Sorry I haven’t updated this in a long while, lots happened . . . been waiting for a happy ending, trying to sell my two lots in Unit 2. Russo refused to help me sell them even though prior majority lot owners offered to help us sell (they sold three of my lots in Unit 8) and Article 10 of the CC&Rs say the HOA is supposed to help us sell.
No builder except the ones there want to build in this cookie-cutter subdivision. They can find much better lots at the price DR Horton is buying for ($40k).
All I and the other 6 lot owners in Unit 2 want to do is sell and get out of this mess!
“The opportunities to steal and the incentives to cheat are so huge in construction that fraud has always threatened every single building project in our city.”
Structure Tone, one of the nation’s largest construction firms, pleaded guilty on Wednesday to corruption charges and agreed to forfeit $55 million for a scheme in which the company defrauded a roster of prominent financial institutions, law firms and ad agencies out of tens of millions of dollars.
The company arranged for electrical, plumbing, drywall and other subcontractors to falsely inflate their bills for Structure Tone’s clients, investigators say, adding millions of dollars to the cost of building office space for Bank of America; Moody’s; Bloomberg; Proskauer Rose, a law firm; and other major customers between 2005 and 2009. . . .
“The opportunities to steal and the incentives to cheat are so huge in construction that fraud has always threatened every single building project in our city,” said Mr. Thacher, chief executive of Thacher Associates, which provides a monitoring service for companies engaged in construction projects. “Corruption adds many, many hundreds of millions of dollars to the cost of construction each year in this city, and that cost is passed on to the public.”
Structure Tone specializes in building office space, or interior construction, as opposed to erecting the core and shell of a skyscraper. In some instances, it acts as a construction manager for a firm, overseeing the work, negotiating contracts and hiring subcontractors, on behalf of a corporate client.
On other jobs, the company serves as a general contractor hired to perform the work for a fixed price, or “lump sum.”
According to investigators, when Structure Tone acted as a construction manager it would tell subcontractors to raise their prices to account for unnecessary “contingencies” under an addendum known as “Rider B,” whose existence was never revealed to the client. At the same time, the executives would demand a discount from subcontractors on “lump sum” contracts.
“Rider B was the vehicle for the fraud,” Mr. Szuchman said.
Here’s the 2nd Amended Complaint by Derry Dean Sparlin, Sr., they dropped the Barnitt’s, who were victims too. (Morris Family Trust lost $1-million too.) Added Hadrianus Terra, LLC, which is also a defendant in my lawsuit another mutual defendant is Tucson Acquisition & Development Corporation, both affiliated with Michael N. Figueroa and Jeffery S. Utsch, who were the prior majority lot owners, Utsch was head of the HOA too.
2nd Amended Sparlin Complaint (PDF), Why would National Bank of Arizona lend them $35-million?!
SPARLIN Complaint Index:
The inept management of the Corona (New Tucson/Sycamore Vista) Project, which led to National Bank of Arizona losing $35-million, pages 53-56
Indictment against PAUL Y. SORENSEN: pages 96ff
Indictment against GREG T. SASSE: pages 85ff
How Sparlin lost money investing in Sycamore Vista (“Corona” = New Tucson): pages, 19, 37, 38, 40, 41
Western Recovery Services (managed by prior majority lot owners) had no cash and was maybe using liens on our lots as assets: pages 53ff
Sparlin has an interest in Hadrianus Terra, I’d like to have him join our lawsuit, his lawyer has written a serious indictment against the prior majority lot owners — securities fraud! Like to also see the lot owners who lost their lots to Hadrianus and Tucson Acquisition because of the bogus Assignments (they intimidated the prior lot owners) join our lawsuit. The prior lot owner of Russo’s associate Southern Arizona Land Trust lost their lots due to despair.
The Assignments of Special Assessments, which are the focus of my lawsuit are securities. From reading this Amended Complaint, it appears that Western Recovery Services had no real cash assets and from looking at the HOA budgets (See Unit 5 for 2006, page 36) it looks like WRS never paid the HOA any money for the Assignments. The budgets consider the WRS “Purchase Agreements” as liabilities — whatever that means? These budgets are very confusing to me. The HOA gave? the assessments to WRS and then WRS sold them to friends and investors, not sure if any of that money went to the HOA.
(Copied from Arizona Corporation Commission, unfortunately, they’re not in order, click right or left side of the page in full-screen to advance or go back.)
EDIT: This explains how they got the loan, they got Carl F. Pepper to apply for it. Pepper is well-known builder and real estate investor. He and Utsch are still friends and business partners. Not sure of Pepper lost any money, I think they appointed him head of Sky Island, which was the vacant lot holding company. Also involved in the foreclosure was CORONA ACRES L.L.C. and PALATINE PROPERTIES FUND L.L.C. both Figueora and Utsch entities
April 20, 2008 — Acres of empty new-home lots marked by evenly spaced power hookups lie along Camino del Toro, west of South Houghton Road in Corona de Tucson. Nearby stands a sign: “Financed by National Bank of Arizona.”
Lots in the SW corner of Unit 5 were finished sometime before September 23rd, 2013 when I went out and inspected my Unit 2 lots prior to cleaning them up. I looked through my emails and blog posts, looks like I never told anyone about this!?
Also, November 1st, when I paid property taxes, I went to Recorder’s office and verified that Russo sold 51 lots in Units 5 & 2 to DR Horton for 33,600/lot (corrected in posts below). Two of those lots sold to DR Horton (in Unit 2) belonged to the prior majority lot owners (Tucson Acquisition and Development Corporation, which is being sued for securities fraud involving this subdivision), online Recorder’s/Assessor’s records show they (prior majority lot owners) sold two lots to NT Properties for $70k, which doesn’t make sense. According to those same records, one of Russo’s shell companies, PRD Investments sold six lots to NT Properties for $180,000 = $30k/lot.
As you know, Russo has offered me and another Unit 2 lot owner $20k-$25k/Unit 2 lot so he can turn around and sell them for $33,600. I also told Russo several months ago of two Unit 2 lots for sale for $15k/ea, they were free and clear of liens. I could have bought them but knew I could not sell them. Russo bought them and did not thank me for the tip.
I paid about $10,000 in HOA dues because I was afraid they would steal my lots, I quit paying now that I realize the HOA is illegal and unconscionable. They make me clean up my lots or threaten to charge me $85/lot to do it. Johnny needed the money, I’d rather give it to him. The friend who helped me this Sunday morning (I got up at 6am) did it as a favor (he teaches children for TUSD, some of the children are very disruptive and disrespectful) but we only finished one lot before we felt too tired and he didn’t have good gloves. Got home started crying and took a tranquilizer.
Russo helped the prior majority lot owners (who are being sued for securities/land fraud) sell three lots in Unit 2 but wouldn’t help me or another person who wants to sell. Major builders won’t buy less than 10 lots . . . we have been asking Russo for several years to help us, he said twice he would help me but then this lawsuit came up where he undermined my foreclosure of the expired/unlawful assessment liens. Russo loves money, not god only a rat would do what he’s doing . . . even the prior majority lot owners did not treat me like this. (At an HOA meeting, Mr. Figueroa got froggy when I accused him of flipping lots among his shell companies to boost their assessed value.)
I wouldn’t doubt that the prior majority lot owners and National Bank cooperated in losing $35-million developing these lots — the biggest loss in NB’s history. . . such theft was common in China:
In China, ventures may be spectacularly unprofitable, yet enrich everyone lucky enough to get a piece. Developers, for example, construct vacant office buildings as an excuse to borrow from state banks. They rake off a cut for themselves, pay bribes to the party officials who deliver the land and reward bank functionaries with sumptuous banquets and trips to Macao. Soon enough, the trophy skyscraper descends into financial disaster, but the developers, bankers and party officials have already extracted their riches, and for long afterward they will still enjoy them. “Lessons the Teacher Forgot,”New York Times, 16 May 2009.
HOA is threatening me again. God knows what they are trying to do but it’s like extortion and feels like a threat. As you know, Unit 5 consists of vacant lots, Unit 2 has only a few lots left. The prior majority lot owners agreed to help us sell our lots to builders because they knew builders would not buy from us unless we had ten or more lots to sell; current majority lot owners will not help us sell but they recently helped the prior majority lot owners (who are being sued for securities fraud involving these lots and others) sell lots they got through threats/intimidation to foreclose bogus assessment liens.
Over the years I have paid over $10,000 in HOA dues. Part of the reason I paid was I was afraid they would steal my lots. I wanted to wait until the assessment liens expired so I could clear the liens off my lots and then sell them. Upon sale I would pay the dues under protest. Some of the dues are over three years old, which means they are uncollectible under statutes of limitations.
I know several lot owners who were intimidated by the HOA and assessment lien-holders into giving up their lots. One person gave a lot to me and said, “if they come after you for the money, let me know.” Theoretically I think the lien-holders could steal everything I worked hard for all my life to collect the value of their bogus liens.
Here’s an example of how useless this HOA is (note that lots in Unit 9 and 10 will not be developed for 10 years, yet they still expect us to pay HOA dues):
This HOA is unconscionable, no one in their right mind would tolerate this. I asked them once, “what benefit does the HOA provide” and they said, “insurance.” I told them my homeowner’s insurance policy insures vacant land I own and I know no one who insures their vacant land.
I just do not know what to do!
EDIT: Lawyers said to wait until we finish litigation.
Just got more notices today for my lots in Units 7 and 8.
Causes me to think: The only other person I met who is as evil as Mr. Russo was someone who would go to the courthouse and undermine my tax lien foreclosures. I confronted the underminer and told him what he was doing was rotten. He said he undermines his friends too!
That tax lien underminer worked for the prior majority lot owners who also got most of their Sycamore Vista/New Tucson lots through tax lien foreclosure. Technically, undermining like what Russo and the other person did (Russo undermined me when I was in the process of foreclosing Mr. Sullivan, one of the assessment lien-holders) is not illegal, it’s just rotten, like the looting on Wall Street wasn’t illegal because Bill Clinton, in the last daze of his presidency signed legislation that legalized the looting.
The HOA is illegal, Dreamland v Raimey, 224 Ariz. 42, 226 P.3d 411:
Deed restrictions for residential community without common areas, containing only restrictive covenants pertaining to each lot owner’s personal residence [this is what we had before the HOA was established], could not be amended by majority vote of lot owners to require membership in homeowners’ association and imposition of assessments, and thus amended declaration of restrictions requiring lot owners to pay assessments to association was invalid.
One could also say tax lien foreclosure is rotten but you choose to not pay your property taxes . . . I did not choose to be a member of this HOA, it was forced upon me (I objected and the County forced the prior majority lot owners to sue) and its consequences (incompetence of the prior majority lot owners, dumping 10,000 truckloads of dirt on Unit 5 and liens on vacant land that will not be built on for many years, etc.) were unforeseeable.
Something I would submit to the court if I was my own lawyer. It will probably be revised with more links added.
- All of my 49 lots are worth $843,200; with liens they are worth less than $0, a liability.
- Liens on lots are over 6-years old hence, they are invalid due to statutes of limitations. (Contracts expire in six years, A.R.S 12-548 and, liens for assessments expire in three years, A.R.S. 33-1807.)
- Contract says payment not due until lots are finished, lots have not been finished before statutes of limitations, any contract lasting this long is unconscionable (interest on loan and decrease in value creates negative equity). (Unconscionable contracts are invalid.)
- Prior majority lot owners agreed to help us sell our lots to builders. Turned out I could not sell lots to builders because they would only buy 10 or more lots at a time and small builders wanted me to subordinate the value of the lot to them so they could get a loan against the lot . . . not a good idea. Current majority lot owners have helped prior majority lot owners sell lots they obtained through threats & intimidation of foreclosing the Special Assessment Assignment liens; Russo will not help me and another Unit 2 lot owner sell our lots.
- Prior majority lot owners are being sued for securities fraud. The liens can be used as securities, buyers of these liens/securities were suckers. Russo made a big mistake buying the assessments from the suckers. (See also #8, below)
- Prior majority lot owners did not sell as many lots per year as they anticipated (or as many as neighboring developments) and went bankrupt causing National Bank of Arizona to lose $35-million, the biggest loss in the bank’s history.
- It is illegal in California for an HOA to sell assessments to a 3rd party.
- I sent one of the assessment lien holders (Mr. Sullivan) a letter demanding a quitclaim deed pursuant to a quiet title action in court, a few weeks later Russo allegedly bought the lien (not sure he actually paid anything) and then sued me.
- In the 1960’s and 70’s people bought lots in the subdivision as an investment, sight unseen expecting there to be roads, the Federal Trade Commission held hearings on land fraud in this subdivision and others sold by Horizon Land Company.
- Principle of buying vacant land is anticipating where development (roads, utilities) will be and then buy there. Someone brought electricity and water to one of my lots in Unit 4 (around the golf course, adjacent to Sycamore Vista) and never contacted me. Russo is saying I was “unjustly enriched” by the development.
- The people who bought the assessments on our lots made a bad investment. Those people were friends of the prior majority lot owners who are being sued for securities fraud.
- The HOA is charging dues on vacant lots that the current majority lot owners admit (see HOA meeting summaries) will not be built on for many, many years. (See also what the HOA dues are being spent on . . . maybe kickbacks, like attorney fees going to Russo for suing me?)
- There were about 40 lots excluded from the Unit 5 HOA, these lots had houses built on them in the 1960’s-70′, they did not want to be in the HOA, neither did Unit 6 or Unit 4 want to be in an HOA and they are doing fine without it.
This article was revised . . . I made a mistake, Russo sold 51 lots to DR Horton (10 lots were in Unit 2), so each lot is worth $33,600, per the affidavit of value for sequence number 20132140169 divide by $1,715,000.00. A few of the Unit 2 lots he sold for the prior majority lot owners and a shell LLC of Russo’s (PRD Investments) that got their lots through threats or intimidation to foreclose the disputed Special Assessment Assignments.
Russo was supposed to help me and another lot owner in Unit 2 sell our lots too but reneged.
A year or so ago I told Russo that two lots in Unit 2 were selling at a loss (they were free and clear of liens) for $15k/ea. I would have bought them myself but knew I wouldn’t be able to sell them — large builders only buy 10 or more lots at a time, small builders want you to subordinate the value so they can get a loan against the lot, which is not a good idea.
Subsequent to the original Unit 5 lawsuit, I was separately served lawsuits for my lots in Units 8 and 9.
In the Unit 9 lawsuit they’re asking for a jury trial . . . no doubt this is Russo’s way of bankrupting me — jury trial will add thousands of dollars in costs. Note that the judge in Unit 5 case allowed Russo’s Motion to Join, which will cost me at least $500 to serve about 20 people. (It costs $10 to mail certified, restricted, return receipt, plus photocopy and paying someone to do it.) If judge allows joinder in Unit 8, costs of serving will be many times that amount because there are at least 210 other lot/homeowners in Unit 8.
My attorney says Russo’s lawyer asked him if I was paying cash or was he taking the case under contingency, my lawyer said “cash and she always pays on time.” That was before they asked for jury trial in Unit 9.
I could tell the jury what rats Russo (his LLCs) are for trying to steal a Million dollars worth of lots from me, how I used to be homeless, etc.
- So without the liens on any of my lots, the Unit 5 lots are worth 8 x $33,600 = $268,800
- plus two other Unit 5 lots at $18k = $304,800 (Russo recently sold his lots in phase 5.2 unfinished for $18k, these two are in phase 5.3.)
- plus two finished Unit 2 lots at $33,600 = $386,000
- plus 36 (or 37) unfinished, platted lots with water & electric nearby, $10k each = $746,000
- plus the two oversized lots in Unit 7 ($45k) = $791,000
- plus two finished lot in Unit 8 (along Del Toro Road) = $33,600/ea = $836,400
My lawyers wrote up a Motion for Summary Judgment that may cause the HOA to remove all the liens on our vacant lots and never collect another penny from us.
I also have a hearing Monday, September 9th in regards Russo’s Motions to Dismiss my counterclaims (see below). I don’t understand how the Judge could dismiss my counterclaims; if he did, he would still have to face the same arguments in my Answer to their Complaint.
Hearing is at 11am . . . I will amend this blog-post.
EDIT: After the hearing
Bottom line is: We have to join other Unit 5 lot-owners in the Complaint and join the other assessment lien-holders to the Complaint. Russo’s Motion to Dismiss was denied. . . . I think we all need to tell Mr. Russo: “You’re not going to cheat us out of our investments!”
If you have a lot in Unit 5 you will receive a copy of the Complaint and will be asked to sign an Acceptance of Service. You will then have to file an Answer to the Complaint telling the Court your side of the story. (Liens/contracts expired per statutes of Limitations, etc..)
Russo says we are being “unjustly enriched” by the improvements to our lots. Any lot will improve by development next door, that’s how Dennis Deconcini made all his money — except for the CAP canal where he had prior knowledge of the canal’s route.
In Unit 4 (where the golf-course is), someone brought electricity and water to my lot-line without ever contacting me.
The Judge kept mentioning settling out of Court, especially since I “only paid no more than $1000” for my lots and got them through tax liens but the prior majority owners got most of their lots for $1000 through tax lien foreclosure.
He also expressed doubt that Special Assessments can be assigned by the HOA to 3rd parties — in California, a statute prohibits an association from assigning liens:
Under Civil Code §1367.1(g) an association may not “voluntarily assign or pledge the association’s right to collect payments or assessments, or to enforce or foreclose a lien to a third party. . .” There is an exception to this rule when the association assigns or pledges the right to collect or foreclose to a financial institution or lender as security for a loan obtained by the association. (Source.) (It’s now Civil Code 5735.)
The Judge also mentioned Rule 1 of the myriad Rules of Court, which says to settle in a timely, inexpensive and just manner:
These rules govern the procedure in the superior courts of Arizona in all suits of a civil nature whether cognizable as cases at law or in equity. They shall be construed to secure the just, speedy, and inexpensive determination of every action.
The Judge made a long ruling (see below) ordering the Plaintiff to provide us with names of Unit 5 lot-holders as well as the names of assessment lien-holders, I will have to serve each of them a copy of the Complaint; hopefully, they will sign an “Acceptance of Service” form and mail it to the Court and I won’t have to spend a bunch of money serving lot-owners & assessment lien holders. You will then have 30-days to tell your side of the story or allow my lawyer to represent you.
It’s disappointing. I’d rather the Judge denied their Motions and prepared to hear our Summary Judgment but the Judge will have a status conference in November round election time.
I didn’t get to ask any questions of Russo about the Board Meetings, I’m not going to pay the Unit 8 assessments or dues. It’s like: the purpose of the HOA is to steal lots from you.
Judge asked a lot of good questions and seemed to be fair about the burden imposed by having to join these other parties.
On August 2nd, PRD Investments (Russo), Tucson Acquisition (A company owned by prior majority owners) and NT Properties (Russo) sold 51 lots in Unit 5 and Unit 2 to DR Horton for $1,715,000 = $33,600 ea. (Recorder’s office Sequence number 20132140169).
I think it would be a good idea bringing in other parties but I also think: if you want an HOA fine but leave me out of it!
The Motions seek dismissal because they allege others in the HOA, who are not a party to the lawsuit will be injured if the Court rules in my favor. This issue of “joinder” was addressed in the Unit 8 vs Pima County lawsuit.
The other Motion seeks dismissal allegedly because it is barred by statutes of limitations. (This is the one with my Big Secret, lol.)
I told you who Russo was in the post below . . . here’s a little something about me: I once got a person’s house for $300 and then sold it back to him for my costs + $1000.
I bought a Tucson City Improvement District lien (Special Assessment) for around $300, sent the person a First-Class letter warning them they would lose the property if they did not pay the $300, they did not pay so the City gave me a deed to the house (link to the law). I never looked at the house except on Google — it looked good (not abandoned) so I paid the property taxes on it thinking I would do nothing until the house was abandoned or??? About a year later the occupant called me and said, “You have my house!” I said, yeah, I’ll sell it back to you,” which I did. I could have legally kicked him out! I’m sure some people would-have!
My Lawyer’s Response:
There’s no statute of limitations on an invalid contract or CC&Rs, i.e., an invalid six year old contract or CC&R does not become valid with time.
23 May 2013 — Petrus Partners of New York (Frank Walter, President), doing business in Tucson under the name of Crown West Realty, (Dean Wingert, VP) acquired 155 acres under an affiliate, Santa Rita Ranch III, LLC, for $1.7 million. Located off Houghton and Camino Del Toro in southeast Tucson, the seller, Arizona Equity II, LLC (Eric Abrams, manager) had platted the property tentatively for 274 residential 50′ x 110′ and 60′ x 110′ lots ($6,200 per lot). . . .
The tentative plat is under review by Crown West to determine whether it will develop or resell the property. There were no brokers involved in the transaction. OK Rihl of Crown West says several builders are eyeing this area for expansion.
Lots are located SE of Sycamore vista and are undeveloped.
Here’s another one for sale by Land Advisors, Santa Rita Foothills Estates, south of New Tucson/Sycamore Vista.
Fagan Ranch Bankruptcy / $16M ~ 550-Acres
After putting his $16 million Fagan Ranch project through a voluntary Chapter 11 bankruptcy reorganization, developer Jim Campbell hopes other owners of distressed commercial property can benefit from his experience. . . .
To avoid foreclosure on Fagan Ranch, a 550-acre development in Corona de Tucson, Campbell sought reorganization in September . The intervention of his attorney, Michael McGrath of Mesch, Clark & Rothchild, brought lender National Bank of Arizona to the judge’s court and the negotiation table. Read more.
Fagan Ranch sales PDF from Land Advisors (no price listed).
EDIT (27 June 2013) — From Land Advisors Facebook page:
Meritage Homes closed 79 – 50’x105’ platted [i.e., undeveloped] lots at Chandler Blvd. and McQueen Road in Chandler, Arizona (map-link). Seller was SMV Financial, L.L.C., an Arizona limited Liability Company. The deal was closed for $3,425,000 ($43,354/platted lot). Sales are projected to start at the end of the 2nd quarter 2014. Meritage Homes will offer floor plans ranging from 1,200SF to 3,000SF. Pricing will be released at the Grand Opening. The sale was brokered through Ryan Semro and Bret Rinehart of Land Advisors Organization in Scottsdale.
- I thought our HOA dues covered lawsuits and that the HOA had their own lawyer on retainer, so why is Russo’s law-firm representing the HOA and why are we being assessed for defending my lawsuit?
- Isn’t what they are doing a conflict of interest?
- I doubt there are any private lot owners that approve of the HOA anymore . . . wonder if we should request mailing list from HOA to survey lot owners?
- Looks like the HOA and Russo have no defense, what are they trying to do, do they think the Judge is corrupt or are they trying to drain all my money?
- I wonder if we should add Derry Dean Sparlin Sr to the witness list . . . he’s the one who is suing Utsch & Figureoa, etc. for securities fraud. In his lawsuit (click link, above) they mention Sycamore Vista/”Corona”/New Tucson.
Bob Bambauer, the Tucson KB Homes Vice President who came to our HOA meeting to tell us we were being ripped off by the prior developers/majority lot owners.
Steve DeGregorio, to testify how he got permits to build on his lot. (Prior majority lot owners would always lie about our ability to use our lots “as is.”) Mr. DeGregorio has a lot in the new development in Unit 5. He is also a board member of Unit 5. He’s upset because the prior developers bulldozed his house and septic system without compensation. It’s his cabin and old Studebaker in the header-picture.
Thomas W. Sullivan, the one I sent Notice to pursuant to quiet title against the Special Assessments which are the subject of this lawsuit. This whole lawsuit developed out of me sending Sullivan a Notice pursuant to a Quiet Title action to remove the Special Assessment liens on my lots that he was assigned. I sent his lawyers a quit claim deed and a few weeks later Russo said he owns the assessments and he paid $12,500/lot. Why did Russo do this to me????
Maybe (call as witnesses) some of the original buyers who believed there would be roads and infrastructure on their lots at no extra cost.
I received a call from a man who said he has talked to Steve Russo about buying all the lots but Russo is asking for too much. The person who called is a local builder/developer. I told him how in Unit 4 (where the golf course is), someone installed water and electric to my lot and never asked me for any money. He sounded kind of stunned by that. I wasn’t . . . all it is is cheap wiring and pipe plus a few metal/fiberglas boxes, not more than a few hundred dollars worth of materials and labor.
They must think Judge Cornelio (the comments on article support the Judge) is a good-old-boy and he will dismiss my case.
So Russo’s law firm represents the HOA? Two lawyers from his law-firm (none of them on the HOA Boards) respond.