Tuesday, August 21, 2012

Mo. AG Scores Securities Fraud Conviction Against Member Of Group That Operated Contract For Deed Racket Financed By Unwitting Straw Buyers

From the Office of the Missouri Attorney General:

  • Attorney General Chris Koster said [] that Greene County Circuit Judge Calvin Holden has convicted William David (Bill) Strong of securities fraud and unlawful merchandising practices for his role in the real estate investment scheme perpetrated by Greenleaf Companies and The Real Estate Company in Springfield.

    When a company misleads Missourians about the risks of an investment, my office will prosecute the responsible parties,” said Koster. “I am pleased that Judge Holden found Mr. Strong guilty for his role in this multi-million dollar fraud.”

    According to Koster, Greenleaf convinced investors to purchase homes chosen by Greenleaf by promising the investors that Greenleaf would pay the down payment, closing costs, and monthly mortgage payments. Greenleaf also promised to purchase the homes from the investors and pay a $10,000 bonus at the end of several years.

    Greenleaf then contracted to sell the homes, which were actually owned by investors and not by Greenleaf, to buyers in the subprime market. Greenleaf did not tell the buyers that investors actually owned the homes Greenleaf was purporting to sell.

    When Greenleaf stopped paying the investors their monthly mortgage payments, and investors were subsequently unable to make the payments themselves, banks began to foreclose on the homes even when the buyers were current on their payments to Greenleaf.

    Evidence at trial showed (1) that Strong misrepresented to investors the creditworthiness of the buyers to whom Greenleaf was reselling the homes; (2) that Strong purposefully failed to advise the buyers that title to the homes was held by the investors, not Greenleaf; (3) that Strong purposely failed to advise the buyers that Greenleaf failed to make timely payments to the investors; and (4) that Strong promised to give a buyer a deed of trust when Greenleaf did not in fact own the property it was selling.

    Strong’s guilty verdict follows guilty pleas by two other officers, Lane Sanders and Eric Gagnepain. Gagnepain, former part-owner of Greenleaf, pleaded guilty earlier this year to ten counts of securities fraud and nine counts of unlawful merchandising practices; his sentencing is scheduled for September 7, 2012. Sanders, former president of Greenleaf, pleaded guilty to securities fraud and unlawful merchandising fraud charges in February 2011; his sentencing is pending.

    Charges against three other officers remain pending: Scott Allen Dasal, former President of The Real Estate Company; Misty May Perkins, former Director of Investor Relations for Greenleaf; and Robert Lee Batchman, former real estate broker for The Real Estate Company.

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