Investment Program Promoted By Condo Conversion Marketer To Unload Unsold Inventory Leaves Investors Holding The Bag

In San Diego County, California, The San Diego Union Tribune reports:

• [Frances] Greenspan is one of a number of investors across California who said they agreed to effectively trade their good credit for a promise of $5,000 to $10,000 per mortgage they took out. They understood that the homes purchased on their behalf would be quickly transferred out of their names, and gone would be any financial obligation.

• Instead, their names stayed on the deeds, and they remained on the hook for hundreds of thousands of dollars in loans. They claim they were lured to this scheme by James McConville, of Diamond House Development, a Fremont company whose corporate status is listed as suspended by the secretary of state.(1)

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• Investors say they were recruited by McConville to buy into three condo conversion projects in North County [...]. In all, roughly 80 units were involved in purchases that buyers allege were arranged though McConville, and nearly all of them are in the process of being foreclosed on by lenders. Many of the condos are rented out, with some units scheduled to be auctioned off in a matter of days.

• Some investors say they recently discovered disturbing details about their transactions, based on final settlement agreements provided them by VoiceofSanDiego.org. The statements show that 3 Mac Asset Portfolio – a company with the same address as McConville's home – received a substantial “marketing fee” on individual sales.

• In several cases shared with The San Diego Union-Tribune, the fee was $180,454 on a two-bedroom unit purchased for $310,000. A more routine six percent real estate commission on a $310,000 sale would be $18,600.

For more, see Investors are duped in condo scheme (Investors say they were recruited to buy into three condo conversion projects in North County, one of which was the the 112-unit Sommerset Woods in Escondido).

For another part to this story, see Renters become unwitting victims in condominium mortgage scheme.

(1) According to the story, Greenspan said one of the investors has contacted the District Attorney's Office in Alameda County where McConville is based to report what had occurred. That office would not confirm whether an investigation is ongoing. However, Senior Deputy District Attorney William Denny reportedly said McConville was convicted of grand theft and sentenced in 1998 to five years probation. He was ordered to pay $242,000 in restitution to two lenders after admitting he diverted insurance funds owed them in connection with a fire that destroyed a hotel McConville owned in the city of Richmond, according to the story.