Left: John Ulmer, courtesy of Real Wealth Expo website
(Toledo, OH) Lucas County Common Pleas judge Thomas Osowik agreed to a preliminary injunction last week against the Westhaven Group and several affiliated companies owned by John Ulmer. This is the latest in legal actions against Ulmer-related businesses over the past few years.
Community activists have long complained about the allegedly predatory practices of the Westhaven group, which uses investor monies to buy dilapidated properties, improve them, and sell them to sub-prime (read: poor and/or poor credit) buyers at double-digit interest rates. Ulmer has been accused of selling properties with major undisclosed problems, selling to people who could never make the high payments, and repossessing properties on the most marginal of contractual technicalities.
The Toledo Blade's Mike Wilkinson, one of the principal writers in the Coingate/ Tom Noe series that uncovered a web of influence peddling and corruption in Ohio state government, has been working hard on this story. There have been several references to the Coingate saga in the latest flurry of articles into Mr. Ulmer's dealings.
At first I just assumed that this was an effort for the Blade to play off the glory of Coingate. Heck, if I had a story that hot I would be milking it for all it was worth, too.
However, I don't think the Blade can be taken to task on this one. Ulmer's latest troubles seemed to surface after authorities recovered $1 million of state monies that Noe invested in the Westhaven Group.
What would be the consequences of a firm like Westhaven suddenly having to return $1 million in investments? That amount represents about 4% of the unprofitable firm's total investments. My guess: returning the BWC investment has crippled Ulmer's cash flow, and this may be the death knell for Ulmer.
There will likely be criminal charges filed against Ulmer for selling unregistered securities, making false representations in the sale of securities, and engaging in securities fraud. Some have likened Ulmer's businesses to Ponzi schemes with new investors paying off the old; time will tell if this is the case.
I interviewed a homeowner last year who bought a home from the Westhaven Group. After she got in the house she learned about serious problems with the electrical wiring that took $3000 to repair. She also learned that the house had undisclosed problems with lead paint, and found to her horror that her 1-year old granddaughter showed elevated lead levels.
Eventually Westhaven and the city of Toledo's Housing Department worked out a deal with the woman to get her into a new property. To my knowledge, the troubled property remains vacant.
Defenders of Westhaven point out that Ulmer's company deals with inexperienced clients, and the high interest rates merely reflect the increased costs of doing business with high credit risk homeowners.
I have been in exactly one house sold by Westhaven, so I am not in any position to speak for all of the thousands of properties the company has bought and sold.
The house I saw, though, was sold at a price at least forty percent over its true value, and the 14% interest rate seemed to me to be an abomination.
But hey - that must just be the latent bleeding heart liberal in me, right?