Class Action Status Sought For Elderly Homeowners Persuaded To Borrow Against Home To Invest In Alleged Ponzi Scheme

In Constantine, Michigan, the Kalamazoo Gazette reports:

• For more than three decades, Orrin and Jama Bowlby have enjoyed a quiet life on Patterson Road in this rural St. Joseph County community. But in the last eight months, the Bowlbys’ simple life has been turned upside down. They say Portage insurance company American Benefit Concepts Inc., which is facing several lawsuits from dissatisfied clients and an investigation by the state, persuaded them to invest in a California-based Ponzi scheme. And it may end up costing them their home.

***

• The Bowlbys aren’t alone. Ann Arbor attorney Joseph Spiegel, who filed one of the three lawsuits pending against ABC, said the Bowlbys are among approximately 70 older homeowners in Michigan who were allegedly persuaded by ABC salesmen to take out new mortgages on their homes and invest the proceeds in Diversified Lending Group Inc. Spiegel’s suit seeks class-action status for an estimated 250 ABC clients in Michigan who invested with Diversified Lending Group, a California real-estate-investment company that was charged with securities fraud earlier this year. It promised investors 12 percent annual returns with no risk. Spiegel said he and West Bloomfield attorney Anthony Trogan represent about 160 ABC clients who claim they’ve lost about $7 million.

• “Diversified was a Ponzi scheme,” said David Gill, the court-appointed receiver overseeing Diversified Lending Group’s assets during the lawsuit. “The only way it could pay the returns it promised was by taking in and paying out money from new investors.”

For more, see Mortgage nightmare: Retired couple face foreclosure after 'too good to be true' investment (Orrin and Jama Bowlby, a retired couple in Constantine, say they were convinced by insurance company American Benefit Concepts Inc. to take out a loan on their house and invest the money into am alleged Ponzi scheme. Now they are at risk of losing their home to foreclosure).