A new lawsuit filed against the lender behind the controversial real estate coaching company "iFLIP Chicago" alleges that the company took advantage of inexperienced Black investors in an effort to seize land near the future home of the Obama Presidential Center on Chicago's South Side.
LIVES FLIPPED UPSIDE DOWN
For months, NBC 5 Responds has heard from dozens of Chicagoans who said a real estate camp that was supposed to teach them how to flip homes instead flipped their lives upside down.
“We are at risk of losing over $200,000,” Ameera Haamid, an iFLIP Investor who shared her story with us earlier this year said.
Haamid is one of at least 20 amateur investors who were recruited by iFLIP Chicago.
The company is run by Ramo Bey, and on its now-defunct website, it describes itself as “a premier real estate group that focuses on providing hands-on learning experiences to new real estate investors with regards to buying, rehabbing and selling single-family homes across the Greater Chicagoland Area.”
Under Bey’s guidance, the investors said they signed up for high-interest commercial loans to purchase investment properties on Chicago’s South Side, and to fund the needed renovations.
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It was marketed as a ‘turn-key’ opportunity with a team of iFLIP contractors, attorneys and lenders standing by to assist. Haamid said that pitch was part of iFLIP’s appeal.
“[iFLIP] had a team that's already built to assist you through the process. So they will locate the property for you. They will put you in touch with the with the lending company provide financing,” Haamid said.
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Here’s where the investors contend things went wrong - in lawsuits, investors said once they had the commercials loans, they were hit with thousands of dollars in unexpected default interest fees, despite making their monthly payments on time.
It was enough of a setback to send several investors into foreclosure, like Haamid and local realtor Tatianna Barnett.
“We're just stuck in a limbo with properties that we bought, that were unable to finish,” Barnett said.
Earlier this year, Barnett told us once she purchased an investment property with Bey, she wasn’t able to access her loan money to pay for the contractors or supplies needed to renovate it. Haamid was in the same situation.
So where did the money go?
“We have no idea where the money is. I have lost $169,000,” Barnett said. “I have a lender that's saying ‘I'm not going to give you this money…your money's gone.'”
WHERE’S THE MONEY?
As part of their agreement with iFLIP Chicago, the investors said they had to apply for commercial loans with Roc360 Capital.
The investors' loan agreements contained a "cross collateralization and cross default" clause which essentially meant that if they fell behind on payments or defaulted on any other loans, the lender could automatically take money from the borrower’s account to settle the debt.
Two lawsuits filed earlier this year accused Bey of taking advantage of this clause by diverting the investors loan money to his own debts, essentially running an alleged "real estate Ponzi scheme."
Attorney Alex Loftus told NBC Chicago that is not the case.
“[The investors’] impression was that Mr. Bey was the bad guy who took their money and they were in a deal with him and he took advantage of them,” Loftus said. “The reality is that the contracts do not allow for this. They didn't sign anything that allowed for their money to be used for someone else.”
Loftus is now representing close to 20 iFLIP investors in an amended fraud lawsuit that takes aim at Roc360, the lender behind those high-interest commercial loans.
“This is a big venture firm in New York taking advantage of the little guys in Chicago,” Loftus said. “I think from the perspective of the folks in New York, if you have this group of African Americans doing business on the South Side of Chicago, that's an easy group to take some risks with.”
Loftus says Roc 360 committed fraud by repeatedly charging 25% default fees to his clients accounts. Loftus said it all comes down to how Roc 360 chose to interpret one word in the loan agreements. That word? Borrower.
WHO IS THE ‘BORROWER’?
“The reality is that the "borrower" as defined in the contract is one LLC. The one company, my client,” Loftus said. “And so yes, if my client had multiple loans, they could be mixed together. They did not agree that their loans be mixed with other companies and other investors.”
Loftus said Bey was not a member of any of his clients LLC’s. In the lawsuit, Roc 360 is accused of trying to justify the fees “by claiming a default by the guarantor, Mr. Bey, enabled the cross-collateralization of other loans he guaranteed."
Loftus claims that Bey never defaulted on any loans.
“The reality is that the agreements do not allow for this. The people at Roc 360 lied to them,” Loftus said.
Loftus said, just like the amateur investors, Bey wasn’t sophisticated enough to understand what was happening or stop it. Loftus said the only ones to benefit from the deals was Roc 360.
“[The investors] go to Mr. Bey and they talk to each other and they're like, ‘Oh geez, we must be stuck because the big guys in New York, the money men in New York all say that we agreed to this’. It's not true,” Loftus said. “No one materially benefits from this whole fiasco besides the lender.”
Investors said Bey eventually moved to Atlanta and stopped returning their calls.
Bey is still named in the amended lawsuit. Loftus said Bey had a fiduciary duty to the investors he recruited and he failed to protect them.
Neither Bey nor his attorney provided a comment for this report.
THE BARACK OBAMA PRESIDENTIAL CENTER
The lawsuit also accuses Roc 360 of intentionally driving investors into foreclosure to “ultimately seize the real estate surrounding the future home of the Obama library."
“They were targeted based on who they are and where they come from, that this was someone that that we could get away with this a while longer,” Loftus said.
“They wonder why home ownership is not accessible to low-income and working families, because we allow companies to do what they've actually done,” 20th Ward Ald. Jeannette Taylor said.
Taylor’s ward has also seen an uptick in real estate prices and residential construction since plans for the Barack Obama Presidential Center were announced.
The center will be located on a 19.3-acre site in Jackson Park near Woodlawn and is expected to be completed by 2026.
“Because they want access to the American dream, we allow a company like this to really destroy their families. You know how hard it's going to be to recover?” Taylor said.
An attorney for Roc 360 issued the following statement to NBC Chicago:
“Roc 360 will respond to the lawsuit in due course and vigorously defend its position. To the extent Plaintiffs have grounds for complaints, it appears to relate to the other named defendants. Roc 360 has, at all times, acted in good faith and fully complied with the terms of the commercial loan documents signed by the borrowers. Roc 360 does not and has never funded consumer loans - all its loans are to companies. Each borrower signs a business purpose affidavit. The plaintiffs in the instant action were represented by counsel and should have been aware of the terms of the loans they were agreeing to. Roc 360's fees were fully disclosed on the closing statement, and the plaintiffs were under no obligation to proceed with the loan. Roc 360's fees are fully in line with industry norms. Contrary to Plaintiffs' assertion in paragraphs 53 and 54 and elsewhere in the complaint, the loan documents (the note and the guarantee) explicitly permitted the cross-collateralization and cross-default of loans. Roc 360 is a large nationwide lender having done over 30,000 loans over the past 10+ years, helping rejuvenate communities in the Chicago area and across the nation and providing employment to hundreds of people, including an office in Lisle, IL.”
