Seminar Video Reveals More About Alleged Real Estate Pyramid Scheme
Posted August 15, 2005 5:35 a.m. EDT
RALEIGH, N.C. — Who would not like to make $10,000 a month without having to work for it? Plenty of people in the Triangle thought they made that kind of deal; now, they regret it.
Backroom price negotiations and under-the-table payments -- that is how the federal government characterizes the real estate dealings of Jim Davis, who is accused of fraud in connection with his Triangle area companies, Easy Financial Services and Eagle Investment Group.
Some who participated say Davis sold them on a dream. Based on a tape acquired by Five On Your Side, it appears he also "wooed" them with spirituality.
It is part religious revival and part real estate investment seminar. Now, many people who attended Davis' June seminar probably wish they had left. That is because FBI agents arrested Davis last month after many of his real estate investors say they lost thousands of dollars.
The tape of the seminar shows how Davis sold people on becoming investors. They just needed $5,000 and good credit. Davis then found houses for them to buy.
In the seminar tape, Davis says he looks for homes "for sale by owner" and those that builders need to sell quickly.
"We're gonna charge him $30,000 to buy his house," Davis says in the video.
He explains how the investor then gets $10,000. Another $10,000 goes into a "reserve" account and Davis gets the other $10,000.
"Jim wants to be paid," Davis says in the video.
Davis was paid plenty, according to the U.S. attorney.
For example, investigators say he schemed with a builder to increase the asking price on one house in Garner -- about $46,000 above market value. They say he got an appraiser to validate the inflated price and convinced an investor to falsify bank paperwork to buy it.
Investigators say the builder, David Layton, paid Davis more than $32,000 in cash after closing, which they say is illegal. They say another part of the alleged scheme victimized investors and people such as Antoinette Jones.
Davis recruited them to rent-to-own the homes. Many paid Easy Financial large down payments, believing half of their rent went toward buying the home. Jones paid Davis almost $8,000 over the four months she lived in her home.
She and the investor have since found out that the monthly mortgage was not paid.
"It's just been torture," Jones said.
But some investors and tenants now have more debt than ever because of Davis. Their credit is also ruined.
If convicted of the fraud charges against him, Davis could spend up to 20 years in federal prison where he will have to put his investment revival on hold.
Five On Your Side spoke with Layton, the builder involved in one of the dealings. He says he believes he did nothing wrong. He says he simply paid Davis for a service.
The North Carolina Contractors Licensing Board, however, is investigating Layton and other builders who might be involved.
Davis is scheduled to go before a grand jury this week where it is expected that he will be indicted.