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IN THE COURT OF COMMON PLEAS

HAMILTON COUNTY, OHIO

LEONE1, LLC : Case No. A1700624


175 S Sandusky Street, Suite 600 :
Delaware, Ohio 43015 : Judge Cooper
:
and :
:
COMPOUND PROPERTY MANAGEMENT :
LLC :
2892 Willow Ridge Drive :
Cincinnati, Ohio 45251 :
:
Plaintiffs, :
:
v. : COMPLAINT WITH CLASS
: ALLEGATIONS
BUILD REALTY, INC. dba GREENLEAF :
FUNDING :
c/o Gary Bailey, Statutory Agent :
2716 Hyde Park Ave. :
Cincinnati, Ohio 45209 :
:
EDGAR CONSTRUCTION LLC, individually :
and as trustee :
c/o Leah Storie, Statutory Agent :
11160 Luschek Drive :
Cincinnati, Ohio 45241 :
:
SERVE ALSO: :
c/o Gary Bailey :
2716 Hyde Park Ave. :
Cincinnati, Ohio 45241 :
:
BBT SERIES XVI LLC :
c/o Incorp. Services, Inc., Statutory Agent :
815 Brazos Street, Suite 500 :
Austin, Texas 78701 :
:
SERVE ALSO: :
712 Main Street :
Houston, Texas 77002 :
:
and :
:
JOHN DOE :
Address Unknown :
:
Defendants. :
:

Now comes Plaintiffs, Leone1, LLC (Leone1) and Compound Property Management

LLC (CPM), (collectively, Plaintiffs), by and through the undersigned counsel, and for their

Complaint in the above captioned matter states as follows:

NATURE OF THE CASE

This case involves a complex business scheme where Defendant Build Realty, Inc. and

Defendant Edgar Construction LLC (collectively, Defendants) solicit investors to purchase and

improve real property from/through them under a fraudulent structure, prohibited by Ohio law.

To effectuate this transaction, Edgar Construction, LLC (Edgar Construction), purchases

certain real property from a third party, then immediately resells the property at a higher price to

itself as trustee of a trust under which the investor is the beneficiary. Edgar Constructions

affiliated entity, Build Realty, Inc. (Build Realty) agrees to lend the investor the after-

renovation-value of the property, including the higher purchase price and an additional amount

for improvements (held in escrow). As part of this transaction, the investor, Build Realty, and/or

Edgar Construction simultaneously execute numerous agreements, under which the investor is

obligated as a mortgagor and borrower on a note for the amount loaned by Build Realty. One of

the documents signed during this transaction also purports to allow Defendants to reclaim the

property, extinguishing the investors rights therein, upon any default and without the

opportunity for cure or any subsequent foreclosure or deed in lieu of foreclosure. The structure

described above is collectively referenced throughout this Complaint as the Transaction or

Transactions.

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The Ohio Supreme Court and courts throughout the state have recognized the structure of

the Transaction as an improper clog on the right to redemption. See Shaw v. Walbridge, 33 Ohio

St. 1 (1877); Panagouleas Interiors v. Silent Ptnr. Group, Inc., 2d Dist. Montgomery No. 18864,

2002 Ohio App. LEXIS 1305, *25 (Mar. 22, 2002). Additionally, the Transaction is fraudulent,

void for unconscionability and as against public policy, and involves numerous breaches of the

fiduciary duties owed to the investors (which are the beneficiaries of the trusts). This Transaction

effectively allows Defendants to profit at the expense of their investors/beneficiaries, including

(i) the retention of the down payments paid on the properties, (ii) the difference in the purchase

price that Edgar Construction paid and the purchase price for the conveyance from Edgar

Construction to Edgar Construction, as trustee, and (iii) any foreclosure proceeds the investor(s)

would have realized. Plaintiffs, on behalf of themselves and those similarly situated, ask the

Court to remedy the harm that Defendants caused and continue to cause those who invest with

them under this fraudulent and improper set of Transactions.

PARTIES AND JURISDICTION

1. Build Realty is an Ohio corporation with its principal place of business in

Hamilton County, Ohio, which sometimes does business under its registered trade name,

Greenleaf Funding.

2. Edgar Construction is an Ohio limited liability company with its principal place of

business in Hamilton County, Ohio.

3. Upon information and belief, Defendant BBT Series XVI LLC is a Texas limited

liability company and is listed as the mortgagee in the Transaction between Edgar

Construction/Build Realty and Leone1.

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4. Upon information and belief, Defendant John Doe is a private investor who,

through initial funding, assists Edgar Construction and/or Build Realty in obtaining the

properties at issue in this case, which Edgar Construction and/or Build Realty later

purport to transfer, with knowledge of Edgar Construction and/or Build Realtys business

model and plan as it relates to the Transactions.

5. Leone1 is an Ohio limited liability company doing business in Hamilton County,

Ohio.

6. CPM is an Ohio limited liability company doing business in Hamilton County,

Ohio.

7. Jurisdiction and venue are proper in this Court because the named parties are

located or do business in Hamilton County, Ohio, and the Transactions and occurrences

that give rise to Plaintiffs claims for relief arose in Ohio.

8. Jurisdiction and venue are further proper in this Court as the pieces of real

property that are at issue in this matter are all located in Ohio.

BACKGROUND FACTS

9. Defendants are affiliated entities, sharing owners, agents, members, shareholders,

and/or addresses.

10. Upon information and belief, Gary Bailey (Bailey) is a managing member,

owner, shareholder, and/or officer of both Defendants.

11. Defendants routinely engage in giving wholesale loans based on the amount of

the suggested after-repair-value (ARV) of certain properties through the Transactions.

12. The ARV represents the value that will be assessed to each property after the

recommended renovations/improvements are made, as estimated by Build Realty.

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13. To effectuate such Transactions:

a) One or both Defendants solicit investors to purchase property from and/or

through them;

b) One or both Defendants create a trust and makes the investor the beneficiary

under the trust;

c) Edgar Construction purchases a property, then immediately transfers the

property (for a higher price) to itself as trustee of the trust under a double

closing arrangement;

d) Build Realty and/or Edgar Construction, or an agent thereof, collects a down

payment from the investor;

e) Build Realty loans the investor money equal to the ARV, which includes the

(always higher) purchase price of the property in the conveyance from Edgar

Construction to Edgar Construction, as trustee, and an additional amount of

money is held in escrow to be used for improvements to the property;

f) In exchange for Build Realty agreeing to lend the investor the ARV of the

property, the investor is required to sign a Collateral Assignment of Beneficial

Interest stating that the investor waives its right to redemption (also waiving

its right to exceeds proceeds upon a foreclosure sale) and that the beneficial

interest in the property will immediately transfer to Build Realty in the event

of investor default under one or more of the Transaction documents;

i. Default includes, among other things, default in the payment of

amounts owed under note and/or the mortgage associated with the

property.

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g) The investor also signs a promissory note promising to make high interest

monthly payments over a short period of time followed by a balloon payment

of the remaining principal amount (which includes the purchase price and the

amount held in escrow) plus interest, as well as numerous other contracts

and/or agreements, including a mortgage, contemporaneously as part of the

same Transaction.

14. The above Transaction structure improperly allows Defendants to hold the

property as trustee (as to Edgar Construction) and as beneficiary (as to Build Realty) in

the event of the investors default, such that no foreclosure or other court action is

necessary to regain title or possession of the property from the investor, who paid

consideration for and has an ownership interest in the property.

15. Ohio recognizes a statutory right to redemption under R.C. 2329.33, as well as an

equitable right to redemption.

16. Having the investor execute the Collateral Assignment of Beneficial Interest

unlawfully eliminates an investors right to redemption, which cannot be waived at the

time the mortgage is made under Ohio law.

17. Additionally, forcing the investor to sign the Collateral Assignment of Beneficial

Interest robs the investor of any excess proceeds it may have realized through a

statutorily mandatory foreclosure sale. It also deprives the investor of exposure to the

market by means of a Sheriffs Sale, allowing an under-valued default sale, potentially to

a purchaser preferred by Defendants.

18. Notwithstanding these violated rights, the Transaction structure enables

Defendants to keep the investors down payment and the investors property, such that

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Defendants are free to resell it, repeat this scheme with another investor, and continue to

improperly profit therefrom.

19. Through these Transactions, Edgar Construction accepts and executes trusts of

property, serves as a trustee, and provides fiduciary services as a business.

20. R.C. 1111.02(A) and 1111.06(A) require that Edgar be licensed as a trust

business.

21. Upon information and belief, Edgar is not and has never been licensed as a trust

business.

22. Upon information and belief, Defendants have entered into dozens, if not

hundreds, of these Transactions throughout Ohio.

23. This action is filed on behalf of those persons and/or entities that suffered losses

due to Defendants conduct in improperly executing such Transactions.

CLASS ACTION ALLEGATIONS

24. Pursuant to Rules 23(A), (B)(2), and (B)(3), Plaintiffs bring this action on behalf

of themselves and the Class, initially defined as further described herein.

25. The Class consists of Plaintiffs Leone1, LLC and Compound Property

Management, LLC (collectively, Plaintiffs), and all other persons and entities in Ohio,

individually and collectively, who invested in real property, by, through, or with any of

the Defendants named herein, through the Transaction structure further described and

defined herein, and subsequently defaulted under the terms of the Transaction, forcing

them to relinquish their interest in that property, within the past four years.

26. Excluded from the Class are Defendants, their employees, officers, directors, legal

representatives, heirs, successors, and wholly or partially owned subsidiaries or affiliated

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companies; class counsel and their employees; and the judicial officers and their

immediate family members and associated court staff assigned to this case.

27. The Class is so numerous that joinder of all Class members is impracticable.

28. Plaintiffs claims are typical of the claims of the other members of the Class

because all members of the Class sustained damages of the same nature resulting from

substantially identical Transactions.

29. Plaintiffs will fairly and adequately protect the interests of the members of the

Class. Plaintiffs have retained experienced and competent counsel, and Plaintiffs have no

interests antagonistic to or in conflict with the other members of the Class.

30. Defendants have acted or refused to act on grounds generally applicable to the

Class, thereby making it appropriate for the Court to render final injunctive relief or

corresponding declaratory relief with respect to the Class as a whole.

31. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members thereof. Among the

common questions of law and fact are as follows:

a) The Transactions all consist of substantially identical documents, containing

substantially identical terms and conditions;

i. As such, a common question exists as to whether such Transactions

were fraudulent, unconscionable, illegal, against public policy, or

otherwise violated Class members rights;

b) Members of the Class were all forced to relinquish their interests in their

respective properties without a meaningful opportunity to redeem the

properties;

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i. As such, a common question exists as to whether Members of the

Class were all improperly divested of their right to redemption and

robbed of excess proceeds arising from a statutorily mandated

foreclosure sale;

c) Members of the Class were all beneficiaries under trusts that Defendants

created and/or executed and for which one or more Defendants served as

trustee, creating a fiduciary relationship between such Defendant(s) and Class

members;

i. As such, a common question exists as to whether one or more

Defendants breached its fiduciary duties to Class members;

d) Common questions also exist as to whether Plaintiffs and the Class are

entitled to damages, rescission, restitution, disgorgement, equitable relief,

and/or other relief and the amount and nature of such relief to be awarded to

Plaintiffs and the Class.

32. A class action is superior to other available methods for the fair and efficient

adjudication of this controversy. Joinder of all Class members is impracticable.

Additionally, because the damages suffered by individual Class members may be

relatively small, the expense and burden of individual litigation makes it nearly

impossible for Class members to seek redress for the wrongs done to them. No unusual

difficulties are likely to be encountered in the management of this class action.

FACTS PERTAINING TO LEONE1

33. Fast Close, LLC, an Ohio limited liability company, and HH Holdings, LLC, an

Ohio limited liability company, are members of Leone1.

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34. Catherine Brill (Brill) is a member of Fast Close, LLC. Richard Hardin

(Hardin) is a member of HH Holdings, LLC.

35. In 2014, Brill and Hardin partnered to form Leone1 to start real estate investing.

36. Shortly thereafter, Hardin and Brill discovered Build Realtys website and

requested more information.

37. Mark Arbino, a former employee or agent of Build Realty who is no longer

affiliated with Build Realty, began soliciting Leone1 to purchase property through

Defendants.

38. On July 1, 2014, Leone1 and Edgar Construction executed a Contract to Purchase

(Leone1 Purchase Contract) whereby Edgar Construction agreed to sell the property at

issue in this case, located at 5121 Leona Dr., Green Township, Ohio 45238 (the Leone1

Property) to Leone1 for a purchase price of $55,900. The Leone1 Purchase Contract

characterizes the sale as a cash sale and does not mention either Build Realty financing

the sale or Edgar Construction purchasing the Leone Property as trustee. A true and

accurate copy of the Leone1 Purchase Contract is attached hereto as Exhibit A.

39. Edgar Construction, by and through Bailey, and Leone1, by and through Hardin,

executed a Trust Agreement for Trust 129, and Memorandum of Trust, both dated July 1,

2014.

40. Trust 129 was created by Edgar and/or Build Realty, or an agent thereof, for the

purpose of facilitating the transfer of real property.

41. On July 31, 2014, Edgar conveyed the Leone1 Property to itself as Trustee of

Trust 129, under which Leone1 is the listed beneficiary.

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42. Upon information and belief, the Leone1 Property was the only corpus of Trust

129.

43. Defendants and/or Leone1 executed several contracts and/or agreements to

memorialize the conveyance of the Leone1 Property, including (1) a Quit Claim Deed,

(2) an Open End Mortgage and Security Agreement, (3) a Balloon Payment Promissory

Note (with an Addendum Additional Language for Promissory Note and Allonge to

Note), (4) a Combined Security Agreement and Assignment of Rents and Leases, (5) a

UCC Financing Statement Description of Collateral Fixtures, Etc., (6) a Beneficiarys

Undertaking, (7) a Borrowers Affidavit, (8) a Memorandum of Trust, (9) a Trust

Agreement, (10) a Construction Loan Agreement, (11) an Escrow Draw Policy, (12) a

Collateral Assignment of Beneficial Interest, and (13) a Compliance Agreement and

Limited Power of Attorney, along with standard closing documents (all of the contracts

and/or agreements referenced in this Paragraph are collectively referred to as the Leone1

Transaction throughout this Complaint). True and accurate copies of the Leone1

Transaction contracts and/or agreements are collectively attached hereto as Exhibits B

through N. Any other contracts and/or agreements executed as part of the transfer or

conveyance of the Leone1 Property are not in Leone1s possession.

44. Through the Leone1 Transaction, Edgar (as the conveyor), conveyed the Leone1

Property to itself (as the conveyee), as Trustee of Trust 129, for the benefit of Leone1 as

Beneficiary of Trust 129.

45. Upon information and belief, as part of the Leone1 Transaction, Leone1 paid a

down payment in the amount of $10,000.00.

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46. Upon information and belief, Edgar Construction (as the conveyee) did not pay

any down payment or other consideration as part of the Leone1 Transaction.

47. Build Realty, a closely affiliated entity of Edgar Construction, financed the

Leone1 Transaction by loaning the ARV.

48. Leone1 was obligated under the Leone1 Transaction to make 18 monthly

payments to Build Realty, beginning August 1, 2014 and ending January 31, 2016,

followed by a balloon payment for any remaining principal, plus interest due under the

loan executed pursuant to the Leone1 Transaction.

49. Per the Leone1 Transaction, Defendants became the conveyor, the conveyee, the

Trustee of Trust 129, the Beneficiary of Trust 129, and the lender with regard to the

Leone1 Transaction upon any default by Leone1.

50. Thus, Leone1 received little more than obligation in exchange for its

consideration.

51. After the Leone1 Transaction was executed, Leone1 began improving the Leone1

Property.

52. As part of the Leone1 Transaction, Defendants agreed to set funds aside in an

escrow account that were to be used by Leone1 to pay for improvements to the Leone1

Property.

53. Defendants did not allow Leone1 to choose which contractors, individuals, and/or

entities to hire to perform work on the Leone1 Property, but forced Leone1 to use

particular contractors, individuals, and/or entities selected by Defendants, including but

not limited to MHN Property Solutions (Build Preferred Contractors).

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54. Upon information and belief, Defendants were aware that Build Preferred

Contractors repeatedly failed to perform the work agreed to or performed such work in in

an unworkmanlike and unsatisfactory manner.

55. Despite this knowledge, Defendants directed Leone1 to hire the Build Preferred

Contractors.

56. Leone1 hired the Build Preferred Contractors to work on the Leone1 Property,

and the Build Preferred Contractors failed to perform the work agreed to or performed

such work in in an unworkmanlike and unsatisfactory manner.

57. Upon information and belief, one or both Defendants received a benefit for

directing Leone1 to hire the Build Preferred Contractors, which was undisclosed to

Leone1.

58. When the Build Preferred Contractors failed or refused to finish the work

contracted for or to complete it in a workmanlike and satisfactory manner, Leone1 was

forced to use its own funds (i.e., not those held in escrow as part of the Leone1

Transaction) to make repairs and/or improvements to the Leone1 Property.

59. Due to the financial strain of paying other contractors to finish or repair the work

that the Build Preferred Contractors either did not perform at all or did not perform in a

workmanlike and satisfactory manner, Leone1 was unable to continue making its

monthly interest payments and defaulted.

60. Defendants retained the Leone1 Property, all funds paid by Leone1 through and

after the Leone1 Transaction, and all improvements to the Leone1 Property that Leone1

made or paid for.

61. Defendants never foreclosed on the Leone1 Property.

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62. Leone1 never executed a deed in lieu of foreclosure in favor of Defendants.

63. Leone1 never signed any documents releasing its interest in the Leone1 Property,

aside from the Collateral Assignment of Beneficial Interest, executed at the time of the

Leone1 Transaction (which unlawfully eliminated Leone1s right to redemption).

64. Defendants then sold the Leone1 Property to a third party for $110,000, over

$54,000 more than the purchase price in the Leone1 Transaction.

65. Defendants retained this substantial profit and did not compensate Leone1 for any

of the funds it paid or improvements it made or paid for.

66. Defendants did not compensate Leone1 for any proceeds to which it would have

been entitled if the Leone1 Property were sold at a foreclosure sale (i.e., the difference

between the purchase price and the amount Leone1 purportedly owed under the Leone1

Transaction).

67. Upon information and belief, Defendants made a greater profit by retaining

Leone1s down payment, the Leone1 Property, and the value of improvements made

thereto upon Leone1s alleged default than they would have made had Leone1 not

defaulted.

FACTS PERTAINING TO CPM

68. In or around March of 2016, Theresa Robinson (Robinson) began investing in

real estate.

69. In preparation for her first real estate investment, Robinson formed CPM.

70. CPM is owned and managed by Robinson.

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71. Robinson saw a Build Realty sign on or around September of 2016 and called the

number on the sign. Jamie Cain, an employee and/or agent of one or more Defendants,

answered the call and solicited Robinson to purchase a property through Build Realty.

72. On October 20-21, 2016, CPM and Edgar Construction executed a Contract to

Purchase real property located at 1915 Acorn Drive, Cincinnati, Ohio 45231 (the CPM

Property) whereby Edgar Construction agreed to sell the CPM Property to CPM for a

purchase price of $26,900 (the CPM Purchase Contract). The CPM Purchase Contract

characterized the sale as a cash sale and made no mention of Build Realty financing the

sale or Edgar Construction purchasing the Acorn Property as Trustee. A true and accurate

copy of the CPM Purchase Contract is attached hereto as Exhibit O.

73. Edgar Construction, by and through Bailey, and CPM, by and through Robinson,

executed a Trust Agreement for Trust 170, for which there is also a Memorandum of

Trust, both dated November 1, 2015.

74. Upon information and belief, Trust 170 was created by Edgar Construction and/or

Build Realty, or an agent thereof, for the purpose of facilitating the transfer of real

property.

75. On December 23, 2016, Edgar Construction conveyed the CPM Property to itself

as Trustee of Trust 170, under which CPM is the listed beneficiary.

76. Upon information and belief, the CPM Property is the only corpus of Trust 170.

77. Defendants represented to Robinson that she could not purchase the CPM

Property as an individual, but rather, could only purchase the CPM Property through

CPM.

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78. Defendants and/or CPM executed several contracts and/or agreements that

memorialized the conveyance of the CPM Property, including (1) a General Warranty

Deed, (2) an Open End Mortgage and Security Agreement, (3) a Balloon Payment

Promissory Note (with an Addendum Additional Language for Promissory Note), (4) a

Combined Security Agreement and Assignment of Rents and Leases, (5) a UCC

Financing Statement Description of Collateral Fixtures, Etc., (6) a Beneficiarys

Undertaking, (7) a Borrowers Affidavit, (8) a Memorandum of Trust, (9) a Trust

Agreement, (10) a Construction Loan Agreement with an attached Greenleaf Funding

Escrow Draw Policy, (11) a Collateral Assignment of Beneficial Interest, (12) a Consent

and Agreement of Holder of Power of Direction, (13) a Land Trustees Receipt and

Agreement, and (14) a Compliance Agreement and Limited Power of Attorney, along

with standard closing documents (all of the contracts and/or agreements referenced in this

Paragraph are collectively referred to as the CPM Transaction throughout this

Complaint). True and accurate copies of the CPM Transaction contracts and/or

agreements are collectively attached hereto as Exhibits P through EE. Any other

contracts and/or agreements executed as part of the purported transfer or conveyance of

the CPM Property are not in CPMs possession.

79. The CPM Transaction improperly names Compound Management, Inc. as the

purchaser instead of Compound Property Management, LLC (i.e., CPM).

80. When Robinson alerted Defendants to the erroneous naming of Compound

Management, Inc., one or more Defendants, including Edgar Construction who is/was

CPMs fiduciary, threatened Robinson with additional closing costs and associated fees if

she insisted upon amending the documents to include the proper and accurate name.

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81. Through the CPM Transaction, Edgar Construction (as the conveyor), conveyed

the CPM Property to itself (as the conveyee), as Trustee of Trust 170, for the benefit of

CPM as Beneficiary of Trust 170.

82. As part of the CPM Transaction, CPM paid a down payment in the amount of

$10,000.00.

83. Additionally, after the CPM Transaction, CPM used its own funds (i.e., not those

held in escrow as part of the CPM Transaction) to make repairs and/or improvements to

the CPM Property, including new flooring, new paint, a new screen door, new carpet,

new appliances, and required plumbing repairs. CPM also paid utilities and maintained

the CPM Property, and made several interest payments to Build Realty.

84. Build Realty accepted CPMs interest payments.

85. Upon information and belief, Edgar Construction (as the conveyee) did not pay

any down payment or other consideration as part of the CPM Transaction.

86. Build Realty dba Greenleaf, a closely affiliated entity of Edgar Construction,

financed the CPM Transaction (loaned the ARV).

87. CPM is obligated under the CPM Transaction contracts and/or agreements to

make eighteen monthly payments to Build Realty, beginning February of 2017 and

ending June of 2018, followed by a balloon payment for the remaining principal plus

interest due under the loan executed under the CPM Transaction.

88. Per the CPM Transaction, Defendants became the conveyor, the conveyee, the

Trustee of Trust 170, the Beneficiary of Trust 170, and the lender with regard to CPM

Transaction upon any default by CPM.

89. Thus, CPM received little more than obligation in exchange for its consideration.

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90. CPM stopped paying its interest payments on the CPM Transaction in or around

May of 2017.

91. On or around June 2, 2017, Defendants sold the CPM Property to Gayle Stock,

Trustee by virtue of a fiduciary deed.

92. The $31,500 purchase price for the June 2, 2017 sale of the CPM Property

exceeded what CPM owed under the CPM Transaction by $4,600.00.

93. Defendants did not notify CPM of the June 2, 2017 sale of the CPM Property.

94. Defendants did not obtain CPMs consent to sell the CPM Property.

95. After CPM stopped making its interest payments under the CPM Transaction,

Defendants retained the CPM Property, retained all funds paid by CPM through and after

the CPM Transaction, and benefited from all improvements to the CPM Property that

CPM made or paid for when they sold the CPM Property on June 2, 2017.

96. Defendants did not foreclose on the CPM Property.

97. CPM did not execute a deed in lieu of foreclosure in favor of Defendants.

98. CPM never signed any documents releasing its interest in the CPM Property,

aside from the Collateral Assignment of Beneficial Interest, executed at the time of the

CPM Transaction in December of 2016 (which unlawfully eliminated CPMs right to

redemption).

99. Edgar Construction did not offer to pay CPM for any of its improvements sold

with the CPM Property, for which CPM paid using its own funds, including but not

limited to appliances, carpet, and a new screen door.

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100. Edgar Construction did not offer to pay CPM any portion of the proceeds derived

from the sale of the CPM Property, including the $4,600.00 difference between the sale

price and the amount that CPM purportedly owed under the CPM Transaction.

101. Upon information and belief, Defendants made a greater profit by retaining

CPMs down payment, the CPM Property, and the value of improvements made thereto

upon CPMs alleged default than they would have made had CPM not defaulted.

COUNT I- FRAUD

102. Paragraphs 1 through 101 are hereby incorporated as though set forth fully herein.

103. Edgar Construction held itself out as being a licensed trust business, authorized to

transact trust business in the State of Ohio, by structuring the Transactions as it did,

conveying properties to itself as Trustee of Trust 129, Trust 170, and other trusts,

purportedly for the benefit of Plaintiffs, holding title to the properties in trust, and

providing fiduciary services as a business by serving as trustee and receiving

compensation for the same.

104. Upon information and belief, Edgar Construction regularly transacts trust business

by calculating and executing other similarly structured transactions throughout Ohio.

105. Edgar Construction is not duly licensed as a trust business authorized to transact

trust business in the State of Ohio.

106. Edgar Construction knew or should have known that it was required to be

licensed as a trust business authorized to transact trust business in the State of Ohio as

early as April of 2015 when it was alerted to such fact through counsel. As Edgar

Constructions agent, its counsels knowledge is imputed to Edgar Construction.

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107. Defendants lacked the authority to structure the Transactions as they did,

including creating the trusts, holding the real property in trust, and providing fiduciary

services by serving as trustee.

108. Because Defendants were never authorized to structure or execute the

Transactions under Ohio law, Defendants knowingly and fraudulently conducted business

as an unlicensed trust business.

109. Defendants conduct in holding themselves out as being authorized to act as a

trust business was material to the Transactions, in that it directly implicates the way in

which the Transactions were structured and Defendants authority to so structure the

Transactions.

110. Plaintiffs justifiably relied on Edgar Constructions misrepresentations (through

its conduct) to their detriment. By acting as a trust business without being duly licensed

as such, the Defendants Transactions lacked the statutorily required oversight from any

regulatory authority. Moreover, Plaintiffs trusted and relied upon Edgar Construction to

act in their best interest as their fiduciary.

111. Defendants conned Plaintiffs, unknowingly, into completing fraudulent

Transactions with no apparent method of recourse.

112. Defendants purpose in devising the fraudulent Transactional structure was an

attempt to immunize Defendants from any potential action or recourse from Plaintiffs by

divesting Plaintiffs of any opportunities to cure any default or redeem their respective

properties.

113. As a result of Plaintiffs detrimental reliance on Defendants misrepresentations

(through Defendants conduct) as to their licensure as a trust business and authority to

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structure and execute the Transactions, Plaintiffs were forced to relinquish their

respective properties, in which they had invested substantial time and money. They have

incurred damages in excess of the jurisdictional amount, to be proven at trial, including

but not limited to their down payment, their interest payments made before default,

equity that they built in their respective properties, funds used to maintain the properties

and/or pay its utilities, funds used to improve the properties, and/or the excess proceeds

realized from Defendants subsequent sale of the properties.

114. In contrast, Defendants profit from their fraudulent and unlawful Transaction

structure.

COUNT II- BREACH OF FIDUCIARY DUTIES


(Plaintiffs v. Edgar Construction)

115. Paragraphs 1 through 114 are hereby incorporated as though set forth fully herein.

116. Plaintiffs were all beneficiaries under trusts for which Edgar Construction served

as trustee.

117. As trustee, Edgar Construction owed certain fiduciary duties to Plaintiffs, all of

which are/were beneficiaries under such trusts, including a duty to administer the trust in

good faith and in accordance with the interests of the beneficiary and a duty of loyalty

(which prohibits self-dealing), among others.

118. Edgar Construction engaged in self-dealing and breached its fiduciary duties of

loyalty and good faith to Plaintiffs by:

a) conveying the properties to itself as trustee of trusts, under which Plaintiffs

are/were a beneficiary, for a significantly higher price (thereby profiting from

that conveyance alone) and under very harsh, one-sided, and unfavorable

terms;

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b) requiring Plaintiffs to execute the Collateral Assignment of Beneficial Interest

in favor of Build Realty, impermissibly eliminating their right to redemption

in violation of Ohio law;

c) selling the properties without giving notice to or obtaining consent from

Plaintiffs, who held/hold a beneficial interest in those properties, as to the

sale;

d) stripping Plaintiffs of their interest in, and all equity built in, their respective

properties in response to their defaults without opportunity to cure or redeem

the properties;

e) failing to compensate Plaintiffs for their interest in their respective properties,

the equity they built in the properties, their down payment, their interest

payments, the utilities they paid for the properties, maintenance of the

properties over the course of several months, or improvements they made to

the properties; and

f) capitalizing off Plaintiffs inability to comply with the extremely harsh and

one-sided terms of the Transactions that Defendants structured.

119. Defendants, including Edgar Construction, profited from their fraudulent and

unlawful Transaction structure, as well as Plaintiffs inability to comply with the hostile

terms of the Transactions (e.g., the high interest rate, the short period of time for making

payments before the balloon payment is due, etc.), and from the financial hardship

Plaintiffs incurred in trying to improve their respective properties in compliance with the

Transactions strict time-frame. As such, Defendants, including Edgar Construction,

profited from Plaintiffs defaults.

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120. Defendants, including Edgar Construction, also profited from improvements that

Plaintiffs made to the properties.

121. One or both Defendants, or an agent thereof, helped plan, design, draft, create, or

structure the Transactions from which Defendants, including Edgar Construction,

profited.

122. As a direct and proximate result of Edgar Constructions breach of its fiduciary

duties to Plaintiffs, Plaintiffs are damaged in excess of the jurisdictional amount, to be

proven at trial.

COUNT III - DECLARATORY JUDGMENT AS TO THE VALIDITY OF THE


TRANSACTION

123. Paragraphs 1 through 122 are hereby incorporated as though set forth fully herein.

124. The unconscionable and fraudulent terms of the Transactions and their numerous

included contracts and/or agreements imposed and continue to impose very harsh and

one-sided burdens on Plaintiffs. The unconscionable terms and conduct advanced through

this Transaction include:

a) charging unreasonably high loan origination fees, inspection fees

(purportedly conducted by one or more Defendants), administrative fees,

interest rates and closing costs;

b) requiring Plaintiffs to improve and resell at a profit (i.e., flip) their

properties before the balloon payment is due in eighteen months, or,

otherwise, pay the full amount of the loan;

c) fraudulently structuring their Transactions in an attempt to circumvent Ohio

foreclosure laws;

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d) making the bringing of any action by Plaintiffs against Defendants an event of

default, such that Plaintiffs cannot enforce their rights under the Transaction

without forfeiting their beneficial interest and accelerating the full amount of

the loan;

e) impermissibly requiring Plaintiffs to waive their right to redemption at the

time of the Transactions through the Collateral Assignment of Beneficial

Interest, which, in turn,

i. robs Plaintiffs of the rights they would realize under Ohios

redemption statute (R.C. 2329.33), including the right to redeem their

properties before sale; and

ii. robs Plaintiffs of the proceeds that could have been derived from a

foreclosure sale in the event they were not able to redeem the

properties from sale (i.e., the difference between the sale price and the

amount owed under the Transaction); and

f) retaining the properties, all equity built in the properties, all down payments or

funds contributed to the properties, including high interest payments, all

improvements made to the properties, and the benefit of months worth of

maintenance and utility payments for the properties, all without giving

Plaintiffs an opportunity to cure, an opportunity to redeem the properties, or a

method of recourse against Defendants.

125. Upon information and belief, all of the numerous Transaction contracts and/or

agreements were drafted by one or both Defendants or an agent thereof.

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126. Most, if not all, of the Transaction contracts and/or agreements contain very small

font over several pages. In total, the Transaction contracts and/or agreements exceed sixty

(60) pages, in addition to the closing documents.

127. Many of the Transaction contracts and/or agreements contain related and/or

conflicting terms, incorporating and referring back and forth to other contracts and/or

agreements.

128. The nature and structure of the Transaction is very complex, even for

sophisticated parties.

129. Plaintiffs lack(ed) Defendants level of sophistication and experience in real estate

investing, especially under this particular Transaction structure.

130. Defendants are sophisticated investment entities, which regularly execute

similarly structured Transactions.

131. The parties were not of equal bargaining power or sophistication.

132. Upon information and belief, the terms of the Transaction contracts and/or

agreements and the conduct advanced by such terms (e.g., the sale of the properties,

robbing Plaintiffs of the excess proceeds from foreclosure) are unconscionable and/or

against public policy.

133. None of the Defendants, including Edgar Construction, which owed fiduciary

duties to Plaintiffs, acted in the interest of anyone other than Defendants, notwithstanding

that the Transactions were not arms length transactions. Instead, they acted in

furtherance of their own interests, even in contravention of Ohio laws and dereliction of

their fiduciary duties.

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134. Additionally, Edgar Constructions conveyance of the real property to itself as

trustees of trusts under which Plaintiffs were beneficiaries constitutes self-dealing and is

intrinsically against public policy.

135. Plaintiffs are damaged in excess of the jurisdictional amount as a result of the

Transactions, which are unconscionable, illegal, and/or contrary to public policy.

136. As such, Plaintiffs request that the Court declare the Transaction and each and

every contract and/or agreement included therein, void for unconscionability, illegality,

and/or as against public policy and award Plaintiffs compensatory and punitive damages

for the same.

COUNT IV VIOLATION OF RIGHT TO REDEMPTION

137. Paragraphs 1 through 136 are hereby incorporated as though set forth fully herein.

138. Ohio law recognizes both a statutory (R.C. 2329.33) and equitable right to

redemption.

139. Ohio law does not allow a mortgagor to waive its right to redemption as the time

of the transaction.

140. Even waivers of the right to redemption that occur after the transaction (such as a

deed in lieu of foreclosure executed at the time of default) are heavily scrutinized and

will not be enforced where inequitable.

141. Plaintiffs were obligated as mortgagors under the Transaction documents.

142. The Collateral Assignment of Beneficial Interest purports to act as a waiver of

Plaintiffs right to redemption by transferring their beneficial interest in their respective

properties to Build Realty immediately upon default without any opportunity to redeem

the properties.

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143. The Collateral Assignment of Beneficial Interest was executed at the same time as

the rest of the Transaction purporting to transfer the properties, including the mortgages.

144. Therefore, the Collateral Assignment of Beneficial Interest eliminates Plaintiffs

right to redemption in violation of Ohio law.

145. As a result of Defendants improper clogging of Plaintiffs right to redemption,

Plaintiffs have been damaged in excess of $25,000, in an amount to be proven at trial.

COUNT V UNJUST ENRICHMENT

146. Paragraphs 1 through 145 are hereby incorporated as though set forth fully herein.

147. Plaintiffs paid for various improvements at their respective properties with their

own funds.

148. Defendants sold the properties with all such improvements.

149. The value of the improvements increased the value of the properties.

150. Defendants had actual knowledge of all such improvements.

151. Defendants retained the proceeds from the sale of the properties including the

proceeds derived from and directly attributable to the improvements made by Plaintiffs.

152. Defendants did not compensate Plaintiffs for any of the improvements.

153. Under the circumstances, it would be unjust to allow Defendants to retain the

proceeds derived from the improvements.

154. As such, Plaintiffs have been damaged in excess of $25,000, in an amount to be

determined at trial.

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WHEREFORE, Plaintiffs, individually, collectively, and on behalf of all other persons

similarly situated, pray for the following relief against Defendants Build Realty and

Edgar Construction:

A. Judgment against Defendants Build Realty and Edgar, jointly and severally, in

excess of the jurisdictional amount, such amount to be proven at trial, in

compensatory damages, including but not limited to all down payments and

excess proceeds, plus interest;

B. Disgorgement of all profits that Edgar Construction, as trustee, realized at

Plaintiffs expense;

C. Punitive damages;

D. Attorneys fees;

E. Court costs;

F. A Declaration that the Transactions, and each and every contract and/or

agreement included therein, are void for unconscionability, illegality, and/or as

against public policy;

G. And for all such other relief at law or in equity, which this Court deems proper

and just.

Respectfully submitted,

/s/ Casey A. Taylor

___________________________
Christopher P. Finney (0038998)
Justin C. Walker (0080001)
Casey A. Taylor (0095966)
Finney Law Firm, LLC
4270 Ivy Pointe Blvd., Suite 225
Cincinnati, OH 45245
(513) 943-6655

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(513) 943-6669 (fax)
Chris@FinneyLawFirm.com
Justin@FinneyLawFirm.com
Casey@FinneyLawFirm.com
Attorneys for Plaintiffs

CERTIFICATE OF SERVICE

I hereby certify that the foregoing proffered Complaint with Class Allegations was served

with the Supplemental Motion to Substitute Complaint with Class Allegations in accordance

with Civ.R. 5(B)(2)(f) on this 6th day of October 2017, via electronic mail, upon:

Alex S. Rodger
Bingham Greenebaum Doll LLP
255 E. Fifth Street, Suite 2350
Cincinnati, Ohio 45202
arodger@bgdlegal.com
Attorney for Defendants

/s/ Casey A. Taylor

__________________________
Casey A. Taylor (0095966)

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