With One Company Forced Into Bankruptcy, Virginia Real Estate Operator Soliciting Investors For New Venture

In Hampton Roads, Virginia, The Virginian-Pilot reports:

• Even as he faces questions about millions lost in his company's investment program, CM Development President Cary McEntee is soliciting investors for a new housing business. McEntee has been posting advertisements on online classified sites, ... . The ads are similar to the newspaper listings he used to find investors for CM Development, a housing company that owned or managed more than 250 properties before it collapsed amid allegations that McEntee had failed to pay mortgages, hadn't maintained the properties and had falsified at least one bank loan. Investors forced McEntee and CM Development into bankruptcy in July.

McEntee reportedly used what sounds like a "straw buyer - house flipping" arrangement in financing his last real estate venture; The Virginian-Pilot describes the arrangement as follows:

• [CM] Development paid investors flat fees to gain access to their credit, and used the money to buy properties in all seven of Hampton Roads' largest cities. It sold the houses repeatedly among investors, taking out bigger loans each time. About three dozen people put their names on loans for the business, with the promise that CM Development would make mortgage payments, collect rents and maintain the houses.

McEntee is reportedly soliciting investors for his new venture, looking to hit them up for $175-200K a pop for a 1 year loan offering 12-13% interest, and is utilizing Craigslist web sites in Norfolk, Richmond, New York, Raleigh, Atlanta and Detroit to communicate his requests for new cash.

To date, there have been no reported criminal charges brought by law enforcement authorities or investigations by Virginia state regulators against McEntee for running potentially improper straw buyer, property flipping arrangements or unregistered promissory note programs. Based on a prior report, equity skimming was also involved in the mess currently in the bankruptcy court as rent was reportedly being collected and pocketed by CM Development without applying those funds to the mortgage payments, real estate taxes or water bills due on the homes titled in the straw buyers' names, thereby allowing homes to go into foreclosure. Many of the units were rented through the federal Section 8 program, which helps pay rent for low-income residents. Also, tenants have complained about their inability to get back their security deposits, according to a prior report.

For more, see Head of failed real estate firm trolling for investors.

For other Virginian-Pilot coverage on CM Development and Cary McEntee, see:

• Remedies overdue to stop housing scams (11-25-07),
• CM Development's bankruptcy leaves many In a bind (9-30-07),
• Housing developer's investors ask federal court to step in (7-17-07).

Go here for other posts on CM Development and Cary McEntee.