Friday, July 10, 2009

Arizona AG Files Suit In Alleged Straw Buyer Scheme Coupled With "No Qualifying" Rent To Own Program Leaving Investors, Tenants, Banks Holding The Bag

From the Office of the Arizona Attorney General:
  • Attorney General Terry Goddard has filed a consumer fraud lawsuit against numerous Tucson real estate professionals and businesses(1) alleging a sophisticated, multi-million-dollar real estate fraud scheme. The lawsuit, filed in Pima County Superior Court, alleges that the defendants engaged in a sophisticated system of fraud that led to the filing of foreclosure notices on more than 130 homes and caused substantial harm to investors, lenders and rent-to-own homebuyers.

***

  • The complaint states that the defendants participated in a scheme that used deceptive tactics to entice under-qualified, novice investors into purchasing homes and then sold them to rent-to-own buyers. However, investigators say the scheme was designed to fail because it targeted rent-to-own homebuyers with credit problems and ignored whether they could qualify to purchase the homes.(2)

Among the Arizona AG's allegations are that the operators:

  • deceived more than 130 investors with assurances of a legitimate and "worry free" investment system requiring little or no capital investment and virtually no involvement in the transaction or in the subsequent management of the investment,

  • defrauded and deceived lenders in order to fraudulently obtain the financing for the millions of dollars of "investment" properties purchased by the consumer-investors,

  • offered the investment homes purchased by investors as legitimate rent-to-own opportunities with the offer of "no qualifying" and the promise of easy home ownership; and that the rent-to-own scheme deceptively targeted unqualified or under-qualified consumers and relied on a high turnover to obtain new "down-payments" as profit. Out of hundreds of rent-to-own transactions, apparently only one consumer out of 270 or more was able to buy a home in the fraudulent rent-to-own system. The rent-to-own purchasers were clipped for upfont money of $1,500 to $10,000 on rent-to-own homes they could not ultimately qualify for. Despite promises of "no qualifying," consumers still needed financing but could not repair their credit or qualify for financing to buy the home.(3)

For more, see Goddard Files Suit Against Massive Real Estate Fraud Scheme.

For the Arizona AG lawsuit, see State of Arizona v. AZI Rent2Own LLC., et al.

(1) The defendants named in the lawsuit are:

  • Andrew Silverstein, former Re/Max All Executives real estate agent,
  • Anthony Zandonatti, owner of AZI Rent2Own and owner of RTOSearch.com,
  • AZI Rent2Own, LLC (d.b.a. Arizona Investments),
  • RTOSearch.com,
  • VinLan Ventures, LLC (d.b.a. Re/Max All Executives),
  • Vince Volpe, designated broker of Re/Max All Executives,
  • Tucson Mortgage, LLC (d.b.a.Tucson Mortgage),
  • William "Bill" Anastapolous, owner of Tucson Mortgage,
  • WGA Enterprises, LLC,
  • Thomas Piazza, Tucson Mortgage loan officer,
  • Amaury Leon, Infinity Funding loan officer,
  • Darren Breen, Red House Lending loan officer,
  • Dave Klein, former Tucson Mortgage loan originator.

(2) Regulators in Arkansas and Missouri recently invoked state securities laws to shut down a similar operation. See:

(3) If any of the allegations are even close to being true, the operators are going to have a tough time vigorously defending themselves in this civil lawsuit without opening themselves up to the exposure of possible criminal charges from the Arizona Feds. Invoking their "right to remain silent" and having their attorneys attempt to quickly reach a settlement acceptable to the Arizona AG may be the preferred route for them to take if they hope to have any chance of keeping the local Feds from showing up at their front door. A case like this illustrates the kind of leverage a state attorney general has when bringing a civil lawsuit of this type, knowing that the allegations can very easily be "copied & pasted" into a Federal indictment (ie. mail fraud, wire fraud, conspiracy, etc.) if the local Feds so choose. rent to own lease purchase option scams yellowstone

posted by Home Equity Theft Reporter at 10:51 AM