A judge in Virginia orders real estate agents to pay into a fund for victims who overpaid for Sugarmill Woods property.
By AMY WIMMER SCHWARB
Published August 17, 2004
SUGARMILL WOODS - A federal judge ruled earlier this month that real estate agents working for a Virginia developer participated in a land sales scam that involved inflated property sales in Sugarmill Woods.
The outcome of the case involved fines against three real estate agents; settlements with six people who owned and operated the company, Buyers Source; and settlements with the two financial lenders that financed Buyers Source.
The scam, according to the U.S. Department of Housing and Urban Development, fleeced about $30-million from more than 1,300 people in 29 states and the District of Columbia. More than 500 of the victims were elderly, and four of them were more than 100 years old.
HUD became involved in investigating the case because it involved interstate land sales. The agency stepped in after some local government agencies, including the Citrus County Property Appraiser's Office, spotted inconsistencies in land sales that raised their suspicions.
"We started seeing the sales come through" and contacted the State Attorney's Office, said Melanie Hensley, deputy property appraiser. The sales were spotted in 2000.
"I didn't really know if it was being pursued by anyone, and then we got a call a few months ago that they wanted someone from our office to come to Washington and testify," Hensley said.
Les Cook, director of appraisal for the Property Appraiser's Office, testified about the inflated land sales the office spotted four years ago. Buyers Source was buying lots in the Cypress Village section of Sugarmill Woods for $3,700 to $12,300, then selling them for $29,900 to $39,900. The appraised value of the lots at the time was about $8,000, Hensley said.
The Citrus Times reported the inconsistencies in September 2000, and Buyers Source agents explained them.
"The property is worth what someone is willing to pay for it - what it's worth to them," Tom Brewer, one of the partners in Buyers Source, told the Times in 2000. "I cannot develop these lots for less than $29,900. We think those lots are worth that."
According to authorities, the deal worked like this: Buyers Source found people who had tried to sell a timeshare they no longer use. The company offered to buy the timeshare for $10,000, but required the timeshare owner to put down a third of that amount as a down payment on a Sugarmill Woods lot.
According to HUD, the settlement reached in the case required Brewer to pay $212,500 in cash and property and forfeit any undisclosed assets, up to $3-million. Altogether, the six owners and operators were required to put up to $1-million into a compensation fund. HUD will seize their homes and personal assets if they fail to comply.
Lannie "Mex" Campbell, who headed Buyers Source sales operations, told the Times in 2000 that the approaching Suncoast Parkway made his company's high prices in Sugarmill Woods possible.
"There's a new road coming in out of the Tampa area, and that's going to put (Sugarmill Woods) so much closer, timewise to that big metro area," Campbell said. "People like to move into an area that's not going to be totally grown up. Sugarmill Woods is a tremendously nice place. It's not our problem that someone is willing to sell (the lots) for far less than what they're worth."
In the settlement reached in Norfolk, Va., Campbell must pay a maximum of $282,000, forfeit any undisclosed assets up to $30-million, and is prohibited from selling any form of real estate for the rest of his life.
