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AG Cooper Announces Restitution for Victims of Paramount Mortgage Fraud Scheme

loansafe.org | September 4, 2013

(Source: Attorney General Roy Cooper) – Raleigh: Consumers who bought overvalued lots at two coastal real estate developments in Carteret and Onslow counties will get to recoup some of their money, Attorney General Roy Cooper said today.

The developers and marketers behind Cannonsgate at Bogue Sound and Summerhouse at Everett Bay are also barred from misleading any future buyers about the value or investment potential of lots offered for sale in North Carolina.

“While many real estate opportunities are legitimate and live up to their promises, some take advantage of buyers,” Cooper said. “Beware of sales pitches that lead you to believe you’re getting a special deal and will be able to make a quick profit.”

As alleged by the Attorney General’s Office, some sales agents marketed lots in Cannonsgate in Carteret County and Summerhouse in Onslow County as good investments, giving consumers the impression that they could re-sell the lots quickly for a profit. Sales agents also sometimes unfairly led buyers to believe that it was urgent that they buy immediately or the lots would be unavailable, and they advertised “developer pricing” to make buyers think they were getting a discount when they were not. In addition, agents were involved in flip transactions where other sales agents simultaneously bought lots and re-sold them for a substantial profit, using funds from the sale to pay for the initial purchase.

Under a consent judgment approved Friday by Wake County Superior Court Judge Howard Manning, the defendants involved in the scheme will pay $2.28 million for refunds.

In addition to paying refunds, under the consent judgment announced today the defendants are prohibited from:

  • Representing that lots have good investment potential or will increase in value unless they can establish certain things in writing, per the requirements of the Interstate Land Sales Full Disclosure Act;
  • Creating a false sense of urgency that lots won’t be available unless bought immediately;
  • Representing that sales prices are discounted in some way and will increase in value over time once infrastructure or amenities are completed;
  • Making contact with an appraiser to seek to influence the appraiser;
  • Closing on a cash financed lot in any phase of any subdivision until at least 15 sales in the phase of the subdivision have closed and the deeds have been filed on the public record;
  • Participating in certain types of simultaneous flip transactions;
  • Selling lots before the infrastructure shown in advertising or sales presentations is bonded; and
  • Making false or deceptive representations about advertised amenities or completion of amenities.

The defendants that agreed to the refunds and changes to their business practices are Randolph (Randy) M. Allen, William Garith (Gary) Allen, R.A. North Development Inc., R.A. North Development I, L.L.C, Southeastern Waterfront Marketing, Inc., R. Douglas Therrell, Kenneth Bednar, and Michael Woolard.

R.A. North of Charlotte was the developer for Cannonsgate in Carteret County, and R.A. North I was the developer for Summerhouse in Onslow County. Randy Allen managed and controlled the operations of both R.A. North and R.A. North I. Southeastern, managed by Gary Allen of Florida, marketed and sold lots in both locations. Kenneth Bednar of Nevada and Michael Woolard of North Carolina participated in sales operations at Cannonsgate and Summerhouse. Bednar purchased a lot in Cannonsgate, as did R. Douglas Therrell of North Carolina.

 

Consumer Refunds

The Attorney General’s Office will contact consumers who may qualify for refunds. Consumers who have questions can contact the Consumer Protection Division at 1-877-5-NO-SCAM toll-free within North Carolina or (919) 716-6000.

To be eligible for a refund, a consumer must:

  • Have purchased a lot in Cannonsgate or Summerhouse from or through one of the defendants or their agents;
  • Be the current owner of that lot or have been the owner at the time of foreclosure, deed in lieu of foreclosure, or some other distressed sale;
  • Not be an owner, shareholder, member, manager, employee, agent for or a relative of any of the defendants;
  • Not have received a discount on the purchase price of the lot. “Discount” is defined as any amount that was deducted from the purchase price on the HUD-1 Closing Statement. It does not refer to any amount of money received at closing or outside of closing to assist in making monthly mortgage payments for a period of time; and
  • Be able to submit a signed copy of the HUD-1Closing Statement from purchasing the property.

 

Tips on Real EstateInvestment

“Real estate can sometimes be a wise investment, but just like other investments, there’s no guarantee it will go up in value,” Cooper said. “Before you decide to buy real estate, do your homework.”

 

Cooper Recommends the Following Tips

  • Research before you agree to buy. Don’t rely solely on information provided to you by the developers or sales agents.
  • Get an independent appraisal on the value of the property. Never rely on the appraisal of the developer or seller.
  • Beware of “now or never” sales pitches.
  • Consider having your own attorney review the closing documents before you sign them to be sure that everything is accurate and above-board.


Source: Attorney General Roy Cooper

 

Back to September 2013 Archive

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