Home Builder Indicted on Bank Fraud Charges

admin —  January 29, 2009 — 2 Comments

Edward Levinson, 49, Chesterfield, Missouri, was indicted by a federal grand jury on ten felony counts of bank fraud in connection with his construction business, resulting in more than $10 million in losses to banks and prospective home owners and subcontractors.

According to the Indictment, Edward A. Levinson was in the residential and commercial real estate construction and sale business, doing business under the name of Levinson Companies, a/k/a Wynncrest, Inc., Terra Vista, Inc., Belle Maison, Inc., and Levinson Building and Realty Corporation, among others. Levinson had construction lending relationships with Royal Banks of Missouri; First Bank; and Enterprise Bank and Trust. The purpose of the loans was initially to purchase and develop land and later construct residences for sale to the public. Royal Banks of Missouri financed the Wynncrest/Terra Vista Projects’ land acquisition, development, and construction of residences at a Levinson project known as Wynncrest Phase I, St. Louis County, Missouri, in 2003,and two more Levinson projects known as Wynncrest Phase II, and Terra Vista, both in St. Louis County, MIssouri, in 2006.

Beginning in September 2007, Royal Banks of Missouri became uncomfortable with their loan exposure with Levinson and demanded that Levinson obtain a third party disburser of money to pay subcontractors on the construction of homes at Wynncrest Phase II and Terra Vista. At this time, Levinson had cash flow problems on his construction projects and attempted to obtain more financing initially from Royal Banks of Missouri and subsequently numerous financial institutions.

In November 2007, Royal Banks of Missouri hired an independent appraiser to re-appraise Wynncrest Phase II, and as a result of this appraisal Royal Banks of Missouri refused Levinson’s request for additional financing. Levinson then went to Enterprise Bank and obtained the additional financing for Wynncrest Phase II without the requirement of utilizing a third party disburser of loan money.

The indictment alleges that in early February 2008, Levinson refinanced two Wynncrest Phase II display homes through Enterprise Bank and Trust, reducing the loan debt to Royal Banks of Missouri. Enterprise also agreed to provide construction financing of pre-sold homes at Wynncrest Phase II up to a total of approximately $3,500,000. However, in April 2008, Levinson obtained an additional $500,000 loan from Royal Banks of Missouri for the Wynncrest Phase II and Terra Vista Projects. During this time, at Royal Banks of Missouri’s request, Levinson sold two lots at Wynncrest Phase II to another builder for more than $200,000 each, reducing his debt to Royal Banks of Missouri and generating limited funds for working capital.

During this time, Levinson contracted numerous purchasers/buyers of Wynncrest Phase II and Terra Vista lots and homes built to specifications of the purchaser/buyers. In return, they paid Levinson a lot deposit and down payment earnest money for the construction of their homes. A number of these purchasers requested their money be placed in a escrow account, and in each instance Levinson refused. Levinson used these contracts to build homes to obtain financing to build the specific homes and pay subcontractors for the construction of these homes.

However, the indictment alleges that down payments/earnest money and construction loan money was used for other projects, other unrelated business interests, and other overhead expenses unrelated to the specific purposes of these monies. During the Wynncrest and Terra Vista developments financed by Royal Banks of Missouri and later Enterprise Bank and Trust, home buyers closed on homes where subcontractors later filed mechanics liens totaling in excess of $500,000. Some home buyers on the Wynncrest and Terra Vista developments failed to close on their contracted homes which were never completed and lost all their down payments for the expected construction of a Levinson home.

The Wynncrest/ Terra Vista Projects were foreclosed upon beginning October 2008 by Royal Banks of Missouri and Enterprise Bank and Trust resulting in losses of approximately $1,500,000 to Royal Banks of Missouri; approximately $1,000,000 to Enterprise Bank and Trust; approximately $300,000 to home buyers; and approximately $500,000 in subcontractor liens against banks and homeowners and home owners associations.

The indictment further alleges that in February 2007, Levinson closed on an $18,000,000 deal with First Bank to finance the land acquisition, development, and construction of homes at the Belle Maison Project. Similar to the Wynncrest Phase II / Terra Vista Projects home buyers would contract with Levinson to build/purchase homes giving him deposit money and down payments. Again, Levinson would use these contracts to obtain loan money from First Bank to build a specific home, and again Levinson used deposit money/down payments and First Bank loan money for other purposes. Home buyers failed to obtain completed homes, did not close on these home contracts and lost their down payment money and other payments to Levinson for home construction.

Subcontractors also performed specific work and were not paid and First Bank lost loan money which was disbursed at Levinson’s direction for the construction of specific homes. In early December 2008, First Bank foreclosed resulting in losses of $8,000,000 on First Bank loans; approximately $241,000 to home buyers; and approximately $1,000,000 on subcontractor liens against First Bank.

If convicted, each count of bank fraud carries a maximum penalty of 30 years in prison and/or fines up to $1,000,000. Restitution is mandatory.

United States Attorney Catherine L. Hanaway commended the work on the case by the Federal Bureau of Investigation, and First Assistant United States Attorney Michael W. Reap, who is handling the case for the U.S. Attorney’s Office.

The charges set forth in an indictment are merely accusations, and each defendant is presumed innocent until and unless proven guilty.

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2 responses to Home Builder Indicted on Bank Fraud Charges

  1. I bought a home and now i find out that its not a real contract. the man named julio montenegro aske me to give him 1,000 dollars. I was told to make the check to levinson, banks & associates? can this have something to do with the Edward levinson case? he also took 8k but to his name. help anyone

  2. some man called Julio montenegro made me a contract for a home and i found out it is going on foreclosure. I gave him a check of $ 1000.00 he told me to make the check out to Levinson, Bank & Associates. could he be connected to the fraud connected to the Edward Levinson Case? can someone help me!

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