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Greenleaf Cos. enters summary judgment

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Operators of Springfield-based Greenleaf Cos. LLC and The Real Estate Co. Inc. were barred from selling or renting homes in Missouri and ordered to pay more than $338,000 in restitution to consumers and the state when the state attorney general’s office secured a summary judgment against the defendants in December.

Defendants Scott Dasal and Eric Gagnepain defrauded consumers by “selling” them homes that were already owned by investors the defendants had solicited, the attorney general’s office said Dec. 16. The investors held mortgages on the homes, but the money Greenleaf collected from consumers to be paid toward mortgages was, in many cases, going toward business operating expenses.

The summary judgment ordered the defendants pay more than $308,000 in restitution to consumers and $30,000 to the state of Missouri.

A lawsuit against former Greenleaf Director of Finance William Strong is still pending. No court date has been set for Strong, according to Nanci Gonder, a spokeswoman for the attorney general’s office.

Springfield Business Journal previously reported that Greenleaf stopped making payments to investors in spring 2008, and consumers lost their homes after banks foreclosed on the properties. On Dec. 9, 2008, investigators from the attorney general’s office confiscated more than 80 boxes of records from Greenleaf Cos. and the Real Estate Co. offices in Kickapoo Corners on South Campbell Avenue.

On Dec. 16, 2008, Missouri Securities Commissioner Matt Kitzi signed a cease and desist order against Greenleaf Cos. prohibiting its owners from selling securities in the state. The company’s operators withdrew their request for a hearing on the facts of the case in June 2009.

Gonder said the summary judgment would not stop criminal charges from being filed against the operators of Greenleaf Cos. and The Real Estate Co.

“The attorney general’s office is continuing to conduct a criminal investigation related to Greenleaf and that investigation has not been completed,” Gonder said. “We have filed no criminal charges out of this investigation at this time.”

She declined to say whether the attorney general’s office was the only agency conducting an investigation against the companies.

Josh Nixon, a supervisory senior resident agent for the FBI-Springfield office, said he could neither confirm nor deny that federal agents were investigating Greenleaf Cos. or The Real Estate Co. He said it is the bureau’s policy not to confirm investigations of specific companies because of the fact that an ongoing investigation of a company may damage its reputation.

Class-action in limbo
SBJ reported in March 2009 that attorney Doug Patterson of Leawood, Kan.-based The Property Law Center LLC was heading an effort to file a class-action lawsuit against the real estate companies.

Cyndi Cody, a Greenleaf consumer who lost her Nixa home to foreclosure, said several foreclosure victims who had been working with Patterson have not been able to reach him to learn the status of that suit.

According to Pacer, a searchable government Web site that stands for public access to court electronic records, Cody had not been named as a plaintiff in any suit filed by Patterson. A suit filed by Patterson on Jan. 23, 2009, was terminated two months later, and the disposition was listed as voluntarily dismissed.

Patterson did not return requests for an interview by press time.

Cody said she had personally contacted 26 people for the potential class-action lawsuit and collected more than two inches worth of documents that she turned over to the attorney general’s office.

“It was bad. I lost my house. I lost my job because I had to take time off work to move,” she said. “I was on a mission.”

Calls to Jason Coatney, an attorney representing Greenleaf Cos. in Dec. 2008, were not returned by press time. Attempts to reach Gagnepain and Dasal also were unsuccessful.
 
The pitch
Greenleaf Cos. recruited investors with good credit from several states including Missouri, Iowa, Colorado and Virginia to take out loans for new homes in southwest Missouri, northwest Arkansas and the Kansas City area.

Greenleaf’s sister company, The Real Estate Co., then marketed those residential properties to people with less attractive credit histories. Those “buyers” signed contracts for deed and agreed to make monthly payments to Greenleaf to cover principal, interest and insurance payments. Those consumers, in most cases, agreed to obtain conventional home loans after making three years of payments.

Investors typically received $10,000 above mortgage payments for obtaining the original home loan.

According to information compiled by the securities division of the Missouri secretary of state’s office, Greenleaf enlisted investors through untitled agreements, contracts for deed and “private placement memorandums.”

Between May 11, 2004, and Sept. 24, 2007, the company executed untitled agreements with 66 Missouri investors representing a total investment of around $15 million, according to the division. Another 30 residents of Missouri who signed contracts for deed invested a total of about $7.4 million between Nov. 7, 2006, and Jan. 31, 2007. And at least 23 state residents signed private-placement memos as Greenleaf investors.[[In-content Ad]]

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