A group of investors is suing Fortuno, Inc., a Lodi, Calif.-based buyer of foreclosed homes and its outside marketing executives, alleging they illegally "enticed" the group to invest in the purchase and re-sale of REOs in Ohio and Michigan with the promise of high returns upon flipping the properties.
The lawsuit, filed by the Law Offices of Andrew M. Wyatt, Los Angeles, alleges that Fortuno, calling itself the "Costco of Real Estate," made misrepresentations to the investors who had hoped to provide affordable housing to residents.
The lawsuit claims, "Fortuno sold plaintiffs' homes in poor unmarketable condition with high-price mark-ups while also failing to find qualified buyers." According to the lawsuit, after purchasing the properties, the plaintiffs unforeseeably encountered several problems including, significant "fix-up" costs, threats of condemnation by local government officials for safety violations, and an inability to sell the houses due to their dilapidated condition.
At press time Fortuno could not be reached for comment.
In the lawsuit, Fortuno, Inc. and/or its co-defendants, were sued for 10 violations of law including: Racketeer Influenced and Corrupt Organizations (RICO) Act; Untrue or Misleading Advertising; Unfair Business Practices; Professional Negligence, Negligent and Intentional Misrepresentation; Breach of Fiduciary Duty; Deceit/Concealment; Unjust Enrichment; and Restitution/Accounting.
Other individuals and companies named as defendants in the lawsuit, include: William D. Yotty, Harry Martin, Barbara Thomas, Bruce Grogg, Sognari International, Inc., Steve Francisco, National Realty, Inc, National REOS, Mike Sarwari, Michael Hironimus, Phyllis Rockower, Real Estate Club of Los Angeles, Roger D. Cram and Real Estate Brokers International.
"Through the use of other independent real estate marketing sources, the Fortuno Enterprise sells dilapidated condemnable homes for $10,000 to $20,000 more than they paid for and were not ‘fixer uppers,’ " the suit claims. "After relying on these representations, plaintiffs purchased the homes to find that they were not inhabitable and required extensive repairs."
The lawsuit is seeking compensatory and punitive damages, plus attorney fees and court costs. In addition, it requests a return of all invested funds and any illegally obtained profits to the plaintiffs, plus interest.
