Attorneys plan lawsuits against Greenleaf, investors

Three law firms, including one in Springfield, are quietly coordinating legal recourse for people who "bought" homes from Greenleaf Cos. LLC that later went into foreclosure when investors who actually owned the properties defaulted on mortgage loans.

One of those firms is The Property Law Center LLC in Leawood, Kan., where real estate attorney Doug Patterson is leading the charge against Springfield-based Greenleaf and sister company The Real Estate Co.

Patterson represents a group of clients who signed contracts-for-deed to buy homes in the Tuscany subdivision in Peculiar, near Kansas City, that were later foreclosed on when Greenleaf officials failed to relay his clients' monthly payments to property investors who owned the homes. In January, Patterson filed a lawsuit against Greenleaf and dozens of those investors in U.S. District Court that accuses the company of running a massive Ponzi scheme predicated on loose lending standards.

Since then, Patterson's been in touch with disgruntled Greenleaf customers who contracted with Greenleaf to buy homes in Nixa, Willard and even in northwest Arkansas, where the company also operated.

"It's huge," he said of the potential pool of plaintiffs.

One of Patterson's clients is Cyndi Cody, who contracted with Greenleaf to buy a $349,000 home in Nixa's 14 Park Place subdivision in 2006. But despite never being late on her $3,000 monthly payments, the lender abruptly foreclosed on her home last year. Cody said her efforts to purchase the home outright from Greenleaf were unsuccessful, and a forced relocation cost her a job as a computer consultant earning $250,000 a year.

"I really just want my money back and some of my income," she said of her rationale for contacting Patterson. "I really just want what I had."

On March 25, Patterson traveled to Springfield to consult with a local attorney - whom he declined to identify - about the possibility of pursuing similar litigation in Greene and Christian counties, where the majority of Greenleaf's real estate was located. After meeting, the legal team decided to group contract-for-deed buyers by subdivision in anticipation of filing suits in April, Patterson said, adding that the cases could then be more easily consolidated into a class action, if warranted.

Like the suit filed against Greenleaf by third-party homebuyers in Peculiar, legal complaints filed here would list the company's property investors as defendants, Patterson said.

"I don't think the investors are victims," he said. "The owner-investors lent their credit to home purchases which should never have happened. They were complicit; they were the most important factor in this."

Investors, however, have told Springfield Business Journal that they're just as much victims, if not more, than the third-party buyers who lived in their homes.

Virginia resident Barbara Safka bought two homes - one in Springfield and one in Arkansas - through Greenleaf's investment program.

The retiree said she absorbed the combined $3,500 monthly mortgage payments on the two properties for 10 months after checks from Greenleaf stopped coming last April. Despite taking out a reverse mortgage, Safka couldn't afford to continue making payments. She unloaded the Arkansas home through a short sale, but still owns the Springfield property in Bent Tree subdivision.

Safka was appalled by Patterson's assertion that Greenleaf investors are somehow to blame for the misfortune of third-party buyers ousted from their homes.

"I lost," she said. "We didn't realize what (Greenleaf was) doing. How can (the third-party buyers) sue us? ... They were, like, paying rent. They didn't lose that much. ... We're the ones that got crooked on this."

Attempts to reach Greenleaf officials for comment were unsuccessful, but company representatives are scheduled to appear before Missouri Securities Commissioner Matt Kitzi on April 15 to argue against the imposition of penalties of up to $10,000 per violation stemming from a December cease-and-desist order issued by Kitzi.

The order was issued a week after authorities armed with a warrant searched Greenleaf's South Campbell Avenue offices in connection with what Missouri Secretary of State Robin Carnahan has called a "real estate investment scheme."

State officials have alleged that Greenleaf sold more than $15 million of unregistered real estate investments to more than 66 Missouri investors.[[In-content Ad]]