CapTech sued by investors
Six lawsuits filed in Ventura County Superior Court allege that investors lost more than $1 million through investments in Central Valley real estate made through a Camarillo firm.
The civil complaints allege that CapTech Advisors took investors’ money to buy lots in the Taft area and begin building houses on them. The investors claim in the court filings that the construction never started as promised and that their money wound up in the personal bank accounts of the people behind CapTech.
But Kenneth Powell, listed in court documents as the head of the firm, said his company simply got caught up in the credit crunch and is unable to repay its debts. He denied profiting from the failed investments and is not the subject of any law enforcement action.
Founded in 2002, CapTech gathered investor money to buy lots, build houses and then sell them, banking on profits from the booming housing market, Powell said. The company’s Web site, accessed by the Business Times before it was taken down, gave CapTech’s slogan: “Grow your wealth through Smart Speculation.”
According to the lawsuits, CapTech bought radio time on a Ventura County station to promote its opportunities to investors. Gerard Dougherty, the Westlake Village lawyer representing the investors in the separate suits, said some of his clients weren’t sophisticated investors and put a considerable amount of their net worth into CapTech.
“The common denominator among my clients is that they were all listening on the radio,” Dougherty said. CapTech “put on radio programs each week where they had certain real estate experts talk about this awesome real estate opportunity out in Taft.”
The lawsuits describe the opportunities CapTech offered as “sham investments.” In the case of investor Gilbert Negrette, the lawsuits allege, CapTech couldn’t convey the title of a lot to Negrette because CapTech had already sold the lot to two other people.
The lawsuits also allege investors were paid “Ponzi ‘interest payments’” to make the situation seem sound. Robert Magana, the lawsuits claim, sank $520,000 into CapTech, and while he got back $29,000 in so-called interest payments, he still lost $491,000.
But Powell says CapTech got caught up in the credit freeze when banks quit lending. Of the 50 banks CapTech once worked with, Powell said, about half are no longer in business.
“We just ran out of money,” Powell said. “We were trying to put together a program to get it back together. We talked to the investors, and they elected to go the lawsuit route. Attorneys need to make money, and it’s easy to pick on a little guy like me who can’t really fight back too well.”
Powell said the company had plans to take advantage Taft’s booming oil fields by building houses for workers. In the southern part of the city sat about 800 lots whose homes needed rehabilitation or tearing down, Powell said. His goal was to take 150 of those lots and turn them into workforce housing.
The idea seemed sound a couple of years ago, Powell said.
“Back then, we could sell a home for $240,000. It took us about $180,000 to put that together, so the investors made $60,000 on the investment,” Powell said. “Where we would make our money was basically on the sale of the house and on the financing. But if you can’t build a house, you can’t make any money.”
But Dougherty said his clients are victims of fraud, and he wasn’t afraid to use the word “Ponzi” in his civil complaints. In a Ponzi scheme, early investors are paid back with the money of subsequent investors rather than actual earnings.
“Just about every dime – with the exception of some small interest payments – has been lost,” Dougherty said.
“I paid interest up until the point we ran out of money,” Powell said.
Powell added: “A Ponzi scheme normally involves someone getting wealthy. I spent my money on this and have nothing to show for it. No big vacations, no big house. People can throw out the words ‘Ponzi scheme’ at the drop of a hat. My Ponzi scheme would be similar to what Washington Mutual and IndyMac did.”
Powell said he is still trying to save the projects and return investors’ money, adding that he’s lost $300,000 of his own funds.
“I know how they feel. If there’s anything I could do, I would do anything for these people,” Powell said. “I consider them my friends, but the circumstances were beyond my control.”
Dougherty said some of his clients are near destitute because of their losses.
“The personal stories included with these plaintiffs are incredible, all the pain and financial pressure they’re going through right now,” Dougherty said.
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