Possible Virginia Straw Buyer Flipping Scam Ends Up In Bankruptcy Court

The Virginian-Pilot reports:

• "A half-dozen investors in CM Development have asked a federal court to force the company and its president into bankruptcy in an attempt to recoup some of the millions they've spent on properties across Hampton Roads. If successful, the investors' move could spell the end of a company dogged by mortgage lenders, city code officials and creditors."

• "A Virginian-Pilot investigation in March found that about half of the 250 properties owned by CM Development and its investors were vacant and in various stages of disrepair. [...] The investigation also found that since forming in late 2001, CM Development has financed its operations largely by selling its properties repeatedly among a growing circle of investors at ever-higher prices. The investors, drawn by the promise of big returns, took out larger and larger loans on the houses."

Attorneys representing the six investors who filed the involuntary bankruptcy petition against CM Development said they had no choice. Reportedly, many of the investors haven't been paid in months and have been left to care for properties, mostly in Norfolk and Portsmouth, that now are going into foreclosure. The attorneys said company President Cary McEntee has said little about why payments were not made. For more, see Housing developer's investors ask federal court to step in.

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