Monday, July 13, 2015

Lawsuit: Middle Tennessee Real Estate Operator Used Forged Documents, Phony Notary Acknowledgements In Massive Scheme To Fraudulently Exercise Redemption Rights Over Realty Sold For Unpaid Taxes; Victimized Former Owners, Heirs Of Dozens Of Properties Seek Class Action, RICO Certification

In Nashville, Tennessee, the Nashville Post reports:
  • A Nashville company specializing in the acquisition of distressed properties is facing allegations it used forgery and fraud in a massive scheme to purchase tax-sale properties for pennies on the dollar.

    A 133-page complaint filed [...] in Davidson County Chancery Court details the alleged scheme perpetuated by REO Holdings LLC and its principals Charles E. Walker, Jon Paul Johnson, Julie Coone and Merdan Ibrahim.

    The company is alleged to have illegally acquired properties through Tennessee's property-tax sale redemption process. Under the law, a property sold by the county for unpaid property taxes may be bought back by the original owner or the heirs of the owner within one year of the tax sale by paying the purchase price plus 10 percent.

    According to the claim of the plaintiffs in this case — former owners and heirs of owners of dozens of properties in Middle Tennessee — REO Holdings would would first identify properties sold to satisfy unpaid property taxes, particularly those with absentee owners or owners unlikely to assert interest.

    They would then allegedly create false instruments such as affidavits of heirship or transfers of title and "append forged signatures and notary acknowledgements." Then, the plantiffs claim, REO would assert redemption rights using the instruments. In other cases, the claim says, REO would simply create property transfers whole cloth.

    In some cases, the plaintiffs say REO would simply copy signatures or use names of property owners that were similar to the legitimate owners. The claim says the signatures are obvious forgeries, even if "guilefully made."

    The complaint contains numerous assertions from notaries whose stamps appear on the documents that they have no record of notarizing the documents through which REO redeemed or acquired properties. One out-of-state notary was "so appalled at the Defendants fraud that ... she immediately contacted the Davidson County District Attorney."

    The plaintiffs are seeking class-action status and are claiming wire and mail fraud, slander of title and a number of similar claims. In addition, plaintiffs are seeking certification as a RICO case, because the alleged scheme is so involved and wide ranging.

    The court is asked to enjoin the defendants from any property transfers or execution of legal instruments, to set aside effected earlier acquisitions and hold the principals individually liable.

    Eugene N. Balso Jr. and Paul Krug of Balso & Nelson are representing the plaintiffs. Calls to REO Holdings were not returned.
Source: Nashville real estate company faces allegations of fraud and forgery (Class-action claim says REO Holdings lied to acquire cheap land).

For the lawsuit, see Family Trust Services, LLC, et ano v. REO Holdings, LLC, et al.

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