Alleged Scams Hit Foreign House Buyers Records: Flipping Distressed Detroit Homes a Lure
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20160222-NEWS--0001-NAT-CCI-CD_-- 2/19/2016 5:48 PM Page 1 Prime-time golf duel only latest sports marketing splash for Quicken Loans, PAGE 3 FEBRUARY 22-28, 2016 Alleged scams hit foreign house buyers Records: Flipping distressed Detroit homes a lure By Robert Snell hoods and compounded blight [email protected] problems, officials said. Overseas investors have cooled Both alleged scams have drawn on buying distressed homes in De- the attention of federal investiga- troit after a pair of alleged scams tors. Crain’s has learned that the FBI targeting thousands of properties. is investigating Dearborn-based The alleged scams involved Metro Property Group LLC, the largest homes purchased for as little as single buyer of distressed homes at $500, in many cases through Wayne the county’s tax auctions in recent County tax auctions, according to years, according to a search war- property and federal court records. rant unsealed in federal court in How one of Michigan’s banking leaders made a big deal, The properties then were flipped, late December. chased a big dream … and raced into bankruptcy in one case for as much as $15,000, “Things have cooled,” said Darin to investors duped into buying McLeskey, managing partner of Breaking news, Jan. 12, 2016: Attorneys for Jack Krasula, prominent businessman and WJR radio show what they believed were bank-fore- Detroit-based Denovo Real Estate, host, ask an Oakland Circuit Court judge to find legendary banker Jerry Campbell in contempt of court over closed homes for more than fair who is helping foreign buyers sal- a $4.8 million debt, claiming he has been hiding assets. That same day, Campbell, a former longtime friend market value, court records say. vage investments in Detroit homes. and business partner of Krasula’s — in a very successful Florida bank and in a stunningly disastrous horse The alleged scams left scores of “A lot of buyers are going down in racing track in Huron Township — files for bankruptcy protection in Florida. abandoned homes across Detroit, flames, asking for help.” devastated struggling neighbor- There is data suggesting weak- By Tom Henderson One of Campbell’s students ening interest among foreign in- [email protected] Editor’s note: This story was was head of the personnel depart- vestors. It was 1969, at the beginning of compiled from interviews, court ment at the Bank of the Common- Cash purchases, seen as an indi- a storied career in banking, and records and published reports. wealth and offered him a job. For cation that buyers are acquiring Jerry Campbell was something of Jerry Campbell didn’t return calls two years, Campbell worked full property as an investment, fell to 45 a boy wonder. He and his partners to HomeBancorp and his time at the university and at the percent in the second quarter of had just bought the Owosso Sav- cellphone. Lisa Campbell didn’t bank before deciding to focus on 2015 in metro Detroit, down from a ings Bank. It was a tiny community respond to email requests. Jack finance. high of 74 percent in the fourth bank with just $40 million in as- Krasula didn’t return phone calls Campbell expanded Owosso quarter of 2011, according to the sets, but, nonetheless, he was a asking for comment. Savings Bank into a bank-holding real estate database firm Zillow. bank president at 29. company with $1.2 billion in as- The percentage of overseas in- Campbell, who had grown up up in a litigious dispute with his sets before selling it to Grand vestors searching online for Detroit on a farm near Allegan in West biggest partner, Jack Krasula. Rapids-based Old Kent Bank in properties fell to 5.7 percent of all Michigan, had had an unlikely ca- Campbell got a bachelor’s de- 1983. In 1986, after raising $3 mil- searches in January from 10.1 per- reer path by then. There had been gree in liberal arts in 1962 from lion from investors, he started all cent in February 2014, according to nothing to hint at a bank presi- Central Michigan University and over again, launching a small property website Trulia. The rate is dency to come. MBAs from Wayne State University community bank in Owosso the lowest in four years. Campbell’s career path ulti- and the University of Michigan. He called Republic Bancorp Inc. that Map of trouble The decline comes amid a rise in mately led him to run three spent the first two years of his ca- opened on April Fool’s Day. Online: An interactive map of the property scams targeting overseas banks, try his hand at horse reer at MichCon Gas Co. and then Investors bought into its model homes involved in a federal case alleging investors, particularly those from breeding and racing — including taught business classes for five of quickly opening mortgage of- that out-of-town investors were taken Europe, Wayne County Register of the construction of the now-razed years at WSU, in investments, fices in a wide footprint and ex- in by a real estate scam. Deeds Bernard Youngblood said. Pinnacle racetrack — and wind banking and finance. SEE CAMPBELL, PAGE 18 crainsdetroit.com/scams He created the nation’s first SEE SCAM, PAGE 20 FILE PHOTOS Jerry Campbell (above) built three banks © Entire contents copyright 2016 from scratch or nearly so, but had a lot of by Crain Communications Inc. All rights reserved. expensive trouble in his horse-racing crainsdetroit.com Vol. 32 No 8 $2 a copy. $59 a year. ventures, including Pinnacle Race Course in Wayne County. NEWSPAPER 20160222-NEWS--0002-NAT-CCI-CD_-- 2/19/2016 3:39 PM Page 1 2 CRAIN’S DETROIT BUSINESS // FEBRUARY 22, 2016 Hart near popular tourist stop Silver nary, recreation and tourist destina- MICHIGAN Lake Sand Dunes. tion to include restaurants, a farm- INSIDE ers market, ice cream shop, micro- THIS ISSUE brewery, skating rink and a bakery. BANKRUPTCIES . 17 MICH-CELLANEOUS CALENDAR . 16 Daniel Ross, owner and developer CLASSIFIED ADS . 17 Ⅲ Old Irish Mill Six years after it was last in use, of in Brooklyn, told the DEALS & DETAILS . 14 the former Steelcase pyramid near Jackson Citizen Patriot that he OPINION . 6 BRIEFS Grand Rapids is again busy as its hopes to have the project complete OTHER VOICES . 6 new owner, Switch, begins a $400 in 2017. The development could PEOPLE . 16 House approves $30 million HopCat,Short’s to sell million build-out of its Supernap cost up to $8 million. RUMBLINGS . 22 for Flint water crisis aid statewide; Big Hart to brew Michigan Data Center. More than 70 Ⅲ A plan is moving forward to WEEK ON THE WEB . 22 workers from 25 West Michigan tear down the Park Place Hotel’s State and federal officials acted to Grand Rapids-based bar and companies are working at the for- domed banquet hall and pool send more help to Flint to deal with restaurant operator BarFly Ventures mer Steelcase Corporate Develop- building in downtown Traverse City COMPANY INDEX: its lead-contamination crisis, as the LLC has partnered with contract ment Center in Gaines Township, a as part of a broader development SEE PAGE 21 Michigan House approved $30 mil- brewery Brew Detroit LLC to market Switch spokesman told MLive.com. project. The approval last week by lion last week to help pay residents’ and distribute HopCat-branded He said the initial construction the Traverse City Historic Districts ignated a national historic land- water bills and Gov. Rick Snyder an- beer. According to MiBiz, Brew De- budget remains $400 million, but Commission removed a key hurdle to mark by the U.S. Department of the nounced a $2 million grant to help troit will produce HopCat’s Beer likely will exceed $1 billion in an ef- the proposal that includes plans to Interior, AP reported. The Badger is the city replace some of its pipes, Right Meow American India Pale fort to open on schedule this year. build a new convention center, said now a car and passenger ferry that The Associated Press reported. Ale for statewide distribution Ⅲ Kalamazooo-based medical a Traverse City Record-Eagle report. travels between Ludington and The federal government is giving through Kalamazoo-based Imperial technology company Stryker Corp. is Ⅲ An $11.2 million effort to elimi- Manitowoc, Wis. $500,000 to two health centers that Beverage to retailers and bars and buying Physio-Control International nate blighted homes in Saginaw Ⅲ The Ontario Hockey League sus- are treating and testing Flint resi- restaurants. Inc. of Redmond, Wash., for $1.28 bil- ended in December after two years pended Flint Firebirds owner Rolf dents exposed to the lead-tainted In more brewery news, Bellaire- lion, AP reported. Physio-Control of work, MLive.com reported. Offi- Nilsen after the major junior team, water. That aid comes as a new con- based Short’s Brewing will offer three develops, makes and markets moni- cials said the federally funded proj- formerly the Plymouth Whalers, gressional report by the nonparti- mainstay beers, a rotating seasonal tors/defibrillators and cardiopul- ect was a success, resulting in the fired its coaching staff for the second san Congressional Research Service selection and two ciders when it ex- monary resuscitation-assist devices. demolition of 862 vacant homes in time this season, AP reported. Head said the Environmental Protection pands out of state by beginning bot- Ⅲ A 70-year-old Port Huron busi- Saginaw and along the city borders. coach and General Manager John Agency waited too long to take en- tle distribution in Illinois by March, ness is closing next month due to a Ⅲ The Ludington-based SS Bad- Gruden and assistant coach Dave forcement action after learning of MLive.com reported.