A federal judge has ordered two Bethesda-based real estate developers to repay a Seattle company $2.4 million in connection with a scam in which the developers lured the investor into a condominium project by pretending there were more potential buyers than really existed.
Brothers Scott A. Nordheimer, 46, and Gary H. Nordheimer, 52, who pleaded guilty earlier this year to three wire fraud violations in support of the scam, also were sentenced last week by U.S. District Judge Albert V. Bryan Jr. in Alexandria to serve 24 and 27 months in prison, respectively.
The Nordheimers have been active in the Washington area real estate market since the early 1980s. Among their projects were the renovations of the Georgetown Inn and Georgetown Omni, officials said.
John W. Nields, an attorney for the Nordheimers, declined to comment on the case.
The fraud centered on Yarrow Hotel, a ski resort in Park City, Utah, which the Nordheimers bought and hoped to convert to time-share condominiums.
In hopes of attracting financial support from Security Properties Inc., a Seattle-based developer, the Nordheimers inflated consumer interest in the condominium by forging signatures on 40 bogus purchase agreements from buyers who did not exist, representing the commitment of an imaginary $1.7 million, court records said. Legitimate prospective buyers had reserved $4 million worth of condominium units.
Security Properties then lent the Nordheimers $2.5 million for the project. Because of complications with the title to the Yarrow property, no sales were completed, the Nordheimers' primary lender foreclosed and Security Properties lost its investment. About 200 employees and sales associates of Long & Foster Real Estate Inc. celebrated the company's 25th anniversary outside its Fairfax headquarters this week.
Co-founder and President P. Wesley Foster told the crowd Monday he had no idea 25 years ago that the company would be so successful.
One of the largest independent real estate companies in the country, Long & Foster reported sales volume of more than $7 billion last year, with 6,000 agents in the mid-Atlantic region. In April, the company had its best month ever, with $821 million in sales, Foster said.
The company now sells more new homes than resale houses, Foster said, with new-home sales up 54 percent this month over last year. Long & Foster has offices at 150 new-home sites and represents another 150 developments at its branch offices.
Foster predicted a growing number of Long & Foster buyer agents, who, unlike the traditional real estate agent, represent solely the buyer in a sales transaction. The rise in buyer agents comes at the same time more states are requiring agents to disclose on whose behalf they're working.
"People before had not realized that agents were working for the seller," Foster said. "We're already educating our people so they won't get into trouble under the disclosure laws, whether they're buyer agents, dual agents or seller agents."
The company also plans to continue expansion in the mid-Atlantic states, Foster said, with a focus on the areas around its strongholds in Washington, Baltimore and Norfolk. Long & Foster had the biggest share of the residential real estate market in Washington last year and the second largest in Baltimore and Norfolk.
"We may reach out to Richmond this year," Foster said. "We've been talking to a couple of companies there."
When a Grand Rapids, Mich., man was shot to death in the middle of the day, real estate agent David Hartger thought he heard opportunity knocking.
But a letter written by Hartger to 110 residents of the neighborhood where the shooting occurred, offering to help them sell their homes, drew outrage from residents and an apology from his company.
The letter read, in part: "With the recent increase of violence in the neighborhood & fears of street gangs in the area, many homeowners are wondering if it is safe to raise a family, or even own a home in your neighborhood."
The letter offended residents, who saw it as preying on their fears after the April 14 slaying of a 29-year-old man as he waited outside a grocery store.
"It was using a neighborhood's tragedy as a money-making gimmick," said Mary Diskin, director of the Roosevelt Park Neighborhood Association.
When officials at Pearson-Cook Co. learned of the letter, they moved quickly to apologize for what they called a lapse in judgment by a gung-ho new employee.
Company President Thomas Kuiper said the company does not use fear to market houses and that there is an understanding in the industry that this kind of sales tactic is wrong.
Hartger apologized too, explaining that he saw the situation as a chance to get his name known.
"My intentions weren't to do any harm," he said. "My intention to promote myself was at a bad time and a bad decision, and the wording of it was bad too."
The Grand Rapids Association of Realtors is investigating the case, said Julia Kars, executive vice president.
Hartger said the letter generated one lead, but Pearson-Cook passed it on to another realty company to avoid profiting from the letter.
IN THE BUSINESS ... Sales of existing homes remained stable in April from one year earlier, according to the National Association of Realtors. On a year-to-date basis, sales of existing homes rose slightly. Through April, 1.054 million units had been sold nationwide, a 0.9 percent increase over the total for the first four months of 1992. The association recorded a seasonally adjusted annual sales rate of 3.46 million existing single-family homes in April compared with 3.49 million in April 1992. April's home sales rate rose 2.7 percent nationwide compared with a month ago ... There were 277 homes sold last month in Prince William County, compared with 266 sold in April 1992, according to the Prince William Association of Realtors. The average price was $126,000. In the first four months of 1993, home sales totaled 939, compared with 1,148 in the same period last year ... Single-family residential housing permit volume nationwide increased 1.5 percent in the first quarter for the seventh consecutive quarterly gain, according to U.S. Housing Markets, a trade publication. It was the smallest year-to-year quarterly improvement since the housing recovery began in mid-1991. Weak multifamily housing development dragged the first quarter's total permit numbers below the same period last year, ending a string of five consecutive quarters of total residential construction growth. Post-hurricane rebuilding in Florida and increased activity in the Oil Patch and Mountain states accounted for most of the gains ... April contracts for future construction in the District totaled $26.6 million, an 83 percent drop from the April 1992 total of $159.2 million, according to the F.W. Dodge Division of McGraw-Hill Inc. Residential contracts last month reached $2.7 million, compared with $916,000 last year ... To encourage career opportunities for minorities in banking, the Mortgage Bankers Association of America announced plans for an industry-wide summer minority student internship program. The association called on member companies to establish summer intern programs for minority students ... At Lee's Hill, a 1,500-acre golf course community outside Fredericksburg, Va., there was enough builder demand for 32 lots designated for homes costing $130,000 to $150,000 that the developers held a lottery to decide who could build where in the Oakmont section.