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WASHINGTON - The Department of Housing and Urban Development
today announced a lawsuit against a group of developers, accusing
them of using a fraudulent land sales scheme to bilk an estimated
$25 million from more than a thousand people, primarily senior
citizens. In a 32-page civil complaint filed by the Justice
Department this week in the U.S. District Court for the Eastern
District of Virginia, the government charges the developers,
operating under the name "Buyers Source," with violating
the Interstate Land Sales Full Disclosure Act and is seeking
an injunction to immediately shut down their operations.
HUD claims Buyers Source, and other similarly named businesses,
sold more than 1,000 parcels of land located in Florida, South
Carolina, Ohio, Arkansas, Texas and Missouri at prices that
far exceeded their value, sometimes by as much as 3,000 percent.
The Department's complaint alleges Buyers Source approached
owners of timeshares with an offer to purchase their shares
- in exchange, the victims agreed to purchase lots of land
at greatly inflated prices with the false promise of tremendous
profit and even gifts.
"Many of these victims worked their entire lives to build
security for their later years," said John C. Weicher,
HUD Assistant Secretary for Housing -Federal Housing Commissioner. "Now
a company with a fraudulent scheme is attempting to take all
that away. HUD, in conjunction with the Justice Department
and State Attorneys General, will do everything it can to protect
consumers from those who would steal their share of the American
Dream."
HUD is seeking to shut down all operations of Buyers Source
and its affiliated businesses, seize the company's profits,
and freeze the personal assets of several defendants, including
suspected ringleaders, Lannie "Mex" Campbell and
Henry Montgomery.
HUD's complaint paints a complex picture of how Buyers Source
and its salespersons operated. It began with Buyers Source
obtaining mailing lists of persons who owned timeshares for
several years. Buyers Source would then send timeshare owners
a post card offering to buy their timeshares "for top
dollar" and "without any tricks or gimmicks." Consumers
would be directed to meet with Buyers Source salespersons in
motel rooms where they were told they must purchase a lot from
Buyers Source. The company would sell plots of land for as
much as $32,000, after paying only $1,000 to $5,000 to acquire
the lots only weeks earlier.
When victims of this timeshare exchange expressed concerns
that they could not afford the property, Buyers Source's salespersons
used high-pressure sales tactics and promised consumers the
lots were such a good value, they would earn a significant
profit within 18 months; in the meantime, the victims were
told to use the proceeds from the sale of their timeshares
to make payments on the lots. HUD estimates that the average
consumer in this scheme would have paid $60,000 in principal
and interest for a lot worth between $1,000-8,000.
The complaint also alleges that Buyers Source also failed
to register the properties with HUD, and failed to give consumers
property reports that describe the condition of the lots, as
required under the Interstate Land Sales Full Disclosure Act.
The North Carolina Attorney General's Consumer Protection
Division first discovered this fraudulent operation and HUD's
subsequent investigation quickly found the abusive operation
specifically targeted senior citizens living in several states.
The subdivisions in which Buyers Sources sold lots are: Sugarmill
Woods near Homosassa Springs, Florida; Savannah Lakes Village,
near McCormick, South Carolina; Apple Valley, near Howard,
Ohio; Holiday Island near Eureka, Arkansas; Rayburn Country
in Jasper County, Texas; and Valley View Village South, near
Branson, Missouri.
Buyers Source is based in the Tidewater, Virginia area. Other
affiliated businesses and individuals named in the complaint
include: Belmont Properties, Inc. of Chesapeake Virginia; One
Source Equity, Inc. of Ohio; Island Realty, LLC of Eureka,
Arkansas; Henry Montgomery and his wife, Susan Smothers of
Howard, Ohio; and, Lannie Campbell and his wife, Susan Gard
of Chesapeake, Virginia. Others include former NFL football
player Bill Elko, Mike Durham, Chris Montgomery, Darrell Brooks,
Gregory Sanjurjo, JoAnne Barros, Patrick Campbell, George Haydu,
Leon Lucarelli (aka Leon Masterson), Beverly McPherson, Dawn
Mock, Sandy Williams and Jeff Votaw.
HUD is the nation's housing agency committed to increasing
homeownership, particularly among minorities, creating affordable
housing opportunities for low-income Americans, supporting
the homeless, elderly, people with disabilities and people
living with AIDS. The Department also promotes economic and
community development as well as enforces the nation's fair
housing laws. More information about HUD and its programs is
available on the Internet at www.hud.gov. Find
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