LEAGUE CITY — More than 50 investors, most from Israel, went to court last week in attempt to save condominium units from foreclosure as they sue a group of companies and people they say defrauded them in a real estate venture.
The lawsuit claims the defendants kept revenue generated by the venture that should have gone to pay debt and used property owned by the plaintiffs as collateral in obtaining a loan of almost $23 million that benefited the defendants.
The investors together own 114 units in Fairways at South Shore, 3045 Marina Bay Drive, in League City. The former 432-unit apartment complex was converted into condominiums about three years ago.
The investors never intended to live in the units but instead were seeking to generate income by renting them to others, according to the lawsuit. Through agreements, the units owned by the investors were put in a rental pool managed by the defendants, according to the lawsuit.
But while Westcorp Management Group, of which Roni Amid is vice chairman, had been collecting rent from tenants, it failed to pay proceeds to the mortgage company or the investors for some units, according to the lawsuit.
Without rental income, some of the investors are unable to pay their mortgages, leading lenders to begin foreclosure proceedings on at least 30 units in the complex, said Danny Sheena, a Houston attorney representing investors.
Investors filed a lawsuit Feb. 9 in the 122nd State District Court in Galveston against Roam Development and seven other entities and individuals, claiming, among other things, fraud, theft, conspiracy, breach of fiduciary duty and violation of the Texas Securities Act.
Attorneys for Roam Development and other defendants did not return phone calls. But the defendants filed in court a general denial of all the accusations in an answer to the lawsuit.
On Tuesday, those investors filed for a temporary restraining order to stop Roam Development and Westcorp Management from interfering with their ability to collect rent on the condominium units, according to court documents.
According to the lawsuit, defendants enlisted the aid of an Israeli company, Founders Israel, to recruit Israeli investors. The sole manager of Founders Israel is Tanya Amid, a defendant in the lawsuit, who is the wife of Roni Amid, according to court documents.
When the defendants had difficulty securing financing for the Israeli investors, Roam Development conveyed the land at Fairways Property to another defendant, RDG Fairways Lease Investments, through a 99-year lease, according to the lawsuit.
Roam Development then conveyed condominium units to defendant RDG Fairways Properties Group, according to the lawsuit.
On Aug. 1, without disclosing it to the investors, the defendants secured a $22.8 million loan from Deutsche Banc Mortgage Capital, according to the lawsuit.
“Defendants, again without consent, cross collateralized all of the units owned by the defendants with the units sold to some of the plaintiffs,” according to the lawsuit. “Plaintiffs, therefore, are unable to sell the cross collateralized units.”
Before Aug. 1, the defendants had secured private mortgages for some of the plaintiffs, mostly through GMAC financing.
Among other assertions, the defendants also misrepresented information about management fees, expenses, homeowners association fees and taxes, according to the lawsuit.
