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In North Carolina Attorney General Roy Cooper announced that a Fayetteville real estate investment scheme has been shut down after leaving dozens of unsuspecting consumers with loans they cannot afford and rental properties that are worth far less than what they paid for them.

“Consumers looking to invest in real estate got snared by a complicated scheme that left them with lots of debt and no profit,” Cooper said. “We’ve put a stop to the scheme so that no one else gets hurt.”

Under a consent judgment signed today by Wake County Superior Court Judge Paul Gessner, two of the companies and one of the individuals who ran the scheme are barred from the tricky practices they used to mislead people into investing in rental properties in the Fayetteville and Triangle areas. The court order applies to Maurice Jenkins, Lessane Properties, LLC, and Fayetteville’s Property Center and any of their agents and representatives. If Jenkins is found to have any financial assets, Cooper will pursue restitution for consumer victims.

The case against two other defendants, Holly Stevens and T he Eddie Peyton Group, remains pending. Cooper’s office believes they have ceased operating in North Carolina.

Cooper contends that Jenkins and the other defendants told consumers they could help them make a profit by purchasing houses and renting them out without having to pay any money down. Jenkins funded his scheme by misrepresenting the value of the properties he sold to consumers and by causing consumers to take out mortgages and lines of credit for more than the properties are worth.

Public records in Cumberland, Durham, Harnett, Robeson, Sampson, and Wake counties indicate that Jenkins and the other defendants have sold more than 120 homes since 2004. The defendants purchased most of these houses out of foreclosure for between $10,000 and $70,000 and then resold them as rental properties for between $30,000 and $150,000.

According to Cooper’s complaint, the defendants promised to manage the rental properties and cover consumers’ monthly mortgage payments, taxes, and insurance on the homes as well as to pay them $500 profit a month per house. However, the defendants did not charge enough rent to cover all of the promised payments. In some cases, houses were not rented at all or were too damaged to be inhabitable.

Jenkins told consumers that he would take care of getting loans for them to purchase the properties. According to consumers interviewed by Cooper’s Consumer Protection Division, Jenkins completed their loan applications, took them to meet with loan officers, and told them how much money to borrow. In loan applications he prepared and submitted, Jenkins inflated borrowers’ incomes, exaggerated what they were going to pay for the properties, and misrepresented at least one borrower’s employment status.

As alleged in the Attorney General’s complaint, in some cases the defendants told lenders that consumers already owned the homes and were applying to refinance so that the loan would be approved with less scrutiny from the bank. Jenkins and the other defendants would then keep the money borrowed by the consumers and fail to pay off the previous mortgages, leaving consumers stuck with two mortgages on a single property. Some consumers didn’t find out that Jenkins hadn’t paid off the previous loans until they started to get foreclosure notices.

“If you’re looking for a legitimate opportunity to invest in real estate, beware of deals that sound too good be true,” Cooper said. “There are no risk-free investments, and any one who tells you otherwise or guarantees you a profit is probably up to no good.”

Cooper offered consumers the following advice about real estate investment deals:

• Do your own research on the property and investment opportunity. Investing in real estate should not be an impulse decision. Don’t rely on the information that is provided to you by the developers or the people who are trying to get you to buy in to the investment.
• Get an independent appraisal to check the value of the property. Never rely on the appraisal of the developer or seller. Hire an independent appraiser, and be sure to check that he or she is a licensed appraiser in the state where the property is located.
• Consider having your own attorney review documents before you sign them to be sure that everything is accurate and above-board. Never sign a closing statement or loan papers that aren’t entirely accurate.
• If the opportunity sounds too good to be true, it probably is.



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