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Liberal 
Group: Moderator
Posts: 11451
Joined: Aug. 2003
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Posted on: Sep. 03 2007,7:18 pm |
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A golden boy or unwitting victim?
By Chris Serres / StarTribune
startribune.com
For years, Adam LaFavre cultivated an image as a successful real estate dealmaker and a man of faith.
He drove luxury cars, wore a Rolex watch and owned a $7.5 million mansion on Lake Minnetonka in Wayzata. He spoke openly of his belief that he was called by God to minister to world leaders, according to former business associates.
But federal regulators, in an affidavit submitted in support for a search warrant of his home and businesses, describe a far different LaFavre. The IRS' criminal investigation division alleges that he helped raise money for an illegal investment scheme that promised high monthly returns in offshore banking programs at no risk.
A court-appointed receiver estimated that 1,300 individuals and investment groups nationwide (including 238 in Minnesota) were defrauded of more than $150 million.
LaFavre, 41, is also under investigation by the state Department of Commerce for violations of state real estate laws, after state and federal regulators uncovered what they believe is evidence of a multimillion-dollar mortgage fraud at a Burnsville firm.
That company is LHS Mortgage Inc., which LaFavre founded.
In June, the Commerce Department permanently barred Ronald Clark Joseph, who worked for LHS, from originating or servicing mortgages. Earlier this year, two LHS loan officers pleaded guilty to federal wire fraud and money laundering charges.
LaFavre's attorney, Doug Kelley, said in an interview Friday that his client had sold LHS by then and was unaware of any wrongdoing. Kelley also said that, contrary to the IRS's claims, LaFavre was a victim, losing "a substantial part" of the money he invested with Travis Correll, an Atlanta man indicted in June on federal charges of money laundering and mail fraud.
"If Adam made a mistake, it was placing his trust in Travis Correll," Kelley said.
The allegations against LaFavre, who referred all questions to his attorney, have attracted attention in Twin Cities real estate circles, where LaFavre was once considered one of this market's most proficient dealmakers.
Lavish lifestyle
In 1997, he closed more than 300 transactions and had more listings than any real estate agent in the state, according to the Twin Cities edition of "Broker Agent" magazine. In his first nine months at Edina Realty, he made $6 million in sales -- a "company record for a new agent in such a short time," the magazine said.
LaFavre was also known for his lavish lifestyle. When IRS agents executed a search warrant of his home in March, they seized a large amount of valuable property, including five Rolex watches, 62 plastic containers of silver coins and some solid silver bars, among many other items. They also seized bank statements and other financial documents from his business address in Wayzata.
The IRS said in its affidavit that LaFavre reported no taxable income in 2003 and 2004, yet he made a $1.2 million down payment on a 32,000-square-foot Wayzata home in October 2004 and was to make monthly payments of $50,000 under a contract for deed. LaFavre bought the home from auto dealer Denny Hecker, and paid off the financing in less than three years, Hecker said.
Hecker said he never met LaFavre before selling him the home. "He said he was in real estate and he drove up in a new Bentley" on the day of the sale, Hecker said. "That impressed me."
Scotty Wiers of Shakopee, a former personal assistant and property manager for LaFavre Homesellers, said in an interview that he never understood how LaFavre amassed his wealth. In the final three years that he worked for LaFavre, Wiers said he saw him driving more than a half-dozen luxury cars, including a Hummer, Cadillac Escalade, Bentley and Mercedes.
"When I asked, he just said it was land deals," Wiers said. "He continued to buy all those cars when we weren't selling a whole lot of houses."
LaFavre talked openly about trips he made to countries such as El Salvador and Russia as part of a mission to spread the Gospel to foreign countries, Wiers recalled. "He felt that God blessed him to be financially successful," Wiers said.
Pyramid allegations
There are differing accounts of LaFavre's alleged involvement in a plan to bilk investors of millions of dollars.
The scheme first came to light in October 2005, when the Securities and Exchange Commission (SEC) filed a civil enforcement action in Texas against Correll. The SEC alleges that Correll, a former NCAA referee, offered stakes in foreign bank deposit programs, which the promoters said would generate monthly returns of between 4 and 12 percent.
Investigators claim the money never went to the deposit programs. Instead, Correll used new investor money to pay back previous investors, a traditional pyramid, or "Ponzi" scheme. In December 2005, a federal court in Sherman, Texas, appointed S. Gregory Hays as a trustee to liquidate Correll's business and recover as much money as possible for investors.
Correll and his firm, Horizon Establishment, owe investors an estimated $153 million, including $20 million to $30 million in cash losses, Hays said. Hays estimates he's recovered $4 million for investors.
In June, a federal grand jury in Minneapolis indicted Correll and a Forest Lake resident, Neulan Midkiff, founder of the Feast of Tabernacle Ministries, on charges of conspiracy to commit mail fraud and conspiracy to commit money laundering. Correll admitted to investigators that he was involved in a Ponzi scheme.
According to the affidavit filed by the IRS, LaFavre worked together with another real estate investor, Jason Ripley of Andover, to "seek out investors, pool the money together, and send large sums of money" to Arnulfo Acosta, who was indicted for his role in the bank deposit program. Together, LaFavre and Ripley brought in between $15 million to $20 million, according to the IRS document.
The IRS also claims that LaFavre and Ripley continued to collect investor money after they received letters from Correll detailing a loss to their investments in 2003 and 2004. "Ripley and LaFavre were well aware of the fictitious and fraudulent nature of such schemes," the IRS wrote in its affidavit.
Ripley and LaFavre, through his attorney, dispute this account and insist they were victims, not perpetrators, of fraud.
"When things started going south, Adam was the No. 1 person in this state chasing after Travis Correll to get money back -- not only for himself, but also for others that he had raised money from," said Kelley, his attorney.
But others dispute LaFavre's innocence. In a lawsuit filed in Dakota County District Court in December, Joseph Miller of Lakeville alleged that LaFavre pitched bank deposit programs very similar to the investment programs described by the SEC in its enforcement action brought against Correll.
Miller said LaFavre and his firms, including Wildly Favred Ventures LLC and Creative Wealth Ventures LLC, failed to return his investment principal of $3.83 million as promised. LaFavre and Miller settled the dispute recently but have kept the terms confidential.
Ripley said he was once convinced that LaFavre was a victim of fraud, but now he's not so sure. Since investing in Correll's venture, Ripley said he has been unable to recover about $2 million that he gave to LaFavre to invest in several properties in the Twin Cities. He has filed separate lawsuits against LaFavre and Correll, accusing both of fraud.
In March, IRS agents executed a search warrant on Ripley's home, seizing about $600,000 worth of jewelry. Ripley said he never actively solicited investors for Correll; however, about a dozen of his friends and family members expressed interest after learning of the high monthly returns offered by Correll, Ripley said. Ripley also said he never received letters notifying him of losses.
"It was a triple whammy to get hurt by Travis, then by Adam, then by the feds," he said. "To say I feel violated is an understatement."
Chris Serres • 612-673-4308
Chris Serres • cserres@startribune.com
URL: http://www.msnbc.msn.com/id/20551971/
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The people are masters of both Congress and courts, not to overthrow the Constitution, but to overthrow the men who pervert it!
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Alfy Packer
Group: Members
Posts: 1197
Joined: Dec. 2004
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Posted on: Sep. 04 2007,1:42 pm |
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Now I didn't see that coming!
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bianca
Group: Members
Posts: 1882
Joined: Dec. 2006
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Posted on: Sep. 04 2007,1:54 pm |
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I find it disturbing for crooks to hide behind their religion, and by the sounds of it he is a crook. Apparently the apple didn't fall far from the tree. Their father now lives up in the cities (Lakeville) as well. Not quite sure what business he is in.
Would be interesting to find out Jane Does reaction/response to these accusations.
I graduated with Jeff LaFavre, he graduated from Oral Roberts University in Oklahoma and is also in real estate. Their sister Cherrie and her husband are ministers in Owatonna
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I believe in the patriotism and energy and initiative of the average man. Woodrow Wilson
Early in life, I had to choose between honest arrogance and hypocritical humility. — Frank Lloyd Wright (1868-1959)
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n0esc
Group: Members
Posts: 206
Joined: Feb. 2004
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Posted on: Sep. 04 2007,2:38 pm |
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Wanna take bets on which shark taught the other one how to swim?
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Psst..! If you were to read 120 words per minute for 8 hours a day, 5 days a week, it would take you 3 years, 4 months, 26 days, 4 hours, 12 minutes, and 59.7 seconds to read all 50 titles of the US Code. Remember--ignorance is no excuse to the law. Pass it on...
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MADDOG
Group: Moderator
Posts: 7821
Joined: Aug. 2003
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Posted on: Sep. 04 2007,3:58 pm |
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I must have missed this in the Sunday edition of the Tribune.
QUOTE Former Albert Lean investigated for fraud By Sarah Kirchner, staff writer Sunday, September 2, 2007 10:05 PM CDT The brother of a high-end real estate developer working in Albert Lea is under investigation for his alleged involvement in investment and mortgage fraud, as reported in the state’s largest newspaper. Adam LaFavre, 41, of Wayzata — brother to real-estate developer Scott LaFavre, who is working to turn the previous Albert Lea Golf Club into the high-end residential development Eagle’s Rest — is being investigated by the IRS criminal investigation division, according to an article in Sunday’s Star Tribune, for his alleged involvement in an illegal investment scheme that promised high monthly returns from an off-shore banking program. He is also being investigated by the state Department of Commerce for violating Minnesota real estate laws. According to the Star Tribune, state and federal regulators uncovered evidence of a multimillion-dollar mortgage fraud at Burnsville firm LHS Mortgage, Inc., which was founded by Adam LaFavre. Bill Leland, broker at Kenneth R. Leland Realty Inc., said Adam LaFavre does not have any financial or management interest with the Eagle’s Rest development. “The commonality there is a brotherly tie and that’s it,” Leland said. “There’s no tie whatsoever between the two. “I don’t know Adam, and our conversations with Scott are specific to Eagle’s Rest and the overall development of it.” Leland Realty is the primary marketing arm for Scott LaFavre, Leland said. In the Twin Cities, Adam LaFavre is known for his success in the real estate market and his involvement in the faith community, as well as living a lavish lifestyle, with the Star Tribune calling him one of the “most proficient dealmakers” in the state. Scott LaFavre purchased the century-old, 100-acre Albert Lea Golf Club in May 2006, and plans to create 120 high-end residential lots, renaming the site Eagle’s Rest. He could not be reached for comment as of press time. Scott LaFavre and his wife, Shari, who now live in Lakeville, graduated from Albert Lea High School in 1981. Adam LaFavre also attended ALHS, graduating after Scott. LHS Mortgage has a history of legal problems, with two loan officers pleading guilty to federal wire fraud and money laundering earlier this year, according to the Star Tribune story. The Commerce Department in June also permanently barred an LHS employee from originating and servicing loans. Adam LaFavre’s attorney, Doug Kelley, told the Star Tribune his client sold LHS before any action was taken against employees of the company and wasn’t aware such events had happened. Kelley also told the newspaper his client is a victim of the investment scam and lost a considerable amount of money in the deal with Travis Correll, of Atlanta, who was indicted on federal charges in June of mail fraud and money laundering. IRS officials executed a search warrant of Adam LaFavre’s home in March, according to the Star Tribune. Officials said he did not report any taxable income in 2003 or 2004 but made a $1.2 million down payment on a Wayzata home formerly owned by auto dealer Denny Hecker. Scott LaFavre himself caused controversy in Albert Lea when he announced the purchase and closure of the Albert Lea Golf Club. According to previous Albert Lea Tribune articles, issues came up between former club members, owners and Scott LaFavre. Since Scott LaFavre’s announcement of his intentions for the development, many in Albert Lea have argued there is not a market for the type of high-end homes he plans to build. The lots themselves could range from $75,000 to $200,000. The Albert Lea City Council approved phases one and two of the Eagle’s Rest development agreement May 14, with a 5-2 vote. Phase one of the project will be completed privately up to city standard and phase two will be completed by the city, with the city oversizing the water main for $17,550, according to a May 12 Albert Lea Tribune article. Under the same agreement, Scott LaFavre will pay all costs for phase one, totaling $1.5 million, and phase two, totaling $585,000 to the city, before awarding phase two construction contracts, according to the Albert Lea Tribune article. This agreement will ensure all initial work would be completed before a building permit is issued. The completion date set for phase one is Sept. 15, 2008. Scott LaFavre also owns Eagle’s Rest Tree Farms and Equity Holdings. He purchased Wedge Nursery in February 2006. tribune
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Actually my wife is especially happy when my google check arrives each month. Thanks to douchbags like you, I get paid just for getting you worked up. -Liberal
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TameThaTane
Group: Members
Posts: 6300
Joined: May 2005
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Posted on: Sep. 04 2007,4:27 pm |
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Don't blame the LaFavre’s. They are God's chosen people. God has blessed them with the ability to make money. Any and all land deals are blessed and approved by none other than Jesus himself. How dare the media question Gods work! Adam LaFavre is a saint sent on a mission from God to enrich those investors who have faith in him. Any and all malfeasance are the result of employees as directed by Satan's minions. Please don't persecute Adam for things he had no control over. It was all someone else's fault and most likely the work of the devil.
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My choice is what I choose to do,
And if I'm causing no harm, it shouldn't bother you.
Your choice is who you choose to be,
And if you're causin' no harm, then you're alright with me.
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GEOKARJO
Google This!!!
Group: Members
Posts: 7799
Joined: Aug. 2003
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Posted on: Sep. 04 2007,6:19 pm |
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I really like that IGGY button ^
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gonetomorrow
Group: Members
Posts: 69
Joined: Jan. 2007
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Posted on: Sep. 14 2007,6:22 am |
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Not justifing their actions, or discriminating against them, but anytime you involve the govenment, well, something bad is going to happen no matter who you are, or what you do.
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"Laws that forbid the carrying of arms . . . disarm only those who are
neither inclined nor determined to commit crimes; they
serve rather to encourage than to prevent homicides, for an unarmed man
may be attacked with greater confidence than an armed man." ...Cesare
Beccaria
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