Wednesday, February 08, 2006

First Magnus files Civil Lawsuit Alleging Kansas City, Missouri Mortgage Fraud Scheme

First Magnus Financial Corporation (FMFC) filed a civil lawsuit in the Federal Court for the Western District of Missouri, Kansas City Division, against the following defendants whose roles, as indicated in the complaint, are also included:

Summit Mortgage, L.L.C, mortgage broker
Joe Richardson, principal/alter ego, member, employee and/or agent of Summit
Dwayne Maddy, principal, employee and/or agent of Summit
Frank Strauss, principal, employee and/or agent of Summit
Rob Adrian, principal, employee and/or agent of Summit
David L Peterson, appraiser
Peterson Appraisal Service, LLC, appraiser
Edwards Appraisal Services, LLC, appraiser
Terence Edwards, appraiser
David Edwards, appraiser
Jason Morgan, appraiser
Kevin Casburn, appraiser
Nicolace Appraisals, appraiser
Paul E. Nicolace, appraiser
Hometown Appraisals, Inc., appraiser
Hometown Appraisals, LC, appraiser
Hometown Property Management, LC (previously Hometown Appraisals, LC)
Dominique P Allen, appraiser
Dennis C. Kiethley & Associates, appraiser
Dennis C. Keithley, appraiser
Mississippi Valley Title, title
First American Title Missouri Agency, Inc. dba First American Title of Kansas City, title
Premier Title Company, title
Realty Title Company, title
Commonwealth Land Title Insurance Company, title
First American Title Insurance Company, title
Old Republic Ins Co, title
Chicago Title Insurance Company, title
Wade Rustici, property seller
Global Assets, property seller
Brian Valet, property seller
Judy Valet, property seller
Kathy Schilt-Richardson, property seller
Kory J. Oline, property seller
K.C. Rehab Inc. , property seller
Mark Owen, property seller
Mark Meirath, property seller
Becky Meirath, property seller
Paul Zarrillo, property seller
Vicki Zarrillo, property seller
Rebecca Case, property seller

In its complaint, FMFC alleges that the defendants conducted a ‘massive scheme of fraudulent real estate transactions’ involving 19 flip transactions involving FMFC, in the greater Kansas City, Missouri area. Summit acted as the mortgage broker for all of the transactions.

According to the complaint, each of the fraudulent transactions began with the acquisition of a subject property, usually through a foreclosure sale.  After acquiring a subject property, the Defendantss made or claimed to have made cosmetic repairs and quickly flipped it to an unwitting buyer at a much higher price.  The repairs were often nonexistent or nominal. In some cases, buyers were not creditworthy, requiring Defendants to misrepresent buyer financial information, employment history and other pertinent financial data.

In order to substantiate inflated contract prices, according to the complaint, the appraisers would manipulate the comps and chose comps that were ‘blatantly incomparable’ to the subject property in that the subject properties were smaller, shoddier and in less desirable areas than the properties used as comps.  In some efforts, inaccurate property attributes were provided.  Title companies are alleged to have ‘ratified the inflated appraisals’ and should have known that the closing statements misrepresented and concealed material facts, namely buyer’s financial information, source of the down payment and other material information.

The properties referenced in the complaint are:

419 Montgal, Kansas City, Missouri
2327 Cedar, Independence, Missouri
816 Monroe Avenue, Kansas City, Missouri
126 South Topping Avenue, Kansas City, Missouri
5218 College Avenue, Kansas City, Missouri
4041 Woodland, Kansas City, Missouri
3209 Jackson, Kansas City, Missouri
3015 Quincy, Kansas City, Missouri
2410 Spruce Avenue, Kansas City, Missouri
3426 Indiana Avenue, Kansas City, Missouri
2822 Bales, Kansas City, Missouri
5235 Highland, Kansas City, Missouri
3725 Higland, Kansas City, Missouri
2529 Askew, Kansas City, Missouri
2807 E. 38th Street, Kansas City, Missouri
8320 Sni-A-Bar Road, Kansas City, Missouri
2539 Olive Street, Kansas City, Missouri
1123 East 79th Street, Kansas City, Missouri

The complaint includes causes of action for RICO, RICO Conspiracy, fraud, negligent misrepresentation, negligence, breach of contract and civil conspiracy.

mortgage fraud

1. Brian Valet, and Judy Valet are innocent of all charges.

   Posted by  on  02/13  at  05:04 PM

2. This story is pure slander, one of the properties in question 3015 quincy, was not a flip.  This property was owned for over three years.  I think people should get their facts straight before they put this story on the internet.

   Posted by  on  02/15  at  03:15 PM

3. One more thing, I have never even heard of 90% of these people that I was listed with.  The lender says rico, that is the most ridiculous thing that I have heard in a while.  I know 5 people on that whole list.  There are 35 people on that list that I have no clue who they are.

   Posted by  on  02/15  at  03:20 PM

4. I want to add one more thing.  All my buyers had credit scores over 700, and stable, and successful jobs.

   Posted by  on  02/15  at  03:24 PM

5. brian and judy valet are innocent of these charges

   Posted by  on  02/19  at  02:34 PM

6. Brian and Judy should NOT even be on this list. They had one property that was owned 3 years so how the heck is that a flip??? Sounds like they threw anybody’s name out that happened to do business with that mortgage company. The buyer decides who to get their loan from NOT the seller! Just as the seller doesn’t pick the appraiser,the lender for the buyer does! As far as the title companies go, they mentioned they should’ve know financial info on the buyers. I’ve been to many closings and have never seen a title company have access to ANY buyer’s financial information, only the lender sees that. Last time I checked I thought a title co. was to insure clear title. They don’t set the price or confirm the value. I have a feeling many people and/or companies named in this lawsuit shouldn’t be on the list and will be cleared.

   Posted by  on  02/28  at  06:01 PM

7. How is it slander to report facts? It is a fact that First Mag filed the suit.  It is up to the courts to determine the validity.

   Posted by  on  04/11  at  08:23 AM

8. well sean it did not go to court because there were no charges that would hold up.  i did nothing wrong in this suit.  in fact i am out of this suit all together.  it may be a matter of public record, but the simple fact is it is all wrong, and frankly all bullshit.  welcome to the world of lawyers and all of the lies that come with it.

   Posted by  on  06/15  at  06:01 AM

9. I wonder how many people were locked adn ready to close when first magnus went belly up? talk about a sham company!

   Posted by  on  08/30  at  09:46 AM

10. I have bought 3 houses from Brian Valet’s company (V & V).  I wish I had seen this info before dealing with him.  If my experience with this person and his company is any indication of what went on with this suit, he is lucky that the mortgage company went out of business.  I would be a lot better off if I had never met him and have a lot more money.  Your experience may be different but, I would be surprised.  Do your homework!

    Posted by  on  12/03  at  06:10 PM

11. Rene bought these houses, I rehabbed these houses with everything new in them.  They are rented section 8.  This guy lives in New York, and owns 12 other properties here.  He has a gripe about everything.  My rehab were better than any of his other houses.  it is not my fault the market flopped and he cannot sell his houses.  I am very sorry I met this investor.  I have been released from this suit, because I have done nothing wrong.  Once again get your facts straight.

    Posted by  on  01/13  at  02:46 PM

12. I have the release from this lawsuit, I did nothing wrong.  I have a great company with a lot of satisified investors.  There are always a few people that you can never make happy, no matter what you do to make them happy.

    Posted by  on  01/13  at  03:03 PM

13. BRIAN VALET IS INNOCENT OF THIS CIVIL SUIT, AND HAS RELEASE PAPERS FROM THE LENDER TO PROVE IT.  I WOULD BE HAPPY TO FAX THE PAPERS TO ANYONE TO SHOW THEM.

    Posted by  on  01/13  at  05:09 PM

14. I thought Brian was very professional.  I bought 7 houses from him.  He rehabbed the houses in perfect condition, and then he rented them as he said he would with section 8 renters.  He still helps me out.  I never had a problem with him, or his company ever.

    Posted by  on  01/15  at  10:14 PM

15. My comment about Brian Valet has nothing to do with the lawsuit above.  My experience with him was horrible.  If anyone wants documentation of what happened including copies of closing statements, financial records, e-mail correspondence or anything else related to my dealings with him, I will be more than happy to provide it to you so tht you can make your own educated and informed judgment.  Brian takes absolutely no responsibility for anything.  The release that he is so proud of gettting may be the result of the bank being burned so badly that they could no longer afford to pursue the case.
    I can tell you that I am not the only person that he dealt with who has the same opinion of doing business with him.  If you’d like that person’s name and e-mail address I’ll be happy to pass it along.
    Caveat Emptor

    Posted by  on  02/03  at  12:22 PM

16. I truly believe I have been scammed
    by Reis Enterprises, Gary Shartzer
    We refinanced our home not so long ago
    and Reis Enterprises was involved
    along with Mr Gary Shartzer also
    JS Appraisal may have done the appriasal
    on our home for this refinance ...
    What can I do ???
    Please contact my wife Marilyn
    ASAP @
    913.458.4802

    Posted by  on  02/08  at  09:45 AM

17. I was on this listed and was dropped from the suit, prior to it going to trial, not sure if it did? I was an apprentice appriaser and did not even hold a license. when talking with FM attorneys, comes to find out that one of the houses was under-appraised? How in the hell is a house that was under-appraised subject to a lawsuit.  The second appraisal was subject to work being complete, not my fault that they gave the person the loan and the work was never done on it, without a 442. This was a witch hunt that involved anyone who’s name was on a piece of paper was sued. I am sure that there was some fraud somewhere but not on our end. The houses set vacant for 18 months before the second opinion was made on the properties. A lot of shit happens to a house in Kansas City when it sits vacant.  Fucking Joke of a lawsuit, greedy fuckers trying to close a bunch of loans and didn’t do their due diligence in qualifying buyers. NIce job Ameriquest, I mean First Magnus!

    Posted by  on  05/10  at  12:13 PM