Ed Okun Victim Cautions LandAmerica Victims, Challenges Government, Admonishes 1031 Exchange Industry

Note of Disclaimer: The following comment, story, and opinion(s) are that of the commenter Elizabeth Callanan and not that of deansguide or the author of deansguide Dean Guadagni. Those of you who have read this blog in the past know where I stand. I am a victim’s advocate and simply creating a place for victims or industry pro’s to communicate.

The following are opinions, experiences and stories of the trials and tribulations of the 1031 exchange industry from long time contributor and commenter Elizabeth Callanan one of the 350 “Trainwreck Victims” of the Ed Okun 1031 Tax Group Ponzi scheme. This is a warning, it is a plea, and it is her argument for the complete overhaul of the 1031 exchange industry–or it’s outright Abolishment.

Note: Not all of the 1031 exchange companies are bad, fradulent, or subversive. There are well respected, honest, and worthwhile 1031 exchange companies doing business.

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To Daniel Lowe and the other victims of the LandAmerica debacle,

You have my most heartfelt empathy.
Having been myself a victim of Ed Okun’s embezzlement of exchangers funds on deposit with the 1031 Tax Group, I truly feel your pain. I’m not an attorney, an accountant, and have no expertise apart from what comes of painful firsthand experience. It was in the hopes of warning other potential exchanger/victims that I started posting on Dean’s List and elsewhere.

At the end of the day, though, I agree totally with Yaco Tiamo, who has posted here. The entire 1031 industry is superfluous and that aspect of the IRS’ 1031 regulations should be expunged. It is a wildly unregulated industry that answers to no government oversight at any level (apart from some half-hearted oversight incorporated in a couple of recently enacted regs by a handful of states (Nevada, California?) and, as evidenced, by the recent spate of embezzlements or gross mismanagement puts all exchangers at great risk for no good reason. Doing a 1031 isn’t brain surgery. The forms are pretty standard and the process pretty simple, really.

Since the IRS has shown no interest in overseeing, licensing, demanding accountability from, providing meaningful insurance for (as the SEC does) or otherwise regulating the industry it created, it should kill it – NOW!

As to the LandAmerica victims, my (personal, not professional!!) advice in terms of investing in legal help is two-fold and in both cases I would act only collectively (except for those whose funds were held in traceable segregated accounts, who will no doubt make a serious (and perhaps successful) run at retrieving those funds, I see little point in acting individually — certainly not in bankruptcy, a self-funding and self-perpetuating legal and financial train wreck for everyone involved except the court appointed functionaries. (If you want to see the extent to which such a process can drag on ad nauseam with many billable hours just check out the history of the 1031 Tax Group case on either of these sites: http://www.committeeinfo.com/1031/index.htm (the official website for our Creditors Committee) or http://trustee1031taxgroup.com/component/option,com_frontpage/Itemid,1/ (the Trustee’s website).)

However, I WOULD hire a legal firm (on contingency if you can – since, by definition, you no longer have any money!) to:

1) GET YOUR CASE OUT OF BANKRUPTCY COURT!! That is a deep dark hole that will suck up every dime of funding available until there’s nothing but dust left. In the 19 months since Ed Okun put the 1031 Tax Group into “bankruptcy” (it was a criminal embezzlement plain and simple now being tried in a US Federal Court in Richmond which was known at the time the bankruptcy was filed in May 07 — the Feds having raided the offices in April 07 — and should never have been accepted as a legitimate bankruptcy to start with!) all of the various court-appointed functionaries have claimed MORE THAN $30 MILLION IN SO-CALLED “ADMINISTRATIVE FEES” and victims have received not one penny of their escrow funds. In fact, in an amazingly brazen and twisted miscarriage of justice, the Bankruptcy Court authorized attorneys for the so-Called “Debtors” (ironically the Dreier firm whose owner embezzled millions in escrow funds himself) to pursue a legal action to retrieve the only escrow funds that Okun himself had not been able to steal and the settlement cozily agreed to by the attorneys on both sides (and approved by the Court) provided for payment as well to the attorneys DEFENDING the bank where those funds were on deposit — the end result of which is that the costs of BOTH SIDES of that court case will be paid by Okun’s victims. (So, to our point of view we were mugged first by Okun and then by the Bankruptcy Court!) The only way to get that Bankruptcy action derailed is to get the Committee itself on board (not easy since the Committee’s attorneys will understandably vehemently argue against the prospect of losing their cash cow), but I’d consider that a first priority.

2) Get a class action going to pursue all the parties involved, including especially LandAmerica to force them to use the proceeds from the sale of its other two arms to repay the exchange funds it squandered on worthless investments.

I sincerely hope you are more successful than we’ve been to date in retrieving even a dime of our life savings. The key is acting collectively and getting a junkyard dog of an attorney who is willing to work on a contingency (which means you’ll get 25% less than you otherwise might, but most of Okun’s victims would happily settle for that today!). Unfortunately in bankruptcy there is absolutely NO incentive for settling anything quickly. It’s all about billable hours — for attorneys, for management companies, for accounting firms, and all the other hangers-on who can get their licks in. If I were you, I’d follow the lead of the creditors in the Southwest Exchange Case – which happened just a few months prior to our’s and in which there’s been a settlement of $92 million of the $97 million lost (minus the contingency and other costs incurred by the attorney) while WE HAVE NOTHING and dismal prospects ahead.

You’ve gotten off to a better start than we did, it appears. You have a website (noted above by one of your fellow victims), your Committee seems to communicate with you (our’s has maintained a nearly absolute silence and shares NO information whatsoever for reasons none of us can fathom), and I understand you’re collectively discussing a civil class action which I encourage you to pursue.

Good luck to you all — sincerely.

LandAmerica Exchange Services Victim: “Any Class Action Lawsuits Yet?”

Reuters.com published this deansguide article 12-12-08

Another deansguide readers, in the growing line of LandAmerica exchange victims, has spoken out. The message from Cathy is loud and clear. How do victims, who have lost their entire or majority life savings, pay for legal assistance in pursuing their “stolen” monies?

The Conundrum

1. Spend Money: pursue “lost” life savings by using what little money you have left or going into debt to attempt to pay for legal representation.

2. Chalk It Up: chalk it up to experience. Do not pursue recovery by spending money. Hope for the best but do not chase your money with more money. Allow LandAmerica to skate free of charge.

3. Legal Action: hope for a class action lawsuit where no investor’s money is required to possibly recover lost monies.

Cathy’s Comment

“I, too, have a big chunk of change stuck in LES. Now, I know I have to file my proof of claim, but who can afford a lawyer, now? Are there any class action lawsuits going on yet against LES? Hate to give what little I have left to an attorney.

thanks for anything.”
Cathy

LandAmerica LES Victim Speaks Out: Victim’s Google Group

Another victim of the LandAmerica debacle, Vivian Hays, has stepped forward to lend her voice of warning. If you are new to the Ed Okun 1031 Tax Group swindle or this latest bankruptcy by LES aka LandAmerica’s Exchange Service, consider these stories a warning. Perform extensive due diligence before taking on any 1031 exchange investments. Good luck to all!

I am one of the latest victims in this unbelievable fraud by LandAmerica. I want to say thank you, thank you, to the author of the article “Okun victims speak out on LandAmerica”, for the concise, if depressing, assessment of the situation. I personally would rather be informed than befuddled, or deluded. I have circulated your article to as many of the other victims as I can find. If you are a victim and want to get in touch with others who are taking action got to: landam1031exchangers@googlegroups.com

People really need to be warned that anyone planning such a transaction is completely without protections or safeguards under any current law. Once caught up in purposeful fraud, or bankruptcy by the 1031 “accomodator”, you will likely never get your money back, or get pennies on the dollar. The victims of this blatant money grab are in for a huge, costly, gut-wrenching fight in a system they do not understand and cannot afford. Senators do not return phone calls, Congressmen are “not available” ( all but Senator Dodd, thank you very much!) the IRS has no answers, but attorneys are very happy to talk with you…for $300 to $500 per hour…plus expenses….so take warning and do not believe anything you are told by an exchange rep…they are probably lying to you and will not be held responsible even if they are. My money was taken in by LandAmerica 5 business days before they closed their doors. They did not even send me my paperwork, I have had to request it from the title company. These people were grabbing all the money they could and knew that they were going to declare bankruptcy, but we, their victims, will be held to contracts that they do not have to honor, and that the parant company supposedly fully guaranteed. My business is probably sunk, my health insurance, which I must have due to diagnosis of breast cancer will probably be lost, and I still have to try and pay a tax bill on money I will probably not ever see, and I may not even be able to write it off as a loss, since the claim won’t be in the same tax year. Mine is only one of the many, many sad stories. I guess I am about to find out if justice is really blind.

Warning Restitution Registration Deadline For Okun-Coleman Victims December 29, 2008

Chicago Sun-Times published this deansguide article 12-07-08

The following email notice was sent to all Okun-Coleman victims of the 1031 Tax Group scandal by the US Department of Justice. If you were one of the 1031 Tax Group victims of Ed Okun and Lara Coleman, you MUST register your financial loss as described in the letter copied below.

Warning: Are You On US Department of Justice Mailing List?

If you do not receive a hard copy in the mail, the CRIMINAL court doesn’t have your correct address. It is imperative that you alert Kim Ulmet, with the US Department of Justice, so she can update or correct the victims’ mailing list she is developing/maintaining to ensure you receive other official court documents. Her information is below. If you fail to follow the steps below, you could miss out on the opportunity to recieve any restitution via the criminal court process (which is totally different from the ongoing bankruptcy mess).

Kim Ulmet Contact Information:

U.S. Department of Justice,
United States Attorney’s Office Eastern District of Virginia in Richmond
600 East Main Street, Suite 1800,
Main Street Centre,
Richmond, VA 23219
Phone: 866-287-5410
Fax: 804-771-2316

The Letter:

December 01, 2008

RE: United States v. Defendant(s)

Case Number 2007R01837 and Court Docket Number 3:08CR132
United States v. Edward H. Okun

Important Notice: Victim Verification of Financial Losses
Enclosed you will find a form entitled, “Important Notice: Victim Verification of Financial Loss,” which requests information and supporting documentation concerning your financial loss associated with Edward H. Okun, d/b/a 1031 Tax Group and Investment Properties of America (IPA). The Qualified Intermediaries relevant to this case include: 1031 Advance; 1031 Security Services; Atlantic Exchange Company; Investment Exchange Group; National Exchange Services; and Real Estate Exchange Services. It is imperative that the enclosed form and your supporting documentation be completed and submitted to the United States Attorney’s Office, Attn: Kim Ulmet, Victim/Witness Specialist, 600 East Main Street, Suite 1800, Richmond, VA 23219 and be postmarked no later than Monday, December 29, 2008. You must submit the form with your original signature, however, your supporting documents may be copies. If your Victim Verification of Financial Loss form and supporting documentation outlining your financial loss are not postmarked by December 29, 2008, your name may not be included in the list of victims that will be submitted to the Court for restitution purposes.
Although you may have received and completed a survey from the United States Postal Service and/or filed a claim with the Bankruptcy Trustee, you must complete the enclosed form to be considered for restitution. In addition, you must sign the declaration under Penalty of Perjury and attach all requested supporting documentation. The restitution process is entirely separate from the pending bankruptcy proceedings. As you will see from the attached form, the relevant inquiries are different and require specific documentation. We appreciate your patience and cooperation with this process.

This notification will be sent through email and regular mail. If you do not receive this notification in the U.S. mail within two weeks, please log in to the VNS website, update your address, and call me at 866-287-5410 to ensure we have your updated contact information.

Ed Okun vs. LandAmerica Exchange Services: Different Situation Same Results?

Due Diligence Warning: I am neither an attorney, tax accountant, nor legal entity of any kind. The information provided is not a call to action nor is it advice on how to handle your financial situation with LandAmerica Exchange Services or any other financial institution. Before entering a 1031 Exchange or any other investment vehicle perform your due diligence investigation.

According to MarketWatch.com article dated November 26, 2008, LandAmerica Financial Group filed for Chapter 11 Bankruptcy protection and will sell 3 of it’s units to FNF.

According to NewsDaily.com “LandAmerica files for chapter 11 bankruptcy protection:

“I am deeply disappointed over the need to file for bankruptcy protection for the LandAmerica holding company and the 1031 company,” Chief Executive Theodore Chandler

Elizabeth Callagnan one of the Ed Okun 1031 Advance ponzi victims points out:

“. . . their (LES customers) 1031 is filing for bankruptcy which means all those exchangers are going to find themselves and their lifesavings mired in the same bankruptcy court hell that the 350 (Train wreck victims nickname for Ed Okun’s ponzi scheme victims) robbed by Okun are now drowning in.”

The following letter was forwarded to me by Elizabeth. It is the alleged letter sent to LES exchange clients regarding their monies. If any other readers, clients of LES, have received the same notice please comment below.

“Dear Valued Customer:

We regret to inform you that, effective November 24, 2008, Land America 1031 Exchange Services Company, Inc. (“LES) is accepting no new customers and is terminating it’s operations. Although the total par value of our 1031 exchange funds exceeds the value of all funds received from our customers, portions of the 1031 funds are invested in ILLIQUID auction rate securities. Our inability to sell or borrow against these securities has precipitated our decision to terminate operations.

Q: Why are 1031 client funds invested in anything without their knowledge? If clients were given the option to provide their 1031 monies for investment into “guaranteed student loans” how many would approve such an investment? Btw what does the term “illiquid” mean?

LES has long invested 1031 deposits only in investment Grade Securities Rated A or stronger, including auction rate securities backed by federally guaranteed student loans. Our goal for the exchange funds has been to maintain the full liquidity necessary to meet customer with-drawl demands. The auction rate securities in our exchange funds, which were sold to us by certain financial institutions, were highly liquid for many years. As has been widely publicized, the auction rate securities market froze earlier this year, and that extenuating circumstance prevents us from liquidating the auction rate securities held in the exchange funds.


Q: Are the 1031 exchange clients made aware of the practice of LES of investing 1031 exchanger monies in auction rate securities market?

We understand that this situation is detrimental to you, and we can only assure you that we have taken every reasonable step possible to avoid the problem, including pursuing numerous liquidity options to no avail. You will be provided soon with details regarding the establishment of a process for submitting claims relating to exchange funds.

This situation involves LES and not any other LandAmerica companies. Specifically, LandAmerica title insurers are highly regulated companies, with legal identities and assets completely separate from LES. These insurers have more than sufficient assets to meet their obligations to policyholder and escrow customers.

Q: Does the sentence ‘These insurers have more than sufficient assets to meet their obligations to policyholder and escrow customers’ guarantee that 1031 exchange clients of LES will have all of their invested monies returned to them in full?

Sincerely,

LANDAMERICA 1031 EXCHANGE SERVICES COMPANY, INC.”


Okun Indicted On 27 Counts: Is Okun On Suicide Watch?

Ed Okun and accomplice Lara Coleman, somebody the mystery caller mentioned months ago as “going down”, face a 27 count indictment as handed down and reported by Gerald McHale this past week. The indictment laundry list of counts:

1. Wire and Mail Fraud Conspiracy: Count 1
2. Money Laundering Conspiracy: Count 2
3. Wire Fraud: Counts: 3-15 (1343)
4. Mail Fraud: Counts: 16-18 (1341)
5. Money Laundering: Counts 19-21 18 USC & (1956 (a) (1) (A) (i))
6. Money Laundering: Count 22 18 USC & (1956 (a) (1) (B) (i))
7. Money Laundering: Counts 23-25 USC & (1957)
8. Bulk Cash Smuggling: Count 26 31 USC & 5332
9. False Declaration: 18 USC & 1623

In the face of this indictment, the fact reported by Mark Heschmeyer that one of his buildings (Shreveport) has natural gas deposits valued at $30-60million-something he can’t touch, and the possible collapse of his marriage and network of friends, it is rumored that Ed Okun has been placed on suicide watch.

Here is one of the only pictures available on the internet of Ed Okun (far right) during a press conference announcing the sponsorship agreement with Foyt Racing. Photo courtesy of Foyt Racing.

Note: This conference was in 2006 long before it was public news that Ed Okun’s wealth was derived from the ponzi scheme known as 1031 Tax Group and affiliates:

//www.foytracing.com/IndyCar/2006_reports/photos/IMG_1458.JPG” cannot be displayed, because it contains errors.

Former Ed Okun Interviewee Speaks Out: Most Outrageous Okun Story Yet?

The list of stories about Ed Okun just increased by one with the following candid and eye opening comment left on deansguide. The comment by, Alden Chevlan, a man who was being wooed by Okun’s organization for a position in their legal department is all too familiar. Tons of money thrown around, no business sense, a suspicious lack of business acumen and a sad case of spending other people’s money for fun.

“I am not surprized to read of the demise of IPofA. I interviewed with the company for the number two legal spot in 2006. After a brief visit (less than two hours)I returned to the airport and my home. Shortly thereafter I was offered a position by the HR director, without ever meeting my future CEO (a former paralegal who had worked with Okun’s outside law firm), or Okun. When I inquired about a second interview, my wife and I were flown to Richmond, put up in a lavish hotel, etc, with no expenses spared. The strange thing was that no interview time had been set and the CEO had not taken the time to review my travle schedule. I did meet with her, with barely enough time to return the rental car and catch my flight. She met me in a “poodle skirt” wearing “Queen Bee” fluffy slippers and spent the entire hour on the phone with Okun who was frantic over the disappearnace of his poodle. MY wife met the office staff, which consisted of two of the CEO’s sisters and a handful of seemingly nice people. I never heard from them again and my wife was quite relieved after learning of the CEO’s paralegal background and her staff of siblings. I did get a nice gift bag with a T-shirt, hat, coffee mug, calculator, sunscreen and other objetcs all advertising his Indy racing team.”

From Is This Where the 1031 Tax Group Victim’s Monies Disappeared?, 2008/06/05 at 11:22 PM