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Monday, May 27, 2024 | Back issues
Courthouse News Service Courthouse News Service

Bilked by Real Estate Ponzi Scheme, Woman Says

SANTA ANA, CALIF. (CN) - A California woman says in state court that Clearwater REI and others bilked her out of her retirement funds with false promises made in a radio ad.

Shirley Peltier says in her Feb. 8 complaint that she was an unemployed single mom with no investment expertise at the time she responded to an advertisement she heard on the radio "which was cleverly disguised as a radio finance talk show."

The defendants convinced Peltier to invest her 401K funds from her previous work by assuring her it was a safe retirement investment that would "pay like clockwork," but did not tell her of the extreme risks of the investments, Peltier says in the suit.

"The Clearwater 2008 Note Program Investment was one of the fraudulent investments that I was put into by an investment advisor that has already been found guilty, as we won a case against him recently - against all odds - but it was clear to the FINRA panel that this was illegal, fraudulent and included Ponzi schemes," Peltier told Courthouse News. "Unfortunately, I invested my entire 401K in the multiple investments recommended by this advisor, of which Clearwater was one."

That advisor was not named in the suit because FINRA found against him and awarded Peltier - who is representing herself in the current action - over $270,000 in damages.

"Now, the dilemma becomes collecting from him - since these criminals know exactly how to hide their (our) money and or decide to file bankruptcy to protect themselves," she said in the interview.

According to its website, the Financial Industry Regulatory Authority (FINRA) is a nongovernment, independent, not-for-profit organization authorized by Congress to protect investors. The organization says its arbitrators handle "more than 99 percent of the securities-related arbitrations and mediations in the U.S."

Ponzi schemes rely on a constant influx of new investors to pay off older investors, and the schemes fall apart when new investments stop, leaving the newest investors holding the empty bag.

"One of the main investments that underlie the Clearwater 2008 Note Program is a $10 million mortgage note on a now-defunct hospital called 'Florence Community Healthcare' in Florence, Ariz. The hospital was established by individuals who had close relationships with Clearwater executives and together conspired in a scheme to overvalue the hospital in order to allow for a large loan that was unjustified by the property values, claiming that the money went to construction costs - when they really pocketed the money and left the hospital in a state where it is bound for failure, while the defendants kept their ill-gotten gains," Peltier said.

According to the suit, Peltier was promised a 9 percent yield on her money, which would be invested in short-term, first-lien mortgage loans to be paid off through traditional long-term refinancing that defendants would "close quicker than the typical bank, thus facilitating a quicker acquisition of real estate."

Peltier was to receive monthly interest payments, representing the 9 percent gain, and was to be fully repaid on her investment by the end of 2015. Instead, she received nothing, she says in her lawsuit.

Peltier named Home Federal Bank as an additional defendant because it "aided and abetted the illegal actions of the other defendants" and "failed to detect the clearly fraudulent transactions of the other defendants, either deliberately or out of reckless disregard," according to the suit.

Neither Clearwater REI LLC nor Home Federal Bank responded to email and phone requests for comments.

Peltier seeks $437,000, representing $137,000 of lost principal and interest and $300,000 in punitive damages.

"I am obviously 'not going to take this one sitting down,'" Peltier said in the interview. "I am a very strong, smart woman and have been completely destroyed by this situation. It is like a circle of organized thieves that clearly get away with this because of our lax laws for these types of crimes."

Peltier is suing for breach of contract, securities fraud, negligence, intentional misrepresentation and mail and wire fraud, among other claims.

The entire list of defendants includes Clearwater 2008 Note Program; Clearwater REI; CREI Florence Healthcare; Clearwater Real Estate Investments; Clearwater REI, Inc.; Clearwater Growth & Opportunity REIT; Clearwater 2007 Note Program; Barton Cole Cochran; Chad James Hansen; Ronald D. Meyer; Christopher J. Benak; Rob Ruebel; Don Steeves; RE Capital Investments; Initiatives Healthcare; Initiatives Healthcare Delivery Consortium; Healthcare of Florence; Florence Hospital; Brent Cherne; Je McEachern; Edward McEachern; Healthcare Capital Partners; and Home Federal Bank.

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