SAN DIEGO – In a lawsuit concerning the sale of foreclosed property, the U.S. District Court for the Southern District of California recently approved a motion to sell a 42-acre section of a 106-acre tract for $1,282,600 with the proceeds being paid to the Securities and Exchange Commission.
The order issued Sept. 17 by U.S. District Judge Gonzalo P. Curiel was the culmination of four-year legal action that began when the SEC filed a civil action against Louis V. Schooler and Western Financial Planning Corp. alleging Schooler and Western had devised a scheme to convince investors in purchase unregistered securities.
To carry out the alleged scheme, Western Financial bought undeveloped real estate, with cash or through financing, and formed one or more general partnerships to own the land. Western then sold general partnership units to approximately 3,400 investors, realizing $153 million from these fraudulent sales.
The court ruling stated that in order to determine the value of the repossessed land, in 2013, a court appointed receiver hired licensed appraisers to determine the value of this property. The appraisers determined that the land was only worth $16,328,000 and that the net appraisal of the properties was only $12,860,661 or 8.41 percent of the total amount Western had received from clients who invested in the land. It was determined that the investors would experience an 88.40 percent loss if the land was sold in 2013. Eventually, after consulting with real estate professionals, the receiver decided to begin selling the land for the best price offered. This transaction covered a portion of the entire tract.
On Jan. 21, 2016, the court had granted the SEC’s motion for final judgment against Schooler, court filings said.
In his ruling, Curiel said, “Having been reviewed and considered by this court, the motion for approval of the 42-acre portion of land is granted. The purchase price of $1,282,600 for the property is confirmed and approved. The receiver is immediately authorized to complete the sale transaction, including executing any and all documents as may be necessary and appropriate to do so. It is so ordered."