An investor claim says Grant Cardone's "I invest alongside you" pitch was really a loan business, which is bad news for people who put equity into his 2018 and 2019 deals.

• The $42 million he described as investing beside his investors was largely lent to the funds, not put in as equity.
• That put him above investors in line to get paid, earning 6% while home loans were running near 4%.
• If a deal went bad, investors would lose everything first, then his loan, then the bank.
• The loans were callable on demand, so he could pull the money out at any time.
• He lent the most during the riskiest stretch, when the funds could not raise outside money.

Outlook: Expect more scrutiny of how his funds were financed, and pressure on other syndicators who blur the line between investing and lending.