Homesource Partners Inc., Owner Pleads Guilty to Wire Fraud | Goodman & Nekvasil P.A. May Recover Investor Losses
Owner of Homesource Partners, Inc. Pleads Guilty to Wire Fraud
ACCORDING TO THE U.S. Attorney’s Office
Karen Lynn McClaflin, age 59, of Colorado Springs, Colorado, and owner of “Homesource Partners Inc.” was sentenced today by U.S. District Court Judge Christine M. Arguello to serve 96 months in prison, followed by 3 years of supervised release, restitution in the amount of $14,528,206.39, and a $200 mandatory special assessment, U.S. Attorney Bob Troyer, FBI Special Agent in Charge Calvin Shivers and IRS Criminal Investigation Special Agent in Charge Steven Osborne announced. On June 21, 2017, Ms. McClaflin pled guilty to one count of wire fraud and one count of engaging in a monetary transaction in property derived from wire fraud.
In late 2010, McClaflin started Homesource Partners Inc. (“Homesource”), and McClaflin rolled many of her investors from Trademark into Homesource. From late 2010 through early March 2017, McClaflin owned and operated Homesource in Colorado Springs, Colorado. In seeking investors for Homesource between March 2011 and early 2017, McClaflin told investors that Homesource was seeking loans from investors to finance Homesource’s “fix and flip” business because Homesource was not able to use traditional bank loans. McClaflin represented that traditional bank loans took too long and some of the distressed homes might not qualify as collateral for such loans.
Through marketing materials and verbal statements, McClaflin told investors that Homesource had access to distressed houses that were deeply discounted, which Homesource could purchase for no more than 80% of the “as is” value of the house. McClaflin further represented that Homesource then had exit strategies to profit from the distressed houses, including selling them within 30 days for an immediate profit, “fixing and flipping” the houses for sale within 31-90 days, or fixing the houses and renting them if the houses failed to sell within 90 days.
McClaflin represented that Homesource had a team of contractors who would fix and upgrade the properties so Homesource could resell the properties for a profit. McClaflin further represented that each property would be financed by an individual investor whose investment would be secured by a Deed of Trust in first position on that property, which McClaflin would record for the investor. Occasionally, McClaflin told the investor their Deed of Trust would be in second position. McClaflin further represented that investors would receive an interest rate of 6% to 15%.
However, starting in late March 2011, McClaflin knowingly and intentionally began having multiple investors “invest” in the same property and began placing multiple Deeds of Trust on the same properties, such that the amount of the investments purporting to be secured by the Deeds of Trust exceeded the value of the property. Additionally, starting in late March or April 2011, McClaflin intentionally did not record all of the investors’ Deeds of Trust as promised. Nonetheless, McClaflin continued to falsely represent that investors would receive a first Deed of Trust and that McClaflin would record that Deed of Trust for the investor. McClaflin also sometimes forged the signature of an investor, without the investor’s knowledge or consent, on a release so McClaflin could remove that investor’s Deed of Trust from a property. McClaflin sometimes did not inform investors when “their” property sold and did not return the investor’s principal upon that sale as promised.
Additionally, starting in at least the beginning of 2013, Homesource’s debt had grown too high and the interest payments owed to investors far exceeded the gross profits earned by Homesource. By at least January 2013, McClaflin was aware of this problem and intentionally continued seeking additional investments so that she could keep making the interest payments owed to earlier investors.
Unbeknownst to the individual investors, the amount of investment funds, which were supposed to be secured by real property, far exceeded the value of the encumbered property and Homesource’s business assets. An analysis of Homesource’s finances shows that the influx of investor funds kept Homesource operating, particularly in its latter years. Without the additional investor funding, Homesource would have failed years earlier.
Investors in Homesource Partners, Inc. May Recover their Losses with Goodman & Nekvasil, P.A.
If you invested in Homesource Partners, Inc., Goodman & Nekvasil, P.A. may help you. Goodman & Nekvasil, P.A., a Clearwater, Florida, law firm with a national practice representing victimized investors, has recovered more than $180 million dollars on behalf of victimized investors.
All our cases are handled on a purely contingency fee basis by Kalju Nekvasil, Esq., formerly regional counsel with the NASD, now known as FINRA. Kalju Nekvasil, Esq. has practiced in this area of the law for more than 35 years.
There is no charge for an evaluation of your case. Further, we handle our cases on a contingency fee basis. This means that unless we recover money for you, we charge no attorney’s fee. Unless you recover any money, you pay us nothing, not even the costs and expenses which the firm will advance on your behalf.
If you incurred investment losses in Homesource Partners, Inc. and would like your case evaluated by a securities attorney (again, there is no charge for an evaluation and all cases are handled on a purely contingency fee basis), please contact us.
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