KANSAS CITY, Mo. (CN) – Gary McClung and his Quintero Business entities took $8 million in a real-estate Ponzi scheme, investors say in Jackson County Circuit Court.
The Benz family claims that McClung took loans in exchange for promises of reduced prices on real estate.
For example, Karen Benz claims she loaned McClung $1 million in November 2000 in exchange for a $300,000 reduction off of any selected Quintero real estate.
In reality, the Benzes say, McClung was looting his Quintero entities to pay off previous investors and other obligations. They say he lied to investors about Quintero’s financial health from 2005 to 2009, while continuing to borrow.
The scheme started to unravel in October 2007, when Hillcrest Bank canceled letters of credit on McClung’s real estate projects in Arizona, the plaintiffs say. They say the FDIC eventually sanctioned Hillcrest for unsound lending practices.
The plaintiffs seek $8 million for fraud, conspiracy, aiding and abetting and other charges. They are represented by Linus Baker of Stilwell, Kan.