Three out-of-state companies face a hefty lawsuit after attempting to swindle at least 48 struggling homeowners out of more than $3 million.
Indiana Attorney General Greg Zoeller filed the lawsuit Tuesday seeking more than $9 million in compensation and civil penalties.
“My office will use every legal tool available to halt this fraud, hold the defendants accountable and assist the victims,” Zoeller said in a press release.
The complaint, filed in Marion County, states that Florida, Oklahoma and Nevada based businesses and their owners took advantage of homeowners who were late on payments and who didn’t understand the Indiana tax sale process.
When a homeowner falls behind on their property taxes, the county sells the property to recover the delinquent funds — a tax sale. The bidding starts out at how much the owner owes in taxes for that property.
If the winning bid exceeds what was owed on the property, the tax money goes to the county.
After interest and other fees are taken care of, the remaining money goes to the original owner.
That homeowner has one year to pay back the taxes on the property.
If they can’t, the property goes to the winning bidder.
It was during that year-long redemption period the three businesses employed their complicated scheme.
The companies misrepresented the homeowner’s legal rights and persuaded them to sign quitclaim deeds. Quitclaim deeds transfer interest into real property.
The homeowners were giving the rest of their legal interest to the companies in exchange for a payout of $450 or less.
The companies would then claim the tax surplus in amounts from $2,000 to $900,000, according to the lawsuit.
The lawsuit estimates that the companies paid the 48 owners a total of $13,640 to sign the quitclaim deeds.
After that, the companies were then eligible to claim $3,265,204 in surplus from the tax sales.
If the taxes on a property are $100 and the bid was $500, then the resulting surplus is $400, said Nicholas Jordan, certified public accountant and the chief deputy auditor for Allen County.
“What would happen is at some point in time, the owner would sell their property to that company for minimal dollar and that allowed the company to claim the surplus,” Jordan said.
Jordan said it’s something that has probably been going on for many years.
“It’s very unfortunate the way the companies prey on property owners,” he said. “Hopefully it will be litigated and settled.”
The lawsuit names Diana Castro, David Fuqua and Craig Talkington owners of FLRC, LLC and Coastal Title, Inc. and Oak Tree Title Inc. the defendants.
“Rarely have we seen a scam that so brazenly exploited desperate property owners and took advantage of their lack of understanding of a complicated legal process,” Zoeller said in a press release. ”Victims not only lost their property but money that was rightfully owed to them.”
