Next week, a Deschutes County court will take up the case of a real estate company, owned by the wife of a former Bend police captain.
Friends and acquaintances allege they loaned money to the company, Starboard LLC, but haven’t been repaid.
It’s just one in a number of high-profile real estate investigations in the state – and in central Oregon.
Today, Ethan Lindsey takes a further look at alleged financial scams going on in the state.
This time, he asks the question, why are we hearing about all these scams now?
There’s a saying, when the tide rolls in, life’s kinda like a beach party.
But, when that tide rolls back out…well, that’s when you find out who’s been swimming naked.
In economic terms, that means right now we’re discovering all the people who’ve allegedly taken advantage of the high times.
Including here in Oregon – especially in Bend.
During the housing boom, the money flowed so freely that some investors are accused of taking too many liberties.
But when the boom times ended....
Martin Hansen: “Basically the music stops and there’s not enough chairs left in the room.”
Martin Hansen is an attorney in Bend. He says the gravy train of the housing boom brought out the worst in some people.
Martin Hansen: “Obviously some people live life on the edge, and cut corners, and you’re going to have that from Madoff on the east coast to anywhere else. There’s nothing peculiar about central Oregonians, I don’t believe.”
He’s involved in lawsuits in two of the region’s most high-profile alleged real estate scandals.
In one, a local police captain retired after the Bend Bulletin newspaper reported he, his wife, and their companies were the subject of an FBI investigation.
Kevin and Tami Sawyer were heavily invested in local and national estate. Now they are the subject of a number of legal proceedings for unpaid debts.
The Sawyers and their attorney could not be reached for comment.
Another major case, involving a different central Oregon company, is the investigation into the now-defunct Summit 10-31 Exchange company.
Nye Miller is an artist and rancher in Tumalo, outside Bend.
She and her husband Ron, say they lost hundreds-of-thousands of dollars they deposited with Summit 10-31, after they sold a small ranch they had developed.
Nye Miller: “I haven’t gone back to the property that we sold because I think I would be overwhelmed with sadness. We sold the property, and we don’t own that, and we also don’t have the money.”
Summit 10-31 Exchange was a company set up purely as a place to deposit money during real estate transactions.
It was an unregulated business, but it was supposed to hold onto the money for its clients.
When people put their money into Summit 10-31, they could avoid capital gains taxes. Usually, people placed their money with the company for no more than 180 days.
But the Bend-based group is alleged to have taken client’s money, without their permission, and used it for other real estate investments.
When the real estate market cratered, the company informed its depositors that it couldn’t pay everybody back.
Miller says she found out about the company’s problems around Christmas. She had gone to their offices with all the paperwork she needed to transfer her money.
And she found the front doors of the office locked.
Nye Miller: “I have nightmares since of my since of myself in a fetal position, by that door, like a door mat, waiting for it to open. We’re waiting every day for some kind of news that we would have a good outcome.”
Here’s Bend attorney Martin Hansen again.
He says the deal between Summit 10-31 and its depositors was very clear.
Martin Hansen: “It did not authorize any removal for any purpose whatsoever under any terms in any circumstance. Period. It would just be tantamount to your bank removing money from your savings account to investment in real estate. They don’t have the authority, without your consent.”
Other similar companies around the country have been accused of doing the same thing.
Calls and emails to Summit company officials and to the company's attorneys were not returned.
Kevin Anselm is the chief of enforcement and securities for the Oregon Division of Finance and Corporate Securities.
Her group heads up state investigations that deal with high-level financial improprieties.
She says the economy only accounts for some of the problems-- but not all.
Kevin Anselm: “There are those companies who handled things properly and are still having some trouble. We see those. But they’re not having the dramatic and drastic results that you are seeing in the headlines now.”
Anselm says the headlines are reflected in her workload.
She says the number of real estate investigations in her office is two times higher than normal.
Kevin Anselm: “It doesn’t matter if you’re in boom times or not, the scams are still out there. Now, the fact that we’re dealing with real estate this time is a little bit different, and the real estate bubble has burst.”
And Central Oregon was at the epicenter of the real estate bubble.
That’s left the region awash in real estate related scams.
