A couple of Missouri real estate companies' complex business model, which drew the attention of the state's attorney general in 2008, has resulted in indictments against the corporations and its top executives.
Missouri Attorney General Chris Koster said Greenleaf Companies and The Real Estate Company were engaged in securities fraud in a business scheme designed to return huge returns for investors while selling homes to buyers with poor credit.
The indictments were handed up against:
- Eric Christian Gagnepain, 38, of Springfield, former part-owner of Greenleaf, is charged with ten counts of securities fraud and nine counts of unlawful merchandising practices;
- Scott Allen Dasal, 44, of Springfield, former President of The Real Estate Company, is charged with ten counts of securities fraud and nine counts of unlawful merchandising practices;
- Misty May Perkins, 30, of Highlandville, former Director of Investor Relations for Greenleaf, is charged with ten counts of securities fraud;
- William David Strong, 42, of Springfield, former Vice President of Finance and Daily Operations for Greenleaf, is charged with one count of securities fraud and five counts of unlawful merchandising practices; and
- Robert Lee Batchman, 33, of Ozark, former real estate broker for The Real Estate Company, is charged with four counts of unlawful merchandising practices.
According to Koster, Greenleaf solicited investors to purchase homes and -- in selling securities related to the purchase of those homes -- omitted key facts and made misrepresentations.
When Greenleaf and The Real Estate Company subsequently sought to sell those homes to consumers, consumers were not told critical information regarding the ownership and financing of the homes, according to the indictment.
Buyers didn't own homes
For example, the buyers didn’t actually own the homes. Greenleaf allegedly recruited investors to purchase new homes from builders, using the investors’ credit to obtain financing. Ownership would pass to Greenleaf through a contract for deed, before being sold to consumers in the subprime market.
But when investors stopped making payments on the homes they had purchased, it meant the homebuyers lost their homes to foreclosure, even though they had been making payments.
Each charge of securities fraud carries a maximum potential sentence of 10 years incarceration and a $1 million fine. Each charge of unlawful merchandising practices carries a maximum potential sentence of four years incarceration and a $5,000 fine.