Right Place principals approve settlement talks

Defendants in a high-profile real-estate investment fraud lawsuit stemming from the sale of apartment-conversion condos in Phoenix said they would consider settling the case while continuing to deny any wrongdoing, according to statements they filed with the court.

The former principals of Right Place Properties and Red Door Group, two companies that solicited and managed investments in Phoenix-area condo projects, have been accused of misrepresenting the properties' value and the nature of the investment deals.

California investor Richard Abel contends that Right Place and Red Door principals Earl Ricker, Rob Porter, Drew Grunwald and Kevin Peck persuaded him to invest $45,500 in an overvalued former apartment complex at 46th Avenue and Thomas Road in Phoenix, now a condominium community called Santa Fe Condominiums, by assuring him that his money would be pooled with funds from other investors to buy the property.

According to court documents, Abel and the defendants have agreed to meet today in Sonoma County, Calif., to discuss a possible settlement agreement. Abel said that after investing his money he found out the defendants, operating under the name Kivas Uno LLC, already had bought the complex with money from other investors and that his cash merely went toward padding their profits.

According to Abel, the defendants pitched the investment as a short-term loan and said a condo unit to be put up as collateral was worth $77,000.

"They didn't tell the plaintiff that they had just bought the unit for $28,000 one month before," said a statement Abel's attorney filed in court last week.

Kivas Uno later defaulted on the loan. The condo unit recently was valued at $10,000 to $12,000, he said.

Abel, suing in Sonoma Superior Court, in Northern California where he lives, also named California-based Lawyers Title Co. as a defendant, arguing that the title company was aware of the misrepresentation and went along with it.

For their part, the defendants challenged Abel's standing to sue them as individuals and said he is merely looking for someone to blame for an investment that went sour when the real-estate market crashed.

They said the failed condo deal was Abel's third time investing with them, and he had profited significantly from the first two deals. They agreed in statements filed last week to attend today's conference, where a court-appointed panelist will attempt to facilitate a settlement deal.

Hundreds of investors say they were shocked when Right Place and Red Door suspended investor payments in November 2008 after operating for 15 years. They officially shut down in February 2009, leaving behind at least 42 unfinished condo-conversion projects with a combined total of more than 3,500 apartment units. Many of the units were uninhabitable, according to investors, and several were in pre-foreclosure because of unpaid property taxes.

The investment brokers did not refund any of the more than $85 million their roughly 1,000 investors say they prepaid for future renovations and maintenance they never performed, taxes they never paid and condo-marketing efforts they never initiated. At least two other investors have filed lawsuits in federal court seeking damages.

by J. Craig Anderson The Arizona Republic Jan. 5, 2011 12:00 AM




Right Place principals approve settlement talks