Okla. real estate broker faces lawsuit
By Brianna Bailey
[ August 2, 2011 - OKLAHOMA CITY ] Wells Fargo Bank has filed a federal racketeering lawsuit against an Oklahoma real estate broker and a group of Florida investors in connection with a series of so-called double-flip escrow real estate transactions the bank said were designed to defraud government-insured mortgage lenders out of millions of dollars.
The lawsuit accuses Oklahoma City real estate broker Michael Biddinger of conspiring with a Sarasota, Fla.-based company called Sussex Group LLC in a moneymaking scheme involving the purchase and resale of apartment complexes in Oklahoma and South Carolina at inflated prices.
Wells Fargo said the parties involved set up at least five double-flip escrow transactions, where there are two escrows on the same property and the same party as both the buyer and seller.
After purchasing an apartment complex, Sussex would immediately turn around and sell the property to another affiliated corporate entity for at least a $700,000 profit, using alias and deceptive corporate names to obscure the real identity of the buyer, the bank said.
The bank said Sussex Group, run by Sarasota, Fla.-based real estate investors Kevin and Deborah Flessner, originally envisioned culling the proceeds from fraudulently inflated mortgage loans to buy apartment complexes.
Biddinger urged the Florida investors to begin using double-flip escrow transactions in 2005 as part of the scam, so he could reap higher commissions from above-market prices on the apartment complex transactions, the lawsuit said.
The lawsuit named two apartment complexes in Oklahoma City as part of double-flip escrow sales in 2005 and 2006, both of them aging properties near NW 10th Street and N. Council Road. The Oklahoma City apartment complexes include the Royal Oaks apartments, 1128 N. Glade Ave., and the Archway Apartments at 7652 NW 10th St.
Wells Fargo claims the defendants used at least five double-flip escrow sales to cull more than $5 million in ill-gotten gains through inflated sales prices.
Reached by phone on Monday, Biddinger denied he was ever involved in the scheme and said he had yet to be served with the lawsuit. Biddinger said he represented Kevin Flessner in one real estate transaction several years ago, but that was the extent of their business relationship.
“I just represented the seller – I was the listing broker,” Biddinger said. “I never even met the buyers.”
First American Title and Trust Co., which handled the closing of the real estate transactions, is also named as a defendant in the lawsuit. Wells Fargo claims in the lawsuit that First American failed to notify the lenders involved in the questionable transactions about the double escrows.
First American Title and Trust has a policy against commenting on pending litigation, said Carrie Navarifar, a spokeswoman for the company.
Attempts to reach Kevin and Deborah Flessner were unsuccessful on Monday. A phone number listed for Sussex Group did not work.
Sarasota-based attorney Andrew Rosin, also named as a defendant in the lawsuit as Sussex’s lawyer, declined to comment, except to say he had not yet seen a copy of the lawsuit.
Robert Haupt an attorney for Phillips Murrah PC, which is representing Wells Fargo, declined to comment on the pending litigation.