“It is alarming that we are seeing what appears to be an emerging trend of predatory lenders misleading unsophisticated investors,” said Phil Jemmett, CEO of Breakwater Equity Partners.
Las Vegas, NV (PRWEB) June 12, 2012
Last Wednesday, a group of 34 investors from across the country represented by Breakwater Equity Partners filed suit (case no. A-12-658265-C) in the Eighth Judicial District Court of Nevada against several financial institutions including Wells Fargo Bank and LNR Partners for fraud, conspiracy to secure an inflated appraisal and unlawful foreclosure.The investors are seeking a judgment of more than $30 million dollars for the recovery of the investment, plus attorneys’ fees and lost profits.
In 2006, the Tenaya Investors came together to purchase a $74,250,000 office building at 2716 N. Tenaya Way in Las Vegas. Real estate investment arrangements known as tenancies-in-common, or TICs, allow individual investors to pool their resources and purchase a large commercial building. During the real estate boom of the early 2000s, many baby-boomers and other smaller investors sought to reposition their financial portfolios with what appeared to be safe commercial real estate investments that would generate a predictable return. According to court documents, the Tenaya Investors believe they were misled by financial advisors and lenders who charged outrageous commissions and conspired to inflate appraisal values.
The Tenaya Investors have retained Breakwater Equity Partners, a consulting firm specializing in commercial loan workouts nationwide, to help guide them through the investment recovery legal process.
“It is alarming that we are seeing what appears to be an emerging trend of predatory lenders misleading unsophisticated investors,” said Phil Jemmett, CEO of Breakwater Equity Partners. “Lenders have a responsibility to provide the tenant-in-common investors with detailed and accurate information. Investors don’t expect any possibility of fraud and breach of fiduciary duty from their trusted advisors and lenders.”
According to the lawsuit, the transaction was flawed from the beginning because the original sponsor of the transaction may have conspired with Wachovia bank (now Wells Fargo) to create a fraudulent, inflated appraisal. The appraisers signed off on a purchase price of $363.75 per square foot, when comparable buildings in the area sold for $324.03 per square foot.
Court documents also contend that problems arose for the investors as the August 2011 maturity date of the property’s loan drew near. The lender refused to extend the nearly $51 million loan and the investors were unable to refinance unless a long-term lease agreement could be reached with the building’s sole tenant, United HealthCare Services (UHS). UHS abruptly withdrew from the lease negotiation process with the Tenaya Investors, making it impossible to refinance and placing the building in danger of foreclosure. Bart Larsen, an attorney with the firm of Kolesar and Leatham representing the investors, says there is evidence that the loan’s special servicer, LNR Partners, improperly interfered with the negotiations.
“The Tenaya Investors believe they could have worked out a successful lease extension with UHS and paid the note in full by refinancing the property, if not for LNR’s interference,” Larsen said. “We believe LNR wants the property to be foreclosed on so it can be purchased at a discount. We are fighting to protect the rights of individuals who deserve a chance to secure their investment.”
“It’s very sad to see this happen to people who have spent their lives building financial security,” Jemmett said. “Decades of their hard work and savings are at risk of being wiped out.”
Judge Rob Bare will hear the receivership motion on June 22 at 9 a.m. in courtroom 11C at the Regional Justice Center in Las Vegas.
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