Fraud involved in home deals, lawsuit claims

Regina Preetorius blames the real estate market crash.

A class action lawsuit filed in federal bankruptcy court says something else caused people who did business with her company, S.D.A. & Associates, to lose their investments and face eviction papers -- fraud.

"Most people who have never bought a house, they rely upon the real estate agent, the loan broker and the lawyers," said attorney Jack Long, who filed the suit Thursday on behalf of husband and wife Juan Valencia and Decia Bostic-Valencia. "They had no concept that the paperwork they were getting was not part of a normal real estate transaction."

The Valencias got kicked out of a house in south Augusta last year despite putting nearly $16,000 down, paying $4,000 to "loan broker" Fred Climer and making 12 monthly payments of $976, the lawsuit says. They thought that they were working toward home ownership in a rent-to-own, bond-for-title deal, Mr. Long said.

Unbeknownst to them, the complaint alleges, S.D.A. took their money while letting an outstanding mortgage on the house go unpaid, leading to foreclosure.

The lawsuit names Mrs. Preetorius, her husband, Charles "Greg" Preetorius, and Mr. Climer as defendants and seeks to create a class of plaintiffs who fell into predicaments similar to the Valencias. The Preetoriuses have filed for Chapter 7 bankruptcy, listing nearly $2.64 million in debts, but the complaint says they can't dodge what they owe the Valencias because taking their money without paying the debt "constitutes an act of fraud."

Mr. Long said he also wants to create a class of defendants -- companies that made money off S.D.A. or are connected to it. The court could probe their books and hopefully recover money for the Valencias and others, he said.

Other lawsuits have been filed against Mrs. Preetorius accusing her of fraud and racketeering. An investigation by The Augusta Chronicle uncovered more than 40 foreclosures and numerous bankruptcies in S.D.A.'s wake.

The company's ads said it could "BUY, REPAIR, MARKET, and SELL HOMES" and make monthly mortgage payments "evaporate." But, according to the lawsuits and those who talked with The Chronicle , Mrs. Preetorius treated the properties as her own and obtained second and third mortgages on them.

The newspaper's investigation revealed that she was involved in the transfer of properties with a combined fair market value of more than $10.6 million. She also persuaded investors to give her nearly $3.7 million in exchange for security deeds.

The burst of the housing bubble was a major factor in the sinking of S.D.A., said Todd Boudreaux, the Preetoriuses' bankruptcy attorney. The company was successful for four years, helping hundreds of people buy and sell homes.

"The people who are having trouble now are, unfortunately, the people they were dealing with at the end, when everything crashed," Mr. Boudreaux said.

Reach Johnny Edwards at (706) 823-3225 or johnny.edwards@augustachronicle.com.