CINCINNATI — Hundreds of house flippers in Ohio and Kentucky will share a $1.3 million settlement from a class-action racketeering lawsuit against Blue Ash-based Build Realty and several related companies.
U.S. District Court Judge Douglas Cole gave preliminary approval to the settlement on March 31. It allows each class member to collect between $1,600 and $20,000, depending on their losses.
“In many, many respects, it was a scam,” attorney Bill Markovits told us in 2019. “They had over 5,000 signs that I’m sure you might recall seeing around the community that said rehab financing for investors, $10,000 down, no credit check.”
Markovits represented the house flippers, along with the Finney Law Firm. He spoke to the WCPO 9 I-Team in 2019 and again in 2023. But the settlement agreement now prohibits attorneys and parties in the case from discussing it with the media.
This scheme lasted from 2013 to 2019, with the company hiring workers to plant more than 5,000 road signs advertising Build Realty around Cincinnati, Dayton, Columbus and Northern Kentucky, according to the lawsuit.
Build Realty, which also operated as Greenleaf Funding, promoted itself as a one-stop shop for home flippers. It advertised through websites, social media, direct mail and free seminars, offering to show people how to profit by flipping homes with little money and no credit checks.
However, rehabbers were duped by deceptive marketing, ambiguous contract terms, illegal trusts and a complex racketeering scheme that was based on mail fraud, according to the lawsuit.
“They said, ‘We buy in bulk and pass the savings onto you.’ They didn’t. They bought from the market, marked up the property, and then you paid at a marked-up price,” Markovits said.
Alleged victims believed they had signed a purchase contract, but they never actually owned the property. Instead, they became the beneficiary of a trust, Markovits said in 2019.
Olga Ferree told WCPO in 2023 that she lost her life savings— everything she had saved from the four years she served in the U.S. Navy — when she invested with Build Realty to renovate a two-family house in the Walnut Hills area.
“They would always feed me all of this nonsense and lead me on and say, 'Oh, it's a great investment,'” said Ferree, now a real estate agent in California. “They are sneaky, they create corporation on top of corporation and there's nothing you can do.”
Ferree estimates her total loss at $160,000 plus two and a half years of sweat equity.
Hear more from those impacted by Build Realty below:
Many lost their properties when Build Realty reclaimed them or resold them due to default, according to Markovits and court filings.
Dwight Price and Darryll Smith described what happened to them in a 2019 interview. They wrote a $10,000 check to remodel a North Avondale home with Build Realty and said they ultimately lost $30,000 and hundreds of hours of sweat equity before they abandoned the project.
Unexpected repair costs ballooned, and they couldn’t afford to make $1,800 interest-only loan payments any longer.
“We thought it was a good deal that we could find a house that we would be able to flip and make a lot of money off it,” Price said in a 2019 interview. He and his brother said they are class members.
Lacrisha Hicks, who WCPO first interviewed in 2019, said she lost $70,000 on two houses in Deer Park after partnering with Build Realty.
“I think there are portions that may be legitimate, but overall, the way that they sell it could be close to a scam,” Hicks said.
The judge described the lawsuit as a “long-running dispute over a real-estate investment scheme.”
The investor-plaintiffs, however, allege that the scheme had a dark side. At a 30,000-foot level, they contend that defendants failed to adequately disclose certain aspects of the deal. This included, for example, that the deal structure would make the investors into the beneficiaries of a trust that owned the property at issue, rather than outright owners, depriving the investors of certain important rights they otherwise would have had as owners,” Cole wrote in his March 31 order.
Defendant Gary Bailey, who taught monthly investment seminars posted on Build Realty’s website and uploaded to YouTube, must refinance his house to raise the initial $50,000 to pay toward the settlement fund, according to court filings.
The judge is set to give final approval to the settlement on Oct. 16, ending the case after six years of litigation.
Simpluris, Inc. will serve as the settlement administrator and notify class members by mail and email. It will also maintain a settlement website.
Settlement with Build Realty Order by webeditors on Scribd
