Virginia Beach Real Estate Operator Forged Docs, Embezzled Rent Money, Manipulated Sales Prices In Alleged Flipping Scam, Says Suit

In Norfolk, Virginia, The Virginian-Pilot reports:

• Two investors claim that a failed real estate company's president repeatedly broke the law in his dealings with them. Cary McEntee of Virginia Beach-based CM Development allegedly forged documents, embezzled rent money, manipulated sales prices and committed other misconduct, according to a complaint filed Thursday in federal court by investors Paul and Scott Dadaian. The company's stated business model was to buy dilapidated houses in low-income neighborhoods, renovate them and either rent them out or sell them. An investigation by The Virginian-Pilot last year found that more than half the homes were vacant and in various stages of disrepair. Many of the occupied homes did not generate enough rental income to support themselves.

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• These allegations are an attempt to prevent a bankruptcy court from dismissing debts from McEntee and the company. [...] At its peak, the company and its investors owned roughly 250 properties throughout Hampton Roads, many of which were sold repeatedly among investors at ever-higher prices as the local real estate market escalated. [...] Since filing for bankruptcy protection, McEntee has testified that he repeatedly falsified loan documents to make it appear buyers used their own money to make down payments when McEntee actually provided the cash himself out of the sales proceeds. The FBI has begun an investigation.

For more, see CM Development exec caused them to lose millions, investors say.

Go here for links to earlier Virginian-Pilot stories on CM Development.

Go here for earlier posts on the CM Development flipping operation.