successful because they're using their kids as the main characters against their will. - [Austin] What are your friends gonna say when you pull up in a Lambo at school? (vehicle droning)
- I don't know. They're gonna be playing. - [Austin] Oh, they're gonna be playing? - In this ultra cringe video, Austin takes his young
daughter to school in a Lambo, hoping to gain the
validation of her friends. You can't see her face,
but she's looking off in the distance confused, because even she's embarrassed her dad is trying to get cool points
from a bunch of five year olds. - [Austin] Oh, look at the
kids, look at your friends. Oh my gosh, what are you gonna tell them? (vehicle droning)
You should say you got dropped of in an Uber. - I would rather watch
fake guru ads on a loop for 24 hours straight
than watch this video. How do people enjoy this? I don't get it. Austin pulls up to the
school and puts the camera on her friends looking at the car so he can get validation
of his success, I guess. The reason why I find this
entire story to be interesting is because Austin became
a fake guru for a few days as he released a course called
How I Became a Millionaire, where he taught students on how to become millionaires
using social media. I didn't take the course, but
after watching his content and following his business ethics, I can only hope it included
a section on hiring lawyers and staying relevant, despite having trash content
and being mired in controversy. This is Catherine McBroom, the wife, who has also been involved
in her own controversy. She's getting sued by TBL Cosmetics Inc, who is the co-founder of her
beauty brand 1212 Gateway LLC. I'm about to breakdown just how easy of a life the McBrooms could have had if they weren't completely
incompetent adults. I was as shocked as John Coffey at the end of "The Green Mile" by how much money
Catherine could have made if she didn't screw her co-founders over. "Catherine McBroom invested $280,000 "for a 63% membership
interest in 1212 Gateway. "Along with its sweat equity, "TBL Cosmetics invested $120,000 "for a 30% membership interest. "Paul Cazers, an inactive
California attorney, "with whom Catherine McBroom
has other business ventures "and a personal relationship,
is a non-voting, "silent member, with a 7% interest." Paul Cazers was one of
the guys behind the scenes for the Live X Live and
Social Gloves fiasco, who was managing Austin. It was really interesting
seeing his name here. And I was pretty surprised to
see Catherine having access to 70% equity, given that
she was only going to put in about 1% of the work. These paragraphs list
out that TBL Cosmetics has had previous other product lines, they developed and oversaw the operations, they had a chief scientist
devote her efforts to creating a premium product, they had industry expertise
which positioned this company to be successful from the start, and they implemented
strategic financial planning and cash flow management. What's so funny to me is when
people think these influencers are self made entrepreneurs. Kylie Jenner, "Self made billionaire." What really happens is you have a company in the industry partner
with the influencer and make it appear like it's
the influencer's company. The influencers are just marketers posting about the product, but literally don't handle any
other aspect of the company. The only difference
between them and a sponsor is that they have equity in
the company they're endorsing. "TBL Cosmetics ran 1212
Gateway, day after day, "building up to the
company's initial launch "and restock events, "ultimately creating
proprietary turnkey systems "that work exceptionally well." Imaging how great life
would be if you could have a company capable of
building out a turnkey system for generating crazy profits
on products under your brand and all you have to do is make
a few posts a month about it. The best part, they only want 30% equity. "Considering 1212 Gateway was
formed less than a year ago, "it has performed far beyond expectations, "and is already a global brand. "The level of success enjoyed
by 1212 Gateway to date "is a direct result of
the TBL's leadership "and day-to-day management
of the Company." A lot of people still clown on the idea of being an influencer as a career, but let me tell you a little something, actual influencers who can
drive sales make stupid money as you'll see right here. "At 1212 Gateway's initial
launch on December 12, 2020, "the Company completely
sold out of its inventory, "selling over $1 million in products "within the first 30 minutes." That's without paid advertising too. Real influencers can build
eight figure companies in months if the infrastructure is correct. I'm beginning with the backstory so you can see how damaging
Catherine's alleged behavior was to this brand and how much money she could have been making. "Two weeks later, 1212 Gateway
hosted a restock event, "which also sold out." "1212 Gateway exceeded its
initial predicted revenue "and product development metrics." "They also succeeded in
delivering twice the inventory "than what they projected." Just imagine if Austin had
as many loyal fans willing to pay for his event as
Catherine did for her product. "The limited drop and restock
events have created buzz "and driven up customer demand "and anticipation for more
products has continued to build. "If 1212 Gateway continues
its upward trend, "it stands to make $60
million by the end of 2021." These two were gifted social media success and are still royally
screwing everything up. From an objective point of view, their content isn't above average in storytelling, editing, or ideas, and the success has been mostly
driven by their young kids. The ACE Club was an utter failure, they had a drink called Silly Juice that I don't believe panned out, they had charity events
that people call a scam, Austin's fake guru course was trash, the Social Gloves event has
led to a $100 million lawsuit and no one getting paid, and
as you'll see in a second, Catherine basically ruined a
potential nine figure company. They've somehow failed
upward and I don't get it. "Instead of responding to
1212 Gateway's initial success "with appreciation for or
continued collaboration with TBL, "and apparently under the
misimpression that 1212 Gateway "was running itself at this point, "Catherine McBroom has instead
conspired with her family, "friends, and other under-utilized members "or idle of her entourage "to stage a takeover of
1212 Gateway's management." I don't know if I should
be confused or jealous. Catherine had 63% ownership
of a company projected to do $60 million in
sales in its first year, was basically turnkey, and
didn't require anything from her other than looking cute on Instagram. She must have received the
same advice Austin did, just don't pay anyone and
keep the profit to yourself. Paragraph 42 describes that
Catherine somehow obtained all of the admin access credentials for all of the portals
used to run this business, including the Shopify, GoDaddy,
and Instagram accounts. It sounds like keeping Catherine away from the admin access credentials was similar to the guards
keeping the security camera on Jeffrey Epstein. Like come on, guys, you had one job. "In further defiance of
the Operating Agreement, "and without warning, "Catherine McBroom changed
the passwords associated "with the accounts and or
withheld from TBL all access "to the accounts, keeping
them for herself." At this point, if you do business with Catherine or Austin McBroom, it's on you for running into trouble. I still don't understand how these two have failed
upward to this degree. They lost their house so maybe it's all coming crashing down, but how did they fumble
this lottery ticket away? "To be clear, Ms.
McBroom's misappropriation "of the administrative
controls is not just a matter "of limiting who can log
in to view information "on the accounts. "By continuing to block
TBL's access to the accounts, "Catherine McBroom is
actively precluding TBL "from carrying out its
management obligations "under the Operating Agreement." This is an interesting business strategy that you won't read about
in your business textbooks. Take away access from the company running the
entire operation of your brand. All she had to do was
exist and make top 1% money for less work than a mugged
drug dealer has on him. "Catherine McBroom has
attempted to seize control "over 1212 Gateway's
customer service operations, "aided and abetted by
a network of associates "who are not employed by 1212 Gateway "or approved by its Board. "On information and belief, "these persons include
individuals associated "with the McBroom family's
other failed business ventures." I'm being serious about this
family somehow failing upwards into a life consisting
of a $10 million mansion, a fleet of exotic cars,
and most importantly, opportunities to start eight
and nine figure companies. And they still failed. Paragraph 51 explains that Catherine has transitioned 1212
Gateway's product fulfillment to her privately-owned facility. Her and her family apparently
recently purchased a warehouse and office space that serves her other, separately-owned business ventures. The lawsuit then went on to explain that the facility isn't big enough to satisfy 1212 Gateway's high volume and fulfillment requirements
and it isn't able to obtain the same
shipping volume discounts. This is like taking a winning
lottery ticket straight to a wood chipper because
doing things yourself is more efficient in your eyes. "Based on current estimates,
Ms. McBroom's actions "will cost 1212 Gateway
an additional $10 million "in lost revenue this year alone." Here's a PSA straight from me. If there's any company that wants to handle all backend operations for a company that will
do $60 million in sales and only wants a 30% cut,
I'm open for business. I will relinquish my pride and allow you to do all of the work so that I can keep a 70% cut. Since most of these
influencer beauty brands require a boob job, I'm stating now that I
will not be completing that requirement though. Apparently Catherine is now threatening to dissolve the company, despite not knowing how to
run the company's operations and putting a team in place who have a pretty poor
business track record. "Ms. McBroom probably assumes "that she can simply
run the company herself, "with the help of her people
who have time on their hands "and space to boot, "given the ACE Family's
other business outcomes. "Perhaps Ms. McBroom "would have a more accurate understanding "if she had participated in
all of the Board meetings "as she was obligated to do." I'm fascinated to see what happens to Austin and Catherine
once they lose their house. Everything they do seems to
turn into a scam or a lawsuit. They will soon no longer have their house, which is really the only visual we have that they're successful. And they have multiple lawsuits
that should bankrupt them if justice gets served. If you didn't see my last
video on Social Gloves, I show proof that Austin could have personal financial
liability tied to the event. All lawsuits require
both sides to be heard, and this is just one, so we should withhold complete judgment until we hear Catherine speak about it, but given that what she and Austin say publicly
rarely matches reality, I don't consider her a reliable narrator. I think the negative energy you see going towards the McBroom family for their recent financial struggles is just the outcome of multiple years of the scams and tricks they've pulled on others finally coming back to them. They've somehow massively failed upward, which is probably an
indication that people are only tuning in because of their kids and not the parents. When I first started analyzing
the Social Gloves fight, I felt like Austin was
creating a Ponzi Scheme by promoting a Social Gloves Two before paying the fighters
for Social Gloves One. I think I was right. He needed new profits
to pay off old debts. Until his next big event, he'll be left with
lawsuits and unpaid debts. And remember, even if
they lose their house, they'll still have the orange Lambo to take their kids to school in, where they'll get plenty of
validation from the little kids instead of having to deal
with all of those bad people on the internet hoping
to see their downfall. With the way they've
allegedly treated others, consider me one of them,
thanks for watching.
