Emergency motion: $458,000 condo sale should be voided because of fraud
Tampa Bay Times
By Susan Taylor Martin
06 July 2017

The $458,100 foreclosure sale of a gulf-front condo in North Redington Beach should be set aside and the money returned to the bidders because of "unauthorized conduct, misconduct and fraudulent acts" leading up to the auction, a new court filing says.

In an emergency motion filed this week in Pinellas County Circuit Court, an attorney for John and Christine Houdes' Orlando Realty Group LLC asks a judge to vacate the June 8 sale because of a "well-executed and sophisticated scheme" to deceive bidders in order to obtain a "windfall" profit from the auction.

In the meantime, an experienced Tampa investor who bid at the same auction said he — like the Houdes — also thought the foreclosure was on a first mortgage. Had that been the case, the winning bidder would have gotten the condo free and clear.

"Holy, cow!" was Rob Isbell's reaction when he learned from a Tampa Bay Times story that the auction was only on a second mortgage and that the condo remained subject to a bank foreclosure.

"It took somebody being very creative" to create the impression that the auction was on a first mortgage, said Isbell, who has bought dozens of homes at bay area foreclosure sales.

Isbell said he also found it curious that the condo was recently on the market for $675,000 with no mention of a pending foreclosure. The listing was withdrawn June 7 — one day before the auction.

As the Times reported Monday, Outbidya, Inc., a company started by Clearwater lawyer Roy C. Skelton, bought the unit in the Ram-Sea Condominiums two years ago for $157,800 after the condo association foreclosed on owner David Kapes.

In March, 2016, Wells Fargo started foreclosure proceedings against both Kapes and Outbyida. Less than a month later, Skelton created Deutsche Residential Mortgage, and Deutsche issued a mortgage to Outbidya and Parkes Investments LLC, which had a 50 percent interest in the condo.

This spring, Deutsche — no relation to the giant German bank — obtained a final judgment against Outbidya and Parkes Investments. Deutsche claimed that the two companies owed a total of $377,000 with interest not only on the condo but also on other properties owned by Skelton's Obidya.

Outbidya and Parkes Investments, both of which had Sketon as their attorney, did not contest the amount, allowing Deutsche to move quickly toward the June 8 auction.

"The sudden and convenient creation of the notes and Deutsche (Residential) Mortgage is itself suspicious," attorney Jon McGraw said in his emergency motion. "But, considering the extensive insider relationships among the conspirators and their principals… fraudulent intentions of the conspirators is undeniable."

By beating the bank to foreclosure, Skelton's Deutsche Residential already has received $380,000 from the sale and could get even more. Had the bank foreclosed first, Skelton's companies would have gotten nothing.

As it stands, the Houdes and their Orlando Realty Group LLC are out $458,000 and could also lose the condo when the lender forecloses.

Experts strongly advise anyone interested in buying a foreclosed property to get a title search before bidding. But Isbell, the Tampa investor, said he did his own informal title search and the second mortgage was not readily apparent.

A search of Pinellas official records showed that the only mortgage ever issued to Kapes, the condo's previous owner, was in 1997, Isbell said. The second mortgage — issued by Deutsche Residential last year — did not have Kapes' name on it .

The first and second mortgages on a property typically have the same borrower's name.

Isbell said that when he saw only one mortgage with Kapes' name, he presumed the auction was on Wells Fargo's foreclosure of the 1997 first mortgage.

Skelton's Deutsche Residential obtained its final judgement of foreclosure under the same case number as the Wells Fargo case. But in his emergency motion, the Houdes' attorney says Deutsche never received court approval to become a party to the case and failed to notify, as required, Wells Fargo's attorneys of its foreclosure action.

Deutsche, Skelton and others "consistently dodged unwanted attention to their efforts by failing to properly reflect the existence of the unauthorized'' action, the motion says.

In an email response to a request for comment Thursday, Skelton did not address most of the allegations in the emergency motion. He did say, though, that the cross-claim, final judgment and notice of sale were publicly recorded "for all to see."

Skelton also said that the Houdes, through their Orlando Realty Group and another company, have bought dozens of other properties at foreclosure auctions.

"Kind of changes the complexion of your article doesn't it?" he said.

If the Houdes can't get the sale vacated, Isbell said their best recourse might be to negotiate with the lender about paying off the $162,000 first mortgage plus any interest and fees owed. That way, they would have outright ownership of the condo, which is valued for tax purposes at $467,542 but is likely worth more.

Including the $458,100 the Houdes bid at auction,'' they overpaid for the property but it's not like they'd lose everything," Isbell said.


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