Compound Property Management, LLC Et Al. v. Build Realty, Inc., Et Al, First Amended Complaint

Case: 1:19-cv-00133-DRC Doc #: 145-3 Filed: 07/13/20 Page: 1 of 151 PAGEID #: 2727
EXHIBIT
A
UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
COMPOUND PROPERTY MANAGEMENT : Case No. 1:19-CV-00133

LLC :
: Judge Douglas R. Cole
and :
:
LEONE1, LLC :
:
and :
:
R & G CINCY INVESTMENTS LLC :
:
and :
: FIRST AMENDED COMPLAINT WITH
ELEVATED BY EVA LLC : CLASS ALLEGATIONS
: (WITH JURY DEMAND)
and :
:
CORY HOMES, LLC dba RANGER HOMES, :
LLC :
:
and :
:
RATIO MODELS LLC :
:
and :
:
ELINJAE PARTNERS LLC :
:
and :
:
PYRAMID INVESTMENT GROUP LLC :
:
and :
:
MAGGY S REALTY LLC :
:
Plaintiffs, :
:
v. :
:
BUILD REALTY, INC. dba GREENLEAF :
FUNDING :
:
and :
:
EDGAR CONSTRUCTION LLC :
:
and :
:
CINCY CONSTRUCTION, LLC :
:
and :
:
MCGREGOR HOLDINGS, LLC :
:
and :
:
COWTOWN HOLDINGS LLC :
:
and :
:
BUILD NKY LLC :
:
and :
:
GREENLEAF SUPPORT SERVICES LLC :
:
and :
:
BUILD SWO LLC :
:
and :
:
GARY BAILEY, as Trustee of the Bailey :
Investment Trust :
:
and :
:
GEORGE TRIANTAFILOU, as Trustee of the :
Bailey Investment Trust :
:
and :
:
GARY BAILEY, as Beneficiary of the Bailey :
Investment Trust :
:
and :
2
:
G2 TECHNOLOGIES LLC :
:
and :
:
GT FINANCIAL LLC :
:
and :
:
FIVE MILE CAPITAL PARTNERS LLC :
:
and :
:
SGIA RESIDENTIAL BRIDGE LOAN :
VENTURE IV LP, f/k/a FIVE MILE CAPITAL :
RESIDENTIAL BRIDGE LOAN VENTURE IV :
LP :
:
and :
:
SMITH, GRAHAM & CO. INVESTMENT :
ADVISORS, L.P. :
:
and :
:
SGIA RESIDENTIAL BRIDGE LOAN :
VENTURE V LP :
:
and :
:
FIRST TITLE AGENCY, INC. :
:
and :
:
GEORGE TRIANTAFILOU, Individually :
:
and :
:
GARY BAILEY, Individually :
:
and :
:
ROBERT SCOTT WHITESIDE, Individually :
:
and :
:
3
PAT CONNERS, Individually :

:
Defendants. :
:
N c e P ai iff , C d P e Ma age e LLC ( CPM ), Leone1, LLC
( Le e1 ), R & G Cincy Investments, LLC ( R&G ), E e a ed b E a LLC ( E e a ed ), Ra ge
H e , LLC ( Ra ge ), Ra i M de LLC ( Ra i ), E i jae Pa e LLC ( E i jae ), P a id
I e e G LLC ( P a id ), a d Magg Rea LLC ( Magg ), (c ec i e ,
P ai iff ), b a d through the undersigned counsel, and for their First Amended Complaint with
Ca A ega i ( A e ded C ai )i he ab e-captioned matter state as follows:
I. INTRODUCTION
1. Build Realty, Inc. dba Greenleaf Funding ( B i d Rea , B i d, G ee eaf
F di g ) is at the center of a long-running real-estate scam. Along with a bevy of co-conspirators,
it bilked putative class members/i e (he eaf e I e ) i g bai -and-switch tactics,
duplicitous real estate agents, calculated misrepresentations, unlawful trust structures, self-dealing,
falsified documents, violations of basic Ohio mortgagor rights, intentionally low rehab estimates,
and lenders agreeing to violate the law for large e ( he B i d Sche e ). The B i d Sche e,
upon information and belief, continued from February 1, 2013 through April of 2019 (the
Re e a Ti e Pe i d ).1 In recent years, as counsel for Plaintiffs made it abundantly clear to
Defendants that what they were doing was unlawful, Defendants repeatedly refused to voluntarily
cease or decrease their activities, but instead endeavored to increase them and, thus, increased the
1
Unless stated otherwise, all allegations of this Amended Complaint relate to the Relevant Time Period.
4
harm to Investors.2 I a i ece ha B i d c d c ed ceased, and only
because others in the community and industry have become aware of its fraudulent tactics. Yet the
resulting harm to hundreds of Investors remains.
2. De i e Defe da a e ac i e a dfa d e c cea he a e a d
nature of the Build Scheme, both in this action and in its state-court predecessor, Plaintiffs believe
that what they have finally received to date provides a fairly clear picture of the scheme.
3. This is a proposed class action brought by nine companies that were Investors, on
behalf of hundreds of bilked Investors. Each of the Plaintiffs were victims of the identical
fraudulent and illegal acts that comprise the primary bases of the Build Scheme, as further
described below. Each Plaintiff suffered injury identical in nature to the other Plaintiffs, as well as
to other Investors that are members of the Class. Defendants have made millions of dollars from
the Build Scheme at the expense of Plaintiffs and Investors. Plaintiffs bring suit for, inter alia,
violations of 18 U.S.C. 1961 et seq. (Federal Racketeer Influenced and Corrupt Organizations
( RICO )), a e a a dc a i ai , a d dec a a j dg e . P ai iff eek
c e a a d eb e da age , dec a a e ief, a e fee , i i e da age , a d a
other relief deemed appropriate by the Court.
II. JURISDICTION AND VENUE
4. This Court has subject matter jurisdiction over this action under 28 U.S.C. 1332, as
the amount in controversy in this class action exceeds the sum or value of $5,000,000 exclusive of
interests and costs and minimal diversity among the plaintiff class and Defendants is met, and
under 28 U.S.C. 1331, as this Federal RICO action arises out of a United States law. In addition,
2
See, e.g., https://www.eventbrite.com/e/nky-house-flipping-brunch-registration-49855449993#, announcing a
Se e be 15, 2018 b ch a d I e ee a d g ee i N he Ke ck he e B i d Rea a d G ee eaf
Funding are excited to invite you to join us in celebrating the Opening of our NKY Brokerage . . . .
5
because the state claims are so related to the Federal RICO claim that they form part of the same
case or controversy, the Court has supplemental subject matter jurisdiction over the Ohio claims
under 28 U.S.C. 1367.
5. Venue is proper in this Court pursuant under 18 U.S.C. 1965(a) because several of
the named Defendants to the Federal RICO allegations reside, have agents, and/or transact their
affairs in this District, and under 28 U.S.C. 1391 because a substantial part of the events or
omissions giving rise to the claims occurred here.
6. The Court has personal jurisdiction over all Defendants under Federal Rule of Civil
Procedure 4 and Ohio R.C. 2307.382 because, inter alia, Defendants caused tortious injury to
Plaintiffs and class members in the state of Ohio. In addition, each Defendant has intentionally
availed itself of the laws of Ohio by transacting business throughout the state, and by deriving
substantial benefit and revenue from the transactions that caused tortious injury. Defendants have
advertised, marketed, promoted, and/or profited off of the Build Scheme in Ohio, which is based
on several Defendants having an interest in, using, and/or possessing real property in Ohio. As
such, all Defendants could anticipate being called into court in Ohio, and personal jurisdiction over
all Defendants does not offend traditional notions of fair play and substantial justice. Plaintiffs
additionally have personal jurisdiction over the out-of-state Defendants under 18 U.S.C. 1965.
III. PARTIES
A. PLAINTIFFS
7. Plaintiff CPM is an Ohio limited liability company. CPM is owned and managed
by Theresa Robinson. In 2016, Ms. Robinson formed CPM and became an Investor in and victim
of the Build Scheme, investing in real property located at 1915 Acorn Drive, Cincinnati, Ohio
45231. In 2017, due to the actions of Defendants, CPM was unable to continue making interest
6
payments to Build pursuant to the promissory note that Build required it to sign, and Build took
the property without any judicial procedure, retaining all funds paid by CPM and the excess
proceeds3 from the subsequent sale. CPM is a member of both the putative Class and Subclass,
both of which are described below.
8. Plaintiff Leone1 is an Ohio limited liability company. Leone1 has two members
Richard Hardin and Catherine Brill. In 2014, Mr. Hardin and Ms. Brill formed Leone1 and became
Investors in and victims of the Build Scheme, investing in real property located at 5121 Leona
Drive, Green Township, Ohio 45238. In 2015, due to the actions of Defendants, Leone1 was unable
to continue making interest payments to Build pursuant to the promissory note that Build required
it to sign, and in March 2015, Build took the property without any judicial procedure, retaining all
funds paid by Leone1 and the excess proceeds from the subsequent sale. Leone1 is a member of
both the putative Class and Subclass, both of which are described below.
9. Plaintiff R&G is an Ohio limited liability company. R&G has two members
Ronnie and Gwendolyn Broadnax. In 2016, the Broadnaxes formed R&G and became Investors
in and victims of the Build Scheme, investing in real property located at 7801 Quarter Maine
Avenue, Cincinnati, Ohio 45236. In 2017, due to the actions of Defendants, R&G was unable to
continue making interest payments to Build pursuant to the promissory note that Build required it
to sign, and Build took the property without any judicial procedure, retaining all funds paid by
R&G and the excess proceeds from the subsequent sale. R&G is a member of both the putative
Class and Subclass, both of which are described below.
10. Plaintiff Elevated is an Ohio limited liability company. Elevated has one member
Princess Crenshaw. In 2018, Ms. Crenshaw formed Elevated and became an Investor in and
3
As detailed and required under Ohio Revised Code § 5723.11.
7
victim of the Build Scheme, investing in real property located at 6326 Hamilton Avenue,
Cincinnati, Ohio 45224. Due to the actions of Defendants, Elevated lost thousands, or tens of
thousands, of dollars relative to its transaction and investment with Build.4 Elevated is a member
of the putative Class, as described below.
11. Plaintiff Ranger is an Ohio dba of a Nevada limited liability company, Cory Homes,
LLC, authorized to conduct business in Ohio. Ranger has two members Paulette and David Linn.
In 2016, the Linns registered Ranger in Ohio and became an Investor in and victim of the Build
Scheme, investing in real property located at 4349 Virginia Avenue, Cincinnati, Ohio 45223. In
2018, due to the actions of Defendants, Ranger was unable to continue making interest payments
to Build pursuant to the promissory note that Build required it to sign, and Build took the property
without any judicial procedure, retaining all funds paid by Ranger and the excess proceeds from
the subsequent sale to another Investor. Ranger is a member of both the putative Class and
Subclass, both of which are described below.
12. Plaintiff Ratio is an Ohio limited liability company. Ratio has one member
Jonathan Hofmann. In 2016, Mr. Hofmann formed Ratio and, in 2018, became an Investor in and
victim of the Build Scheme, investing in real property located at 3423 Algona Place, Cincinnati,
Ohio 45207. Due to the actions of Defendants, Ratio lost tens of thousands of dollars relative to
its transaction and investment with Build. Ratio is a member of the putative Class, as described
below.
4
Whi e Defe da d ike E e a ed a ac ion as a success because it received proceeds from the end
sale of the property, the ceed ecei ed e e e ha E e a ed d a e , h h fi e e
payments, and out-of-pocket rehab expenses. Thus, Elevated suffered a net loss. Upon information and belief, the
same is true of the vast majority of Investors who are fortunate enough to make it to this end-stage of the Build
Scheme.
8
13. Plaintiff Elinjae is an Ohio limited liability company. Elinjae has one member
Jeffrey Randall. In 2018, Mr. Randall formed Elinjae and became an Investor in and victim of the
Build Scheme, investing in real property located at 228 Eaton Avenue, Cincinnati, Ohio 45013. In
2019, due to the actions of Defendants, Elinjae was unable to continue making interest payments
to Build pursuant to the promissory note that Build required it to sign, and Build took the property
without any judicial procedure, retaining all funds paid by Elinjae and the excess proceeds from
the subsequent sale to another Investor. Elinjae is a member of the putative Class and Subclass,
both of which are described below.
14. Plaintiff Pyramid is an Ohio limited liability company. Pyramid has one member
Fatima Peeples. In 2015, Ms. Peeples formed Pyramid and became an Investor in and victim of
the Build Scheme, investing in real property located at 4344 Clifford Road, Cincinnati, Ohio
45236. Due to the actions of Defendants, Pyramid lost tens of thousands of dollars relative to its
transaction and investment with Build. Pyramid is a member of the putative Class, as described
below.
15. P ai iff Magg i a Ohi i i ed iabi i c a . Magg ha e e be
Kevin Johnson. In 2018, Mr. Johnson formed Magg a d beca e a Investor in and victim of
the Build Scheme, investing in real property located at 1837 Sunnybrook Drive, Cincinnati, Ohio
45237. D e he ac i f Defe da , Magg e f h a d fd a eai e i
transaction and i e e i h B i d. Magg i a e be f he a i e Class, as described
below.
16. Each of the above Plaintiffs were injured, in the same way, by the primary frauds
of the Build Scheme, which were accomplished through uniform documented misrepresentations
and omissions.
9
B. INDIVIDUAL DEFENDANTS
17. Defe da Ga Bai e ( M . Bai e ) i a e ide f Ha i C y and, upon
information and belief, resides at 2716 Hyde Park Avenue, Cincinnati, Ohio 45209. Mr. Bailey is
named as a Defendant individually and as co-trustee and sole beneficiary of the Bailey Investment
Trust (which, upon information and belief, is or was the sole member and owner of Build Realty).
As further discussed below, Mr. Bailey was at the center of the Build Scheme, and held multiple
leadership positions with Build.
18. Defe da Ge ge T ia afi ( M . T ia afi ) i a e ide f Ha i
County and, upon information and belief, resides at 40 Muirfield Drive, North Bend, Ohio 45052.
Mr. Triantafilou is a co-trustee of the Bailey Investment Trust (which, upon information and belief,
is or was the sole member and owner of Build Realty). Mr. Triantafilou, as further discussed below,
maintained ownership and/or leadership roles in Build and is part of the Build leadership team that
carried out the Build Scheme.
19. Defendant Robert Sc Whi e ide ( M . Whi e ide Sc Whi e ide ) is a
resident of Georgia who regularly conducts business in Ohio and, upon information and belief,
resides at 4630 Plantation Mill Trail, Buford, Georgia 30519. Mr. Whiteside, as further discussed
below, maintained ownership and/or leadership roles in Build and is part of the Build leadership
team that carried out the Build Scheme.
20. Defe da Pa C e ( M .C e ) i a e ide f Ha i C a d, upon
information and belief, resides at 3140 Fiddlers Green Road, Cincinnati, Ohio 45248. Mr. Conners
is an employee and agent of First Title Agency, Inc. ( Fi Ti e ), which Investors were
e i ed ea a f he B i d Sche e. M . C e ,a f he di c ed be , ka
active role in carrying out the Build Scheme, particularly through his handling of Investor closings.
10
C. BUILD DEFENDANTS
21. Defendant Build is an Ohio corporation with its principal place of business in
Hamilton County, at 9468 Towne Square Avenue, Cincinnati, Ohio 45242. Upon information and
belief, the Bailey Investment Trust is an Ohio trust and is the current or former sole owner of Build.
Alternatively, and upon information and belief, G2 Tech gie LLC ( G2 Technologies ) is the
current or prospective sole owner of Build, or held itself out as the owner of Build. Upon
information and belief, Mr. Triantafilou, Stephen King (by and through a trust not named
herein),5 and Mr. Whiteside are the owners of G2 Technologies, with Mr. Bailey now acting as a
c a .
22. Upon information and belief, Build and the related Build entities named as
Defendants herein (Edgar Construction LLC, Cincy Construction, LLC, McGregor Holdings,
LLC, Cowtown Holdings LLC, Build NKY LLC, Build SWO LLC, and Greenleaf Support
Services LLC c ec i e i h B i d, he B i d C a ie ) ha e fi , c i g e funds,
have the same business address, have the same employees and independent contractors, provide
loans to one another without sufficient consideration, treat the assets of one as the assets of all, do
not regularly observe corporate formalities, and own interests in one another, such that they are all
alter egos of one another and of their principal, Mr. Bailey.
23. The purpose of the separate Build Companies was simply to allow Build to
purchase multiple properties simultaneously (or in close temporal proximity) to further advance
the Build Scheme, in which all Defendants herein were involved.
5
Upon information and belief, Stephen King filed bankruptcy in Georgia in 2018, and such bankruptcy remains
pending. Plaintiffs include this information solely for context and explicitly state that they are not seeking to assess,
collect, pursue, or recover relative to any claim against Mr. King, as they fully respect and intend to honor the
automatic stay protections afforded to Mr. King under 11 U.S.C. 362, as well as any other protections that have been
or may be invoked relative to his pending bankruptcy petition.
11
D. CO-CONSPIRATOR DEFENDANTS
24. Defe da GT Fi a cia LLC ( GT Financial ) i a Ohi i i ed iabi i
company, with two known members: George Triantafilou and Eleni Triantafilou. With full
knowledge of and active participation in the Build Scheme, detailed below, GT Financial provided
short-term transactional funding for the Build Scheme.
25. Defendant Five Mile Capital Partners, LLC is a Delaware limited liability company
that, through its management and control of Defendant SGIA Capital Residential Bridge Loan
Venture IV LP (f/k/a Five Mile Capital Residential Bridge Loan Venture IV LP) ( F d IV )
(collectively, with Five Mile Capital Partners, LLC, Fi e Mi e ), ha d e ubstantial business
with Build. With full knowledge of and active participation in the Build Scheme, detailed below,
Five Mile provided permanent financing for the properties involved in that scheme, periodically
cha i g g f a f Build to replace the short-term financing of GT
Financial.
26. Defendant Smith, Graham & Co. Investment Advisors L.P. is a limited partnership
with offices and partners in New York and Texas that, through its management and control of
Defendant SGIA Residential Bridge Loan Venture V LP ( Fund V ), (collectively, with Smith,
Graham & Co., S i h G aha ), ha d e b a ia b i e i h B i d. Wi h f k edge
and active participation in the Build Scheme, detailed below, Smith Graham provided permanent
financing for the properties involved in the Build Scheme, periodically purchasing groups of
f a f B id e ace he h -term financing of GT Financial. Five Mile and

6
S i h G aha a ec ec i e efe ed he ei af e a he Pe a e Le de . After the date
6
Smith Graham and Five Mile, through counsel, have insisted the correct parties to name for this action (which
contains no breach of contract claims) are the investment vehicle funds used by Smith Graham and Five Mile to carry
out their unlawful actions. Smith Graham and Five Mile, through counsel, have insisted that Smith Graham and Five
Mile and their employees and officers acted only as managers of the investment vehicle funds in carrying out the
12
that the Permanent Lenders purchased the loans (and, arguably, even before), the Permanent
Lenders retained all control over the loans and tasked Greenleaf Support Services LLC ( G ee eaf
S Se ice ) with servicing the a f he Pe a e Le de i a a de c i e
benefit.7
27. Defendant First Title is an Ohio for-profit corporation with offices in Hamilton
County. With full knowledge and active participation in the Build Scheme, detailed below, First
Title, in the course of providing closing services for Investors, furthered the frauds and injuries
suffered by Plaintiffs and other Investors.
IV. SUBSTANTIVE ALLEGATIONS
A. THE BUILD SCHEME
28. The Build Scheme described herein involved an agreement by the Defendants to
bait and hook prospective real estate investors i b i g a d fi i g properties, using Build
for all of their investing needs (including without limitation identifying properties, providing rehab
funds, and helping them sell the properties for great profits once completed). O ce h ked,
Defendants completely altered, i ched the deal at a two-step, double closing. At the first
closing Build (or one of the Build Companies) purchased the property from a third-party seller
(referred to herein as the Buy Side f he a ac i ). A he ec d c i g, hich typically
occurred the same day as the Buy Side closing, the Build Company sold the property to itself/Edgar
Construction LLC (another Build Company, efe ed he ei a Edga Construction ), as trustee
unlawful activities alleged. To avoid confusion, Plaintiffs in their Amended Complaint add the two investment vehicle
funds referred to by Smith G aha a d Fi e Mi e a d hei c e . C ec i e , a d aki g i acc P ai iff
alternative theories of liability, Smith Graham, Five Mile, and the two investment vehicle funds named herein are all
efe ed a Pe a e Le de .
7
The Permanent Lenders and Build/Greenleaf Support Services, LLC execute Loan Purchase and Sale Agreements
( L a PSA ) a d F S b e ici g Ag ee e ( FSA ) e a i e he Pe a e Le de ed e.
H e e , he Pe a e Le de e i he B i d Scheme is not limited to that which is set forth in such agreements.
13
of a trust under which the Investor purportedly became the beneficiary (while simultaneously
signing away all of its rights as beneficiary) ( efe ed he ei a he Sell Side f he
transaction). Both the Buy Side and the Sell Side closings were facilitated by First Title and Mr.
Conners. Each Defendant played a vital role in enabling and furthering the Build Scheme, despite
knowledge of its fraudulent nature and other associated illegalities.
29. Despite the written documents showing various Build Companies buying, selling,
and lending as part of the Build Scheme, the actual flow of money shows that the Build Companies
exist only as a façade. Payment for the Buy Side sale and for a portion of the Sell Side sale flowed
from GT Financial to First Title in one wire. Once the Build Companies had a sufficient number
of loans to pool and sell to a Permanent Lender, those companies would send payment delineating
both repayment to GT Financial and the exact amount of money that would be placed in an escrow
rehab account for the benefit of the Investors. The funds wired from the Permanent Lender were
initially wired to an account set up in the name of Greenleaf Support Services, with George
Triantafilou as signatory, but eventually the Permanent Lenders just began wiring the entire
amount to George Triantafilou and GT Financial, after which Mr. Triantafilou would electronically
transfer what he thought should be in the Rehab Escrow Account (defined below) into that account.
30. The Build Scheme operated in substantially similar form during at least the
Relevant Time Period when, upon information and belief, Build was forced to involuntarily
abandon certain aspects of the scheme upon local industry professionals and the public at large
learning of its illegal nature.
31. Despite their recent apparent abandonment of certain aspects of the scheme,
Defendants have caused wide-spread and pervasive harm to Plaintiffs and the putative Class they
14
seek to represent, by and through the Build Scheme, and that harm continues unredressed. The
Build Scheme worked as follows:
The Bait
32. Build, acting through Mr. Bailey or other agents, advertised itself through roadside
signs, websites, social media, direct mail, and seminars, all offering to show potential real estate
investors how ake e fi i g h e ih i e e d a d c edi check .
33. Below is a picture of a typical sign found throughout the greater Cincinnati area
this one photographed on September 27, 2018 at the intersection of Ridge Avenue and Ibsen
Avenue in Cincinnati, Ohio. The sign indicates that for $10,000 down, including rehab costs, an
interested person could rehab a home without a credit check.8 Build employed several people at a
time to place road signs identical to the one below all around the Greater Cincinnati, Dayton,
Columbus, and Northern Kentucky areas, with a goal of planting 75-100 signs per week. Between
2015 and mid-2018, Build planted more than 5,000 signs.
8
As of December 2017, Build was spending upwards of $1,000 per week on signs for Cincinnati, Northern Kentucky,
and Dayton.
15
34. Following this paragraph is a picture of an advertisement for Greenleaf Funding on
the back of a vehicle. The picture was taken October 3, 2018 on Edwards Road in Cincinnati, Ohio.
Above the Greenleaf Funding logo, i ae Rehab Fi a ci g f Rea E a e I e . Be
the log i ae 10k D a d N C edi Check ; a d the sign lists a phone number of
Greenleaf Funding.
35. Below is a typical social media post by Build. This example was posted to Facebook
on January 14, 2018 by Build agent Lorena Anticoli. It offers profit margins of 200%+ to those
interested.
16
https://www.facebook.com/LorenaSellsCinci/photos/a.126547161410117/167791700618996/?ty
pe=3&theater
36. Build also marketed the Build Scheme through monthly seminars. Below is a
screenshot from a Build investment seminar video, led by Mr. Bailey and posted to YouTube on
March 6, 2018. I he ide , he a e ha 52% f he h e ha B i d e I e c e
from off-market sources that an Investor would not have access to unless the Investor went through
Build. He also states that 34% of Build Investors are repeat clients. Upon information and belief,
both representations are false. Monthly seminars such as this one were videotaped and placed on
the Build website and/or YouTube, repeating these and other misrepresentations, including, inter
alia, that: (a) Build closed 217 houses to Investors in 20179; (b) that Build Investors made an
average of $10-20 h a d e f i ; (c) ha B i d c ed $15 illion in loans in 2017 and $40
9
Discovery produced by Build reflects 96 loans closed in 2017.
17
million in Cincinnati since its inception; and (d) that if Investors buy a house from Build they will
ge a de ai ed b eakd fe e hi g he eed f he ehab, a d B i d e e e ai e i
confirm that every rehab can be done for the estimated price.
https://www.youtube.com/watch?v=i7uXFCiYou0
37. Build advertised that it was selling homes to Investors at a discount. On its website
i a ed ha i cha e[d] properties in bulk from over 20 different sources and then passe[d]
he a i g [I e ]. H e e , he di c e da e h hat Build did not buy most
properties in bulk, and that instead of passing the savings on to Investors, Build and its co-
conspirators marked up the price of the property by several thousand dollars each on the Sell Side,
without disclosing this mark-up to the Investors (the I i ia Ma k-U Ma k-U F a d ).
a. For example, on May 27, 2016, Build purchased a property at 793 Delta Avenue
in Hamilton County, Ohio and then marked it up $24,000 before transferring
the property that same day to a trust for an Investor. In the transaction involving
18
Plaintiff Ratio for the property at 3423 Algona Place, Cincinnati, Ohio 45207,
the Initial Mark-Up was $28,900.
38. Build told Investors that all they would need is $10,000 down. Discovery to date
shows that this was a misrepresentation. A down payment on the purchase of a home is understood
in the industry to represent a percentage of the full price of the home being purchased. A down
payment is separate and distinct from closing or settlement costs. For example, if the purchase
price of a home is $100,000, [a] 3 e ce d a e ea he b e a he e e $3,000

10
and then b $97,000. Typically, the separate closing costs range from 2% to 5% of the
purchase price, with the percentage amount decreasing with an increase in the value of the
property.11
39. Here, Build and its co-conspirators structured the Sell Side of the transaction so that
the $10,000 was paid in cash, but represented a zero percent down payment of the full price of the
property. Build made e ha a f he $10,000 e ed c i gc a B id
and its co-conspirators. The $10,000 was misrepresented as a down payment, when in fact it was
a non-refundable cost assessed to the Investor (the D Pa e F a d ).
a. For example, a loan on a property at 3975 Warwick Avenue for $129,500 on
February 10, 2017, required an initial fee of $2,000 and cash due from the
Investor at closing of $8,000. Similarly, a loan on the property at 2248 South
Road for $270,000 on September 11, 2017, required an initial fee of $2,000 and
cash due from the Investor of $8,000. Build and First Title manipulated the
closing costs to ensure that none of this $10,000 paid was ever applied as a
10
https://www.bankrate.com/finance/mortgages/down-payment-1.aspx, accessed December 19, 2018.
11
https://www.zillow.com/mortgage-learning/closing-costs/, accessed November 29, 2018.
19
down payment paid against the purchase price of the property. First Title was,
at all times, fully aware that none of the $10,000 would be used toward the
purchase price of the property. Indeed, First Title worked with Build to
manipulate the Sell Side closing numbers to always net $10,000 from Investors.
40. The manipulated $10,000 in costs were generally far in excess of typical closing
costs. For example, the HUD-1 Settlement Statement ( HUD-1 ) i P ai iff Ra i a ac i
lists the price of the property as $59,900. Thus, the closing costs of $10,000 equal nearly 17% of
the loan. Even more egregious, the contract purchase price listed on the HUD-1 in Plaintiff
E i jae a ac ion is listed as $49,900. This means that the $10,000 settlement costs were more
ha 20% f he cha e ice.
41. The $10,000 in closing costs also implicates an additional fraud. Once an Investor
decided to purchase a property under the Build Scheme, they were asked to sign a contract to
purchase. They were required generally to provide a non-refundable payment of $2,000, which
was listed a a f hei $10,000 d a e , e e h gh (as previously noted) it was not
a down payment but was rather a ied c . The I e c ac cha e i c ded a
Addendum which stated, at Paragraph 4 thereof:
Buyer agrees to reimburse actual closing costs incurred by Seller for the purchase
of this property from the owner of record. Buyer also agrees to pay all closing costs
a d f di g fee a cia ed i h he B e cha e f Edga C ci
LLC, the total of both reimbursements is not to exceed $2,750,12 excluding Title
Insurance, Title Insurance Binder, and Broker Administrative Fee.
(Emphasis added).
42. Notwithstanding such contractual terms capping closing costs, Investors were
charged well in excess of the contractual cap stated therein. For example, in the HUD-1 dated
12
This amount was sometimes $1,750 or $2,990 instead of $2,750.
20
December 30, 2016 relative to the property located at 3419 Brotherton Road, Cincinnati, Ohio
45209 ( he B he P e ), the closing costs charged to the Investor for both the Buy Side
and Sell Side c i g, e c di g Ti e I a ce, Ti e I a ce Bi de , a d B ke
Ad i i a i e Fee, a ed $19,709.77 (i.e., $16,959.77 above, or more than seven times, the cap
on closing costs). Investors were fraudulently induced through the supposed cap on closing costs
that was subsequently ignored (the C i gC Ca F a d ).
43. Build and its co-conspirators also drew in Investors with projected rehab estimates
that purported to show the amount for which the properties could be completely rehabbed using
Build-provided funds (the Rehab Escrow ). At the monthly seminars discussed above, Mr. Bailey
would say, for example in January 2018, [The a ] i c de a he ehab e ,a he e
eed fi i ,a he e eed b i . In June 2017, Build claimed that it provided
detailed and professionally done rehab estimates ba ed h a d a d h a d and
thousands of rehab estimates over the last 10 years, and assured Plaintiffs and other Investors that
the rehab could be done for the estimated amount.
44. However, the rehab estimates were generally much lower than what improvements
would actually cost. This benefited Defendants. Build would not release rehab funds that were
supposedly placed in a bank trust account dedicated to the Rehab Escrow ( he Rehab E c
Acc ) until the Investor completed a particular aspect of the rehab. What this meant in practice
was that Investors generally had to, from the beginning, put in their own money or sweat equity to
finish a portion of the rehab, just to receive the inadequate loan money associated with that portion.
In that manner, equity in the property was increased, at he I e e e e, idi g addi i a
loan security to GT Financial and the Permanent Lenders (the Rehab E i a e F a d ).
21
45. For example, one Investor emailed Mr. Bailey on April 5, 2014, expressing his
frustration about the draw program a d a i g i a : Af e ki g a he d a ched e e ee
that the budget allows for a draw of $200 for the rough plumbing of a brand new bathroom on the
ec d f . Tha d e e e c e he c f he a e ia ch e he ab a be
cha ge .
46. More recently, on October 15, 2019, in an internal message to other Build agents
and/or employees, Build employee April Myers acknowledged that the budget provided for
P ai iff E e a ed a WAY ff a d. . . he e ha ike did ha e he direction that she
eeded.
47. One investor wrote in an email dated July 28, 2015:
[T]the budget for heat and air was underestimated. I went out of pocket for the heat.
I i ib e d hi f he ice i he b dge . . . eb d h b i d he
budge did ea i ic ice e j b i c di g AC a d d i e a . S e
essentials like old plumbing and all the water in the basement I had to fight, new
pump were not even in the budget. I had to pay it out of pocket as well. Who can
help me get realistic funding for air and drive way?
48. Three months later that same investor wrote:
Almost all costs for jobs were underestimated. Including Hvac, windows, drive
way, plumbing, electric, changing the layout, make a bathroom upstairs. . . Im not
even talking about termite damage, foundation problems, and lawn waters. . . All
that I had to fix at my cost. There were not even in the budget. Broken pipe is a
e f i ec i . I c d fi d a b d h d d i f he e i a ed
cost. Including contractors from the list you gave me. In order for me to follow all
ec e da i I d ha e a 3 i e e I e aid a ead ab e
he b dge . G d e a ei i d . N b d i d i f $1500. I a 4-5k job.
Why they put unrealistic numbe f 1500, I d k .
Pre-Closing: The Hook
49. Once it appeared that an Investor was committed to working with Build to
cha e a e , Build or one of its co-conspirators would find a property for the Investor
on any one of several property auction websites such as Auction.com or through HUD-licensed
22
broker websites, and bid sufficiently high to ensure it was likely to win the auction. These avenues
are generally available to buyers in the marketplace, including the Investors, notwithstanding
Bui d i e e e ai he c a .13 When Build was unable to find an Investor for a
property it had put under contract, it would simply back out of the contract. In many cases, Build
did this without losing any money as, upon information and belief, no earnest money was ever
deposited with First Title relative to properties that Build did not actually acquire, but rather First
14
Title was give a f ged a d f a d e ea e e check.
50. Because Build was financed by Mr. Triantafilou and the Permanent Lenders, it did
not have the means to pay down payments or earnest money deposits on each of the properties it
wished to purchase from a third-party website. As a result, to obtain these properties, Build used
Adobe Photoshop to falsify bank statements to make it look like the Build Company buying the
e had fficie f d ,e e h gh i did ,a d fa if ca hie a db i e checks
to make it appear as if it had deposited the earnest money on a property, even though it had not.
Each falsified check was made out to deposit at either First Title or Build Realty.
51. Each of the Build Companies regularly used and transmitted to third parties
falsified or photoshopped checks and bank statements, using the Build Companies
interchangeably.
52. First Title and Mr. Conners played an integral role in ensuring that Build or the
Build Companies made it to the closing table relative to their purchase of a property from a third-
party seller (i.e., the Buy Side of the transaction), thus allowing them to continue perpetrating the
13
Build buys properties from a variety of sources, including estates, but upon information and belief, the majority of
the properties it buys come from the MLS website and third-party auction websites, which are otherwise available to
the Investor directly.
14
And, often, no earnest money was ever deposited even when Build did ultimately acquire a property, as is more
fully explored herein.
23
fraudulent Build Scheme relative to the simultaneous or immediately subsequent closing with an
Investor (i.e., the Sell Side of the transaction).
53. This integral role is conspicuous in the case of earnest money checks written to
First Title, where third-party sellers frequently emailed to obtain written confirmation that the
earnest money deposit had been paid. First Title regularly responded to these inquires with an
email to sellers representing that the earnest money had, in fact, been deposited. Upon information
and belief, these representations were false, as the earnest money was either not then funded or
never funded.
54. Fi Ti e a dM.C e a ici a i i he f a d e a i e ea e e
deposits that Build or the Build Companies were required to pay was critical to Build acquiring
the properties that would later become the corpus of a trust in the Build Scheme. First Title
participated in this fraud in a number of respects.
55. Many times, Build never actually paid earnest money on the Buy Side of the Build
Scheme, and First Title and Mr. Conners turned a willful blind eye to this fact. In the below email
exchange dated June 26, 2013, Build Realty agent Sean Cole explains to Kristyn Ernst of First
Title the customary (and fraudulent) procedures utilized when Mr. Conners was in town. Kristyn
Ernst writes:
Sean, I will be handling this closing for Pat since he will be out of the office the
next few days. Have you sent the earnest money to them to I can proceed with the
REO company to get scheduled to close?
Sean Cole responds:
S ,a a e he eeded a c f a EM check hich I d a ead e e.

I he a e a ha f c i g g ha Pa f .
24
56. In yet another instance, Karen Taylor of Comey and Shepherd Realtors sent an
email to Kristyn Ernst of First Title on February 26, 2016, copying the office coordinator at Build,
as well as a Build agent, writing:
Hi, Krystin. Please find a copy of the earnest money check dated January 28th, 2016,
and made out to First Title. I know when we talked a few days ago, you told me
that you had not received any earnest money funds to date. Though the term
de i ed ha bee ided i fa f c ec ed, he $2,500 h d i be i
possession. Could you let me know if you have received these funds from Build
Realty?15
57. Kristyn Ernst does not then write to Karen Taylor to tell her the truth that the
ea e e i ha bee de i ed i Fi Ti e acc (or that the check Karen Taylor
had attached was not, in fact, a legitimate check) but instead writes to Build, asking:
Wha a I ed a i ce I d ha e he ea e e f g a
f e ? She ea hi g k e e hi g a d I i g gi e a i le
information as possible.
58. First Title and Mr. Conners, thus, often helped or tried to help Build cover up the
fact that it had not paid earnest money so that Build could still acquire properties in furtherance of
the Build Scheme. Upon information and belief, First Title even confirmed receipt of earnest
money when it was not paid or had not yet been deposited.
59. If sellers knew that the earnest money had not been paid, they would likely (and
did in one or more of the few cases where they discovered that the earnest money had never been
paid) cancel the contract, thereby precluding Build from acquiring a property it intended to use in
furtherance of the Build Scheme.
15
C ic , hi ea e ha he ha a c f a ea e e check da ed ea e h i , e
j a fe da ag Fi Ti e had ecei ed ac a ea e e .U i f a i a d be ief, he B i d
and/ Fi Ti e efe e ced c ie f ea e e check , he e e i fact referring to the fake checks that Build
had fraudulently generated using Photoshop.
25
60. First Title and Mr. Conners would often reconcile this deficiency at the closing by
either (i) falsely showing the funds on the Buy Side transaction as having been returned at the
closing to the buyer or (ii) comingling funds between the Buy Side and the Sell Side closings,
collecting the funds (claimed on the Buy Side HUD-1 as having been paid and received) as a part
of the funds received in the Sell Side closing, both of which are improper.
61. Below is an example from the Buy Side HUD-1 on 576 Locust Corner Road,
Cincinnati, Ohio 45245 dated October 26, 2016, in which Edgar Construction bought the property
from a third-party seller, The Bank of New York Mellon. Although, upon information and belief,
the earnest money had never been paid to First Title, they represented and certified that it had been
paid and was being returned to the buyer at closing.
62. Mr. Conners explained this sleight of hand under oath, thusly:16
It means that we either returned it or never received it and the, the buyer
and seller wanted the earnest money reflected on in some way on the
settlement statement.
63. The second instance never collecting the earnest money deposit at the Buy Side
closing and, instead, illegally collecting it at the Sell Side closing by comingling funds between
the two closings was also explained by Mr. Conners via sworn testimony. Many times, the
earnest money check was never made good, but rather the money made it into the Interest on Trust
Account ( he IOTA acc in which title agents collect funds for closings) only with the
funding of the Sell Side transaction. Mr. Conners testified as follows:
16
Mr. Conners testified to this as a corporate representative of First Title at the 30(B)(5) deposition thereof on
December 7, 2018.
26
Q: And what if ou didn t collect it [the earnest mone ]?
Pat Conners: Then it would be collected at the time of closing because it

would have been in their funds to close.
Q: Collected how?
Pat Conners: They would have sent it in their wire. So, if they did not send
the $2,500, [GT] would have sent it in with their funding.
64. Thus, it is clear that First Title was aware of and involved in the continuous
misleading of sellers that earnest money had been dep i ed i Fi Ti e IOTA acc .
65. Another method First Title and Mr. Conners often employed to help Build Realty
a id a i g he ea e e de i a i ig e e e e e f c fi ai
with the hope they just would stop asking.
66. Again, part of the fraud with regard to Mr. Conners and First Title was receiving a
conspicuously fake check payable to First Title, knowing it was also sent to the seller, and
repeatedly ignoring and delaying confirmation (or, upon information and belief, falsely confirming
i ecei / e ) a not to tie up Build Realty funds with an escrow deposit. Of course, this
defeats the entire purpose of an escrowed earnest money deposit if, in fact, the good-faith monies
are not paid when promised.
67. Wi h Fi Ti e a dM.C e ac i e a ici a ion and involvement in
these frauds on the Buy Side of the transactions, Build would only have been able to purchase
properties later used to defraud Investors at a fraction of the volume.
68. As to the portions of the transactions involving Investors, Build would require that
the Investors be LLCs. The use of an LLC to make the investment was intended to deprive the
Investors of the benefit of numerous laws and protections available to individual consumers. The
27
Investor LLC would (at least initially) be listed as the Buyer and one of the Build companies would
be the Seller. The Investors all signed substantially the same contract to purchase.
69. Plaintiffs and other Investors were induced to sign the contract to purchase based,
in part, upon its representation that they would actually be purchasing and taking title to the
property a representation that was known by Defendants to be false. The contracts to purchase
specifically required Plaintiffs and other Investors to provide the name of the company in which
they would be taking title. However, Plaintiffs and Investors were never given title to the property,
as further described below (the Ti e F a d ).
70. Specifically, the cha e c ac ie he I e a ke ab e i e he
Rea E a e b deed a hown below:
71. A ached he cha e c ac a a he d c e ca ed he B e
I f ai Shee e a ed b B i d, hich a ked he b e (I e ) i ha a e he
b e d ike ake i e he e ,e e h gh B i d e e i e ded to convey title
to the Investor. This document was independently presented to the Investor at or before the
execution of the purchase contract to further encourage the belief that the Investor would take title
to the property. The Buyer Information Sheet relative to R&G is shown below:
28
72. The Buyer Information Sheets were delivered to First Title with the purchase
contract packet relative to the later closing.
Closing: The Switch
73. After Plaintiffs and Investors signed a contract to purchase, Build would schedule
a closing, with First Title as the title company. Build would inform Investors that First Title had
to be used for the transaction. For example, on November 2, 2016, Build agent Cedric Pashi listed
M e Fi Ti e Age c a c i g/ e e e age a a e f B i d fi a ci g i a
email to an Investor. Similarly, on December 30, 2017, Build agent Kassie Faugno wrote to a
potential i e ( h a e beca e a I e ): [W]e a a e fi i e age c f a f
closings. This is because they a e fa , efficie , a d e fa i ia ihh c i g k.
74. While there was certainly an abundance of fraud and other misconduct both before
and after closing, the closing room is where a significant portion of the fraud was consummated.
75. On the date of closing, Build, facilitated by First Title, engaged in a double closing
on the property. The Build Scheme was, in fact, an impermissible perversion of what is commonly
known as an A to B B C h e ae a ac i . I a adi i al wholesale transaction, a
b e ( a B ) i ge a e de c ac ihi e e ( a A ) i h he i e
immediately resell it to an end-b e ( a C )f a fi . B i e ec e a ec d c ac
sell the property to C before it closes on its purchase from A. The two closings (A to B and B to
C) will be scheduled in close temporal proximity, often simultaneous or back to back. Because,
17
i f ai a d be ief, G dF d a i ea e e a e (i c di g Ohi ) do not
permit the use of funds brought to closing by C to finance the purchase from A to B, B typically
ii e a ac i a f di g a separate lender who provides short-term financing for the A to
17
See, e.g., R.C. 1349.21.
29
B transaction and is repaid with the funds brought to the B to C closing by C.18 One of the many
be ihB id e di i f he h e a e a ac i a ha B i d a e e ia b h
Party B and Party C, with Edgar Construction (its wholly owned subsidiary and alter-ego)
ed ac i g a ee for the Investor, who is named as a beneficiary of the trust into
which the property is placed a form of self-dealing unbeknownst to the Investor/beneficiary.
76. First, Build would close on the purchase of the property from an auction website
such as Auction.com or through a HUD-licensed broker by using one of the Build Companies (Buy
Side or A to B transaction). Around the same time (typically later the same day), Build would close
on the sale from one of the Build Companies to Edgar Construction, as trustee (the Sell Side or B
to C transaction).
77. Build and/or Mr. Bailey would request a wire from GT Financial for the Sell Side
a a i he ehab f d , a d GT Financial would send a single wire to First Title for
such amounts. That single wire was purportedly used to finance both sides of the transaction/both
c i g, i h a di g he ack f g df d.
78. Mr. Triantafilou testified as a corporate representative of GT Financial in his
deposition on April 25, 2018:
So to give an example, let a he b ide i 80,000 a d he a ide i a h d ed

thousand dollars. I make one wire of a hundred thousand dollars and that covers
both. S he b ide ie d c e back The transactional monies, the
$80,000 does c e back. I a f the hundred thousand dollar loan.
(Emphasis added).
This is in stark contrast to permissible financing through a traditional transactional lender.
79. First Title and Mr. Conners had actual knowledge that none of Build, the Build
Companies, or GT Financial ee d ci g g d f d a d, e e he e , b h ac i e
18
In the B i d Sche e, he a ac i a e de ei a ed b GT, ed b M . T ia afi .
30
participated in and sanctioned such commingling of funds between the Buy Side closing and the
Sell Side closing.19 With respect to both earnest money and the funds to close, this concept is
herei af e efe ed a Lack f G d F d .
80. The closing with the Investor was conducted by First Title, and generally by Mr.
Conners. At the closing, Investors were presented with 17 documents to sign from Build ( he 17
D c e ),20 and another 12 to sign or accede to from First Title ( he Fi Ti e D c e ).21
Closings generally took between 15-30 minutes. If an Investor asked about a particular document
or the transaction, Mr. Conners would reassure them that all the documents were necessary and
typical and that there was nothing to be concerned about, saying things like:
a. "This is the same kind of thing of when you buy your own home."
b. The e a e he a e d c e he c e h e."
c. The e d c e a e a da d f a eal estate closing."
d. "This is no different than buying your house."
81. In fact, the documents presented to the Investor at the Sell Side closing were neither
typical nor consistent with the Investor s prior contract to purchase. The primary difference was
that the documents created a trust transaction (the T T a ac i ), where the actual purchaser
19
Upon information and belief, no reputable title agency would permit, much less knowingly sanction, such instances
of commingling unless it had a substantial financial interest in the transactions beyond that typical of an agency
providing the occasional title/closing services. See In re Newton, 375 S.C. 531, 654 S.E.2d 536, 537 (2007) (finding
i i e i ib e close[] certain transactions as part of a two-transaction flip, using loan proceeds intended to
fund only the second transaction to fund both a d prepare[] HUD-1 closing statements containing false
representations and/or omissions that were material to the transactions. ).
20
The 17 Documents were previously filed with the Court by agreement of the parties as Doc.# 117-3 on January
15, 2020 and are expressly incorporated herein. Upon information and belief, the 17 Documents were the same at
every one of the Sell Side closings with Investors.
21
The First Title Documents were previously filed with the Court by agreement of the parties at Doc.# 117-4 on
January 15, 2020 and are expressly incorporated herein. Upon information and belief, the First Title Documents
were the same at every one of the Sell Side closings with Investors.
31
and title holder of the property was another Build entity, generally Edgar Construction. The
Investor did not purchase or receive title to the property, but rather became a supposed beneficiary
of the trust held by Edgar Construction, furthering the Title Fraud.22
82. If a ked ab he c e, M . C e d di i i a a big dea .
83. Build never presented the Investor or First Title with a document that would assign
the right to purchase the property lawfully belonging to the Investor pursuant to the purchase
contract to a Build Company, such as Edgar Construction as trustee. In closing the transaction
without such assignment (effectively, an entirely different transaction than the Investor signed up
for in signing the purchase contract), First Title participated in and advanced the fraudulent Build
Scheme, despite its knowledge that the purchase contract promised a deed and title to the Investor
( he Fai e Ob ai C ac A ig e F a d ).
84. The Trust Transaction created duties on the part of Build alter-ego Edgar
Construction, as trustee, which Build, Edgar Construction, and the other Defendants absolutely
ignored. On the most basic level, Edgar Construction, as trustee, had a duty to act for the interest
of the Investor beneficiary, but instead acted contrary to those interests.
85. For example, the Mark-Up Fraud was not only a violation because of the prior
misrepresentations of Build that it would pass along savings, but a beca e i i a ed B i d
a d he B i d C a ie fid cia d ie ed he I e b i e f he eai hi .
86. First Title knew of the Initial Mark-Up and knew that the Sell Side transaction was
conspicuously self-dealing because it facilitated both the Buy Side and Sell Side closings and
22
Upon information and belief, no Build Company is licensed as a trust company, as is required under Ohio R.C.
Chapter 1111 and/or KRS 286.3-020(2) for the Build Companies to conduct trust business, as they are doing in the
Build Scheme. The paramount purposes of requiring licensure to act a trust company in Ohio or Kentucky is to ensure
(a) compliance with statutory and common law fiduciary duties (and provide oversight relative to the same), and (b)
that each trust company is sufficiently bonded. Neither Build nor the Build Companies meet either of these two
requirements, as set forth in Ohio R.C. 1111.06(B) or its analogous Kentucky counterpart.
32
created a HUD-1 to, in part, create the illusion that the transfer was legitimate. The only purpose
of Build first acquiring the property in the name of one of the Build Companies before further
conveying it to Edgar Construction, as trustee, was to effectuate the Initial Mark-Up of the
property.23
87. Further misusing its position as fiduciary, Build engaged in additional self-dealing
by charging the Investor/beneficiary an above-market interest rate of 15% (the typical rate for
short- e a ec ed b e , ca ed ha d e a , i 8-12%)24 notwithstanding its
wholly- ed b idia (Edga Construction ) ea ee f he I e . B i d ge e a
sold the note to the mortgage on the property to a Permanent Lender for an interest rate of 12.5%,
pocketing the difference between the two rates without any disclosure to the Investor its
beneficiary f he Pe a e Le de i ee i he a ac i or the interest rate spread being
retained ( he I e e Ra e S ead ).
88. As yet another gross misuse of its position as fiduciary, Build with the assistance
of First Title d he I e ha he e b ed a f he ehab (i.e., the Rehab
Escrow)25 was placed in escrow at closing, and then required the Investors to pay 15% per annum
23
Otherwise, the entire transaction could be accomplished, but for its numerous other improprieties, by having Edgar
Construction, as trustee, purchase the property from the third-party seller from the beginning. The unnecessary and
extra step of a second closing was a deliberate action taken by Defendants to unlawfully profit at the expense of its
Investors/beneficiaries. In one instance, because of problems with the double closing, the transaction was limited to
one closing. In an email dated December 30, 2015, Build touted that to the Investor as saving them money, saying
T ake c i gc e , e did a a ig e f hi c i g Thi e i i a e a c e h a dd a
of closing costs!!
24
The biggest difference between the Build Scheme and tradi i a ha d e a i ha a ica ha d e
loan results with title being vested in the buyer. Here, the Investors are forbidden from taking title, a fact they do not
learn until much later in the transaction, and a fact that is contrary to the covenants and material representations made
in the purchase contract.
25
Sec i 2.8. f he C c i L a Ag ee e ( e f he 17 D c e I e a e ade ig a c i g)
instructs that B i d ha di b e he ceed for repair and rehabilitation of the property. . . on the date the Loan
closes. . . in escrow a d ha ch f d ca be ad a ced c ac ie . (e ha i added). The
proper use of such Rehab Escrow fund i f he e ai a d ehabi i a i f he e .
33
on those funds as well.26 However, the Rehab Escrow was not funded at the closing but, instead,
only became funded and available to Investors once the Permanent Lenders bought the loan from
Build, often weeks after the closing. This means that the Investors were paying interest on money
that simply did not exist. Build and First Title (by creating the HUD-1s showing the Rehab Escrow
a ecei ed ) acted in concert to intentionally misrepresent that the Rehab Escrow was funded at
closing and disbursed by First Title relative thereto, with actual knowledge that such representation
was false, despite the representations made at closing and despite the requirements contained in
documents signed as part of the Trust Transaction (the Rehab E c F a d ).
89. B ida , ih di c e he I e /be eficia , cha ged 4.9 i f
the origination loan, when it paid nothing to the Permanent Lenders for loan origination. These
fees, along with the Interest Rate Spread, are both in breach of the fiduciary duties that Build/Edgar
Construction owed to Investors and constitute impermissible self-dealing.
90. B id a di c -Defe da i e f he Rehab E c did op there.
Documents show that Defendants regularly used the Rehab Escrow funds, which were purportedly
set aside for the benefit of Investors, to purchase other properties to be sold to more Investors in
furtherance of the Build Scheme, or to pay for operating expenses. And perhaps most egregiously,
a di ec di g f a B i d e ec i e eade hi ee i g October 5, 2018 reflect Mr.
Triantafilou i he e e a e describing using these Rehab Escrow funds to pay $30,000
i B id ega fee .27 Build and the Permanent Lenders were continuing to charge interest on
26
As part of the exorbitant closing costs, Investors are required to pay 15% interest on the full loan amount (including
the Rehab Escrow) from the date of closing through the first day of the next calendar month (i.e., pre-paid interest).
27
Discovery to date also shows Mr. Triantafilou transferring millions of dollars to himself and/or his company, GT,
from Rehab Escrow Account to pay wires on new purchases and for various other impermissible purposes having
hi g d i h he e ai a d ehabi i a i f he e [ie ].
34
these funds despite their unavailability while they were being used for other improper purposes,
ch a a i g B i d (a d ib he ) ega fee .
91. Additional misuses of the Rehab Escrow discovered to date include payments made
to First Title (upon information and belief, for the purchase of new properties on the Buy Side)
and payments made to the Permanent Lenders (upon information and belief, to sati f B i d
interest payments owed thereto and/or to payoff other loans).28
92. U i f ai a d be ief, Defe da eg a a d c i i e
(essentially, embezzlement or theft) of the Rehab Escrow operated to prevent or delay an Investor s
ability to access such funds even after they were eventually funded by the Permanent Lenders.
93. The HUD-1s for the Sell Side closing the transfers from a Build Company to
Edgar Construction as trustee were created and certified by First Title (generally by Mr.
Conners). A copy of the certification that Mr. Conners signed on each HUD-1 ( Fi Ti e
Ce ifica i )i h be :
94. The Fi Ti e Ce ifica i a i c ded a g age ha a ed: [i] i a c i e
knowingly make false statements to the United States hi a i ia f i c ding
penalties of fines or imprisonment.
28
In other words, Build often used Rehab Escrow funds held for the benefit of one Investor to pay off an entirely
unrelated loan. Upon information and belief, when a sale closed with an end-buyer at the conclusion of the Build
Scheme, the proceeds were wired to a separate Build bank account (i.e., not the account in which the Rehab Escrow
funds were held) and, thus, any loan payoffs should have come from that account, not the Rehab Escrow Account.
35
95. Disconcertingly, in the 30(B)(5) state-court deposition of First Title, Mr. Conners
repeatedly stated that he could not confirm the accuracy of specific line items on the HUD-1s even
in the face of the First Title Certification, which he signed.
96. Despite the First Title Certification, the HUD-1s were plagued with a multitude of
illegalities, deficiencies, and fraudulent misrepresentations. For example:
a. Deed P e (Typically Line 1107 of the HUD-1): Typically Paragraph 24 of
he cha e c ac a e : Se e ha be e ib e f a fe a e,
c e a ce fee , [a d] deed e aai . N i h a di g ch c ac a
term, the HUD-1 showed a charge to each Investor of $100, payable to Dan
Orner (Owner and Preside f Fi Ti e) abe ed A e Fee . Fi Ti e
ha e e e ed ha ch A e Fee e e ea f deed e aai
which, in any case, would be improper under the purchase contract.
b. C e a ce Fee/T a fe Ta (Typically Line 1202 of the HUD-1): Ohio
R.C. 319.292(C) provides that sellers shall be responsible for paying
conveyance fees and transfer taxes. While, parties could, in theory, endeavor to
contract around that provision, Paragraph 24 (typically) of the purchase contract
sta e : Se e ha be e ib e f a fe a e , c e a ce fee , [a d]
deed e aai . N i h a di g ch c ac a e a d a
requirement, the HUD-1 charged each Investor a fee for such Conveyance
Fee/Transfer Tax.
c. C ed Re (Typically Line 804 of the HUD-1): As set forth above, Build
e ea ed ad e i ed i e f a ef i g c edi check . Di c e ha
shown that Build did not perform credit checks and did not generate or obtain
36
any Credit Report. Upon information and belief, First Title and Mr. Conners
knew that there was no Credit Report relative to Investors under the Build
Sche e. N i h a di g hi e ie fic i a i ed fee, Fi Ti e /M .
C e k edge f he a e, a d B i d e e e e a ions as to
the same, the HUD-1 cha ged I e $50 f a C edi Re a each
closing, payable to Build dba Greenleaf Funding.
d. D c e P e (Typically Line 807 of the HUD-1): First Title and/or Mr.
Conners received the 17 Documents, further discussed below, relative to each
Sell Side closing under the Build Scheme. These documents were automatically
ge e a ed b B i d ffice coordinator via Build/G2 Technologies Sa e f ce
software and then, upon information and belief, were sent to First Title from
Build ha Fi Ti e c d b i g he d c e he c i g. Thus, no
e ac a e a ed he . N i h a di g he fac ha e ac a
e a ed he 17 D c e a d Fi Ti e /M . C e k edge f he
same, the HUD-1 charged Investo a $400 $450 fee f D c e Pe ,
payable to GT Financial or attorney Jack Donenfeld, neither of whom prepared
any documents relative to the closing.
e. P e-Paid Interest on Unfunded Rehab (Typically Line 901 of the HUD-
1): The First Title Certification as shown above, paired with Line 104 of the
HUD-1, affirmatively misrepresented to Investors that the Rehab Escrow was
ac a ecei ed a d d be di b ed b Fi Ti e a a f he
e e e f he Trust Transactions (i.e., upon closing), the Rehab Escrow
Fraud previously described. As further demonstrated below, First Title and Mr.
37
Conners knew that the Rehab Escrow was not funded at the time of closing
First Title neither received such funds, nor did it disburse them at closing. For
example, Plaintiff Magg a c ed Ma 2, 2018, a d he Rehab E c
made up $48,808.54 of the total loan amount of $87,000 (i.e., over 56% of the
a a a c i ed f he Rehab E c ). Magg a cha ged 30
da h f e-paid interest, totaling $1,087.50. H e e , Magg Rehab
Escrow was not funded until May 17, 2018 when Smith Graham/Fund V
cha ed i a . Acc di g , Magg a cha ged f e ha eek
of pre-paid interest on the full loan amount, when the Rehab Escrow comprising
over half of the loan was not even available.
f. W e Fee (Typically Line 806 and Line 1111 of the HUD-1): Upon
information and belief, few if any wires are employed relative to the double
closing utilized in the Trust Transactions. Notwithstanding the lack of wires
a d Fi Ti e k edge f he a e, he Sell Side HUD-1 charges Investors
with multiple Wire Fees of up to $50 per fee, payable to First Title and GT.
Additional Wire Fees are built-in to the Buy Side closing cost reimbursement
charge listed in Line 111. Upon information and belief, the Wire Fees charged
to Investors were well in excess of those actually incurred by any party to the
Buy Side or Sell Side closings.
g. I O e P c (Typically Line 1110 of the HUD-1): As more fully
set forth below, First Title and Mr. Conners began each Sell Side closing, before
the Investors were presented with the 17 Documents (including those that
purported to disclose the trust structure), soliciting Investors to purchase an
38
e licy of title insurance. In doing so First Title and/or Mr. Conners
represented to Investors that such policy would protect them a he e f
the properties should any title issues arise, notwithstanding the fact that
I e ee e a d would not take title, and despite First
Ti e /M . C e k edge f he a e. Fi Ti e a d M . C e
e e e ed ha ch ic a a ead i c ded i he cost of the loan,
giving the Investors little option or reason to reject it.29 Investors were, in fact,
cha ged e a a e fee f ch c e age, a ab e Fi Ti e
principal/underwriter, Stewart Ti e G a a C a ( Se a ). However,
Stewart has not and, apparently, will not honor such policies relative to the
Investors because, despite the fact that Investors were told by First Title/Mr.
Conners that such policies were for their benefit and paid for the same, Investors
are not the beneficiaries of the policies. The policies are, thus, entirely illusory
(the I O e P ic F a d. ). U i f ai a d be ief, Fi Ti e
solicited more than 500 Illusory O e Policies as authorized agent of
Stewart as part of the Build Scheme. The premiums for such policies were paid
by Investors to Stewart, as shown below, with a substantial portion thereof
retained by First Title as a commission. An example of the charge for an Illusory
O e P ic i h be :
29
In his deposition, Mr. C e a ed ha he ee he ffe f a e ic f i e i a ce I e
b a i g: He e i e ec i f e c e age a d i e i a ce. A d if ha e a e i , you can
read it. If not do you want a policy of title insurance, it s alread included in the cost, and then they check yes or
. (E ha i added).
39
97. The fees contained in the above Paragraph are collectively referred to as
Fa d e HUD-1 Cha ge he ei af e .
98. Af e ici i g he I O e P ic , Fi Ti e/M . C e d he
proceed with having the Investors sign the rest of the closing documents. Among these documents
that Investors were required to sign at the Sell Side closing were the First Title Documents
(prepared by First Title),30 hich e ea ed efe ed he I e a b e , a d, h ,
furthered the material misrepresentation that the Investors would take title by and through the Trust
Transaction. This is also when First Title wo d ee I e i h he 17 D c ents,
prepared by Build via Salesforce.
99. In addition to the foregoing, notable issues arising from the within the 17
Documents that comprise the transaction are:
a. The M gage : The M gage a ig ed b Edga Construction, as
trustee, and by Build dba Greenleaf Funding and was intended to secure the
funding (purportedly from Greenleaf Funding although such funds actually
came from GT Financial and, later, the Permanent Lenders) for the purchase of
the property. The Mortgage was for an amount equal to the price that the
30
The First Title Documents were previously filed with the Court by agreement of the parties at Doc.# 117-4 on
January 15, 2020 and are expressly incorporated herein. Upon information and belief, the First Title Documents were
the same at every one of the Sell Side closings with Investors.
40
I e ee a i g f he e he e ha he I e ee
borrowing for the Rehab Escrow, and any other costs that Build added to the
total ( he T a L a A ). Upon information and belief, the Mortgage
was assigned to GT Financial and the Permanent Lenders to secure their
interests, but such interests were never disclosed to the Investors.
b. Be ef c a U de a g :I de i d ce G ee eaf F di g (agai ,
purportedly) to lend money to Edgar Construction, the Investors signed a
d c e i ed Be eficia U de aki g, i hich he I e ag eed
perform all the obligations that would have been required of Edgar
Construction, as trustee, under the Mortgage and other related agreements, thus,
affirmatively obligating the Investors as mortgagors.
c. P N e : The Investors signed a promissory note to pay 15% per
annum interest on the Total Loan Amount (which included the Rehab Escrow).
As set forth above, during that time before the Rehab Escrow was funded, the
Investors were paying interest on monies that did not exist.
i. First Title and Mr. Conners knew that the Rehab Escrow funds were not
funded or would not be funded until well after closing, as Mr. Conners was
copied on one or more emails from Build to Mr. Triantafilou, instructing
GT Financial i e he a a i he ehab e c .
Similarly, Mr. Conners often asked Build and/or Mr. Triantafilou how much
was being funded relative to a given property,31 yet First Title/Mr. Conners
31
In other words, he knew that the amount(s) listed on the HUD-1 that he or First Title prepared were not indicative
of what would actually be wired.
41
misrepresented that fact on the HUD-1s and signed the First Title
Certification, representing that such funds were received at closing.
ii. For example, First Title prepared the below HUD-1 and certified that it was
a acc a e acc f he f d which were received and have been or
will be disbursed by [Mr. Conners] (emphasis added) relative to the
Brotherton Property:
iii. However, on the same date as the Sell Side closing and above HUD-1
relative to the Brotherton Property, December 30, 2016, Mr. Conners
e ai ed he B i d ffice c di a a k: H ch a e f di g
hi a ? B id ffice c di a e ded: I e e ed he a
amount minus the rehab escrow. S $158,338.78. (E ha i added).
42
iv. Again, notwithstanding the First Title Certification and Mr. Conners di ec
knowledge to the contrary, the HUD-1 for the Brotherton Property reflected
that $237,279.7432 a aid f b e (i.e., funded), as shown below:
v. First Title has testified under oath that the Rehab Escrow funds at one point
were held in escrow with First Title but, starting in or around 2016, were
funded directly to Build as escrow agent.33 This was a change directed and
required by the Permanent Lenders.
vi. First Title/Mr. Conners made material misrepresentations on the HUD-1s
relative to the Trust Transactions both when First Title was acting as escrow
agent and when Build was acting as escrow agent. They knew the Rehab
Escrow was not funded at the time of the closing and yet falsely certified
that it was.
vii. As another example, on July 28, 2016, on line 104 of the HUD-1 for the
Sell Side closing on the property at 1822 Lincrest Drive, Cincinnati, Ohio
45240, First Title represented that the Rehab Escrow funds were being held
by First Title in its IOTA account and would be disbursed to Build upon
closing. This was false. The Rehab Escrow funds were not wired to First
32
This is quite a bit more than the $158,338.78, which Mr. Conners knew was the amount actually being funded, as
demonstrated by the December 30, 2016 email set forth above.
33
In his deposition, Mr. Conners (acting as a corporate representative of First Title) stated that during the period of
time when First Title handled the Rehab Escrow accounts, many were not seeded until weeks or months after the
closing, and that often the accounts were not funded until after Build had found a permanent lender to buy the loans.
43
Title until nearly two weeks later. Additionally, the funds were not
ultimately managed by Build but, instead, by First Title. First Title collected
a fee for each draw request, which was split between Build and First Title.
viii. Similarly, on July 15, 2014, on line 104 of the HUD-1 for the Sell Side
closing on the property at 170 Farragut Road, Cincinnati, Ohio 45218 (the
Fa ag P e ), First Title represented that Rehab Escrow funds were
being held by First Title and would be disbursed to Build upon closing.
Upon information and belief, this was false, as the Rehab Escrow funds
were seemingly never received by First Title and disbursed to Build. This
is confirmed by an email from Mr. Bailey to a number of Investors,
including the Investor for the Farragut property, dated September 4, 2014,
stating:
The purchase of the loan portfolio by the new lender was finalized
today, however, we are told funding will not take place until the
middle of next week. . . I assure you that we will fund all of your
draw requests the same day they fund their purchase.
ix. This email shows that, not only were the Rehab Escrow funds not held or
disbursed as represented in the HUD-1, but also that Investors experienced
a delay in accessing the Rehab Funds as a result.
d. C ae a A g e f Be ef c a I e e : To use Greenleaf Funding as
a loan source, the Investors were also required to sign a document titled
C aea A ig e f Be eficia I ee , hich ab e a d
c di i a a ig ed a d a fe ed B ida he e a d ea e f
he e , ga e B i d a ec i i ee i a f he I e e e t and
fu e igh , i e a d i e e i he e a d a he a e f he
44
I e , he he ed he eaf e ac i ed. Thi d c e a
stated that the Investors waived their rights to redemption and excess proceeds,
which is impermissible under Ohio and Kentucky law. Upon information and
belief, the Collateral Assignment of Beneficial Interest was also assigned to GT
Financial and, later, the Permanent Lenders as security for their interests.
100. A number of the closing documents bear upon another misrepresentation used to
induce Investors to enter into the transaction. Build repeatedly promised Investors and prospective
investors that the loans were non-recourse, when this was untrue. For example, in Build seminars
held in January of 2018 and May of 2017, respectively, Mr. Bailey said:
a. We d ie a hi g e e ha ha e. Y c a e a i he
h e i e f. Tha i.S e hi g ha e . Y a ,I j d e, j
a k a a , igh ? We d g af e c edit score. We d a ach a hi g
e e. N hi g.
b. If , hea e f bid, c e i a d d a ehab a ih a di d e
g e a d defa , e e g i g i ife. We e g i g
to go in and attach all your bank accounts and destroy your credit. You just
walk away and the only people that ever knew about it was you and anybody
else knew you owned34 a h e. Tha i.
101. In contrast:
a. The Construction Loan Agreement, one of the 17 Documents signed at closing,
contained an indemnity provision at Section 3.2.4., wherein Build claimed a
34
Thi i a f he a ia i f he c i e e e ai ha I e d he e ie .
45
igh ec e a iabi i , c ai , ,c , a d ega e e e. . . a i i g
f e a ed (I) he P e , (II) he W k, (III) [I e ] defa [ ].
b. The Collateral Assignment of Beneficial Interest, another of the 17 Documents
signed at closing, stated a Pa ag a h 3(b): A f d ad a ced b Le de f
any purpose. . . and all expenses incurred in connection therewith, including
A e Fee a d C , will be part of the indebtedness secured by the
security interest created in this Assignment, and will be immediately due and
a ab e ih ice a d i h i e e a he Defa Ra e ecified i he
N e.
c. The Addi i a La g age f P i N e d c e ,a e f he 17
Documents signed at closing, at Paragraph A stated: Le de a , he f e
extent permitted by applicable law, exercise its rights against
B e /Be eficia a d went efe e ce B e /Be eficia
persona iabi i .
102. Indeed, Build threate ed I e ih ch e a iabi i i h a di g
its prior representations that no personal liability exists. For example, in an email dated January 6,
2016 to the Investor relative to the property located at 8335 Todd Creek Cir., West Chester, Ohio
45069, Build Operations Manager, Chris Robertson, wrote:
If we do not receive at least $3,000 by Friday the 8th, we are taking the following actions:
Changing the locks on the house

Selling the property to another investor
Pursuing legal action for any losses we take in reselling the property, which would
include all late payments, outstanding utilities and any amount we would net that
is less than the loan amount
46
Please understand that this problem is not going to go away if you choose to walk away
from this loan, as we will be forced to pursue you for the outstanding payments that are
owed.
(Emphasis added).
103. Build, in fact, did pursue claims for damages against one or more Investors in this
ac i a e-court predecessor.35
104. Despite First Tit e /M . C e dece i e a d ca a ie e e a e i
by Investors at closing, the Trust Transactions under the Build Sche e e e, i fac , a big dea
through it, the properties were conveyed by Build to Edgar Construction as trustee (essentially
from Build to Build itself), and the Investors were named as beneficiaries, but the 17 Documents
show that the rights of Investors-as-beneficiaries quickly evaporated. Rather, the trusts were set
up to benefit Build, GT, and the Permanent Lenders, certainly not the Investor/beneficiary.
105. Build, the Build Companies, First Title, and Mr. Conners, with actual, detailed
knowledge of the various frauds described above, all directly participated in Investor closings,
purposefully distorting the true nature of the Trust Transactions to induce the Investors to
consummate the same. Moreover, most if not all of the frauds that occurred at the Sell Side closings
benefitted the Permanent Lenders.
Post-Closing
106. At the conclusion of each Sell Side closing, the Investors had paid $10,000 to be a
purported beneficiary to a trust created by a Build Company transferring a property to itself as
ee. The I e had a c i ed de ake a f he ee b iga i a gag
and to be B i d kh e relative thereto, all while also paying 15% interest per annum and 4.9
i B i d. Thi i i akc a he a ac i b hich he e e bai ed i he
35
Build eventually dismissed these claims.
47
Build Scheme, under which their closing costs would have been a fraction of what they were under
the Build Scheme, and where they would have received title to the properties.
107. Once the Rehab Escrow was finally funded, the Investors received the money that
was loaned for improvements to the property through (frequently delayed and insufficient)
periodic draws. A draw could only be made after the completion of a specific rehab project within
the property.
108. As previously discussed, each project was pre-budgeted by Build, with costs for
improvements generally and deliberately undervalued. This led to many post-closing difficulties
for Investors.
109. For instance, where an Investor emailed Mr. Bailey expressing his frustration over
Build budgeting $200 for the rough plumbing of a brand new bathroom on the second floor, the
Investor was required to actually pay for the materials, contractors, and all other costs out-of-
pocket first (which, upon information and belief, greatly exceeded $200), and then request
reimbursement from the Rehab Escrow funds of the $200 only when that particular portion of
rehab was completely finished, despite paying excessive, marked-up interest on the Rehab Escrow
funds.
110. To receive a draw from the Rehab Escrow Account, the Investor had to allow a
Build employee or agent to inspect the completed project. Investors incurred another $150 for each
rehab inspection, which was split between First Title and Build for Rehab Escrow funds held by
First Title, and retained by Build for Rehab Escrow funds that Build held.
111. The draw process was used to further defraud Investors once they had entered into
the transaction. For example, in a June 9, 2015 email to Build agent Cedric Pashi, an Investor
expressed frustration with the draw process by stating:
48
[The inspector] NEVER returned my calls and 2nd of all he is quite frankly being
very, very picky in regards to releasing funds. For example: He would not release
the funds for cabinets even though they are completely installed. He would not
release the funds for the appliances even though they are in place and ready to
go. He said because they were not hooked . I other words, the water line
was not ran to the dishwasher or the fridge. He would not release the funds for
painting and ceilings even though ALL the painting has been completed except
the touch- . Ced ic, I understand that he has to protect Gary's best i e e
but quite frankly, this is ridiculous and has to change. We are paying 15% interest
on the TOTAL loan amount and we have to fight just to get reimbursed for funds
we have already spent. What is the purpose of borrowing money for rehab and
paying interest on it if you do not get any of the money back until the end???
Mr. Pashi responded to the Investor by stating:
I understand your frustration . . . and it has been an issue with all of our clients
and hopefully Gary is addressing that issue.
(Emphasis added).
112. If a line item exceeded the pre-determined budget, which often occurred, the
Investor was not reimbursed for the amount exceeding the initial projection, which was created by
Build as a material inducement to enter the transaction but, rather, was forced to come out of
pocket to cover the deficiency.
113. Upon information and belief, this was a recurring issue with the budget projections
that forced numerous Investors to come up with significant amounts of additional and
unanticipated funds out of pocket, thereby impeding their ability to meet their other purported
obligations under the Build Scheme and forcing them into default. These fraudulent practices did,
however, benefit Build and the Permanent Lenders, by providing additional and increasing security
in the form of equity in the property.
The Scheme Works so Well, it gets Financed by Outside Lenders
114. Generally, within two to twelve weeks of the double closing, Build would sell the
rights to the loans to a Permanent Lender. In turn, the Permanent Lender received a secured interest
49
in the property (an assignment of the Mortgage) and an assignment of the Collateral Assignment
of Beneficial Interest (i.e., an assignment of the beneficial interest in the trust in which the property
was held). None of this was disclosed to the Investor, the beneficiary of the trust.
115. As developed by the Build Scheme and described in part through the Loan PSAs
and FSAs, GT Financial (before the sale of the Investor loans to the Permanent Lenders) and each
Permanent Lender (after such sale) were knowing and direct beneficiaries of the entire fraudulent
Build Scheme, including the illegal waiver of the rights of redemption and to excess proceeds.
Build effectively acted as a broker and undisclosed agent for GT Financial and the Permanent
Lenders to secure the loan documents that conferred such benefits.
116. As is conspicuously acknowledged, and even required by terms of the Loan PSA
and FSA, each of the Permanent Lenders had granular involvement in the management of the loan
portfolios, including without limitation advising and instructing Build on whether to take back
specific properties that were in default, whether to offer Promissory Note extensions, how to
manage delinquent Investors, and deeming he e e he O e f he e ie he d i
f I e ,a e a a igh e a ed he e .
117. Defendants knew the routine that the trusts were established for the benefit of the
Permanent Lenders and (by way of the various other frauds associated with the Build Scheme) the
trustee. However, the Investors, who were the stated beneficiaries of the trust, did not. In reality,
B id a e e a he a h he had edged hei fide i .
118. Instead, Build sold its loyalty to the Permanent Lenders and acted, at all times, for
hei a d he Defe da be efi , as set forth above and developed more fully herein.
50
119. Upon information and belief, more than 90% of the loans that Build made to
Investors were pooled and purchased by the Permanent Lenders. The money from these sales
repaid the initial lender, GT, for its short-term financing and funded the Rehab Escrow.
120. When the Permanent Lenders bought loan pools from Build pursuant to the Loan
PSAs from and set up FSAs with Build, the Permanent Lenders were fully aware of the nature of
the Build Scheme.
121. The Permanent Lenders were provided and aware of the 17 Documents that were
used in the Build Scheme. The Build Scheme was further explained to them by Build. The
Permanent Lenders were aware of all of the following:
a. That Investors were duped into forming an LLC for the improper purpose of
circumventing applicable laws that could otherwise be favorable to Investors.
b. That Investors initially signed a purchase contract falsely indicating that they
would take title to the property upon the consummation of the Sell Side closing.
c. That no assignment of the right to purchase the property was ever executed.
d. That the property was purchased and retained through an unlawful trust.
e. That the placement of a Build Company as the Seller, the named lender, and
buyer/trustee of the trust created a number of irreconcilable conflicts and
constituted self-dealing in breach of the fiduciary duties owed to Investors.
f. That the trust structure served the sole and deliberate purpose of protecting the
Pe a e Le de i e e , he de i e f he I e h e e he
beneficiaries under the trusts.
g. Tha B i d i e e ai ed a i e e ae a d i ead
disclosed to Investors and to the detriment of Investors.
h. That the Trust Transaction structure denied Investors their statutory rights of
redemption and to excess proceeds and put the Permanent Lender in a position
di ec c a d decide each I e fa e relative to these rights. In
other words, the Permanent Lender became the direct beneficiary of the illegal
and improper waiver of right of redemption.
51
i. And that Build regularly used the Trust Transaction structure, and the Build
Scheme generally, to unfairly and unlawfully profit off of Investors by
maintaining a steady flow of interest payments to the Permanent Lenders and
to itself.
122. For example, in a prospectus to one potential lender, which was, upon information
and belief was based on the documentation Five Mile required Build to submit, sent on January 5,
2016, Build flaunted:
a. The i a fea e fa f a i ha ed a he B e
ake i e he e ;a d
b. H di g each e i a i di id a ha i c lled by the Lender-
appointed Trustee provides an additional layer of protection and control for the
Le de .
123. More recently, on June 1, 2018, Build described the trust structure to Smith Graham
b a i g, i a , he f i g Ad a age he a ucture:
a. J dicia f ec ei e i ed ec ai he a e i ca e f defa ;a d
b. If B e defa , he a e e ed a Be eficia a d a e Be eficia
i a ed.
124. Upon purchasing the loans from Build, Permanent Lenders were vested with full
decision-making authority on what to do if an Investor failed to make a payment. When this
happened, the Permanent Lenders made the decision whether to change the locks and take back
the property, or to simply sell the property and keep the proceeds in derogation of the statutory
rights of redemption and to excess proceeds.36 This authority is plainly spelled out in the terms of
36
And, in fact, the high interest rate and the requirement that the Investors pay all rehab costs out-of-pocket before
seeking reimbursement placed a burden on Investors that many Investors were not capable of carrying. They were,
after all, expecting to pay only $10,000 on a loan that included rehab costs.
52
the Loan PSAs and the FSAs, which repeatedly make B i d ac i eai e I e bjec
he Pe a e Le de a a r at their direction.
125. As set forth herein, GT Financial and the Permanent Lenders not only encouraged
and assisted, but actually directed and instructed Build and the Build Companies to act as set forth
above, breaching the fiduciary duties owed to the Investors and knowingly, purposely, and
a ici i a i g he I e igh including the right to redemption, the right to excess
proceeds, and the right to a loyal and disinterested trustee for the profit and benefit of
Defendants.
126. The Permanent Lenders, thus, always were the intended beneficiaries of the trusts,
e i gi I e f he igh s to redemption and to excess proceeds from the financing
portion of the Build Scheme and, in fact, enabling all other aspects of the Build Scheme.
127. The Build Companies effectively acted as agents for GT Financial and the
Permanent Lenders in effectuating these breaches and violations, as GT Financial and the
Permanent Lenders retained a secured interest in the properties and directed the Build Companies
on several material, improper, and/or illegal aspects of the Build Scheme, including: (a) directing
them to take back the properties (in violation of the right of redemption); (b) directing them in
handling a property once taken back from the Investor (depriving the Investor of the excess
proceeds to which it is entitled under applicable state law); and (c) directing them with regard to
the handling of the Rehab Escrow, among other forms of direction.
128. Specifically, and by way of example:
a. On June 11, 2015, M . Bai e e a I e ia e ai , O ce a a i 2
months late we have to report as a default to the lender who will begin actions
53
to take the property back and resell it. (Emphasis added). The lender or an
agent of the lender for this property was Five Mile.
b. On February 23, 2016, Mr. Bailey wrote to ano he I e ia e ai , I
reaching out to you to help avoid an uncomfortable situation with the lenders
on Glasgow . . . Their intention is to take both properties back. (Emphasis
added). Fi e Mi e a he e de age f he e de f he G a gow
property referenced in this email.
c. On April 15, 2016, Chris Robertson, under his title as Operations Manager for
B i d, e he a e I e ia e ai , [W]e a e g i g e he e der
know that they are not going to receive payment for April, and that they have
the opportunity to decide what will happen with the home. They have the
opportunity to work with us to see if they will allow you more time to pay, or
they have the legal right to take ownership of the property. . . I m certain that
they will take the house back if we are unable to explain to them why you are
aki g a e . (E ha i added).
d. O J e 12, 2017, Ch i R be e a he I e ia e ai , O
main lender is becoming more involved in our business . . . What that means is
you will receive a letter indicating that you are in default, and have until the
30th to become current on your loan. If you are not current on July 1st, they will
expect that we will take the house (or houses) back. (E ha i added). The
lender for this property was Smith Graham.
e. O A g 21, 2017, M . Bai e e a he I e ia e ai , The e i
a very real possibility that at some point tomorrow the lender will instruct us to
54
change the locks and take the house back. (E hasis added). The lender for
this property was Five Mile.
f. On November 2, 2017, Chris Robertson wrote to the same Investor as above
ia e ai , The lender is willing to consider another extension on your loan,
but you will have to be paid up for October and November before they will
consider this . . . if payment is not received, the loan will be in default, and they
will not extend the loan. (Emphasis added).
g. On February 18, 2018, Mr. Bailey wrote to Smith Graham via email describing
situations with two Inve h e e i defa a d a ki g, P ea e e e
know if there are any specific actions you would like us to take for either of
he e. B h f he e e ie e e ake back. P e ab , a d pon
information and belief, Build took back these propertie a S i h G aha
direction.
129. On August 10, 2018, Mr. Bailey wrote to several key employees and agents of Build
the following, describing in detail the level of control the Permanent Lenders exerted over Build,
Mr. Bailey, and Mr. Triantafilou:
Whe I e he e he e de , I efe i g B i d G ee eaf i hi

context The actual lender is the private equity fund in New York that bought the
note from us they are the ultimate decision makers on any loan defaults because
it is their money on the line.
Our job is to work with Borrowers, and in the case of default e he e

what actions we have taken with the Borrower each month so that they can make
an informed decision as to what actions they would like us to take.
(Emphasis added).
The e de efe e ced i hi e ai a S i h G aha .
55
The End-Game
130. If and when an Investor defaulted on its loan, the Permanent Lender had very little
risk of losing the money it lent. There are at least five reasons for this. First, the Permanent Lender
was receiving 12.5% interest, which was at the highest end of what is considered reasonable for
hard money loans, and therefore minimized the risk of loss. Second, the Permanent Lender avoided
both the time and expense of foreclosure upon default under the Build Scheme. Third, the low
rehab estimates generally required Investors to put their own money and sweat equity into the
e f he a , i c ea i g he Pe a e Le de ec i . Fourth, when Build took back
a property, it simply resold it to another Investor or an end buyer, often for a profit. And fifth,
Build agreed to broadly indemnify the Permanent Lenders in both the Loan PSA and FSA.
131. For example, when Plaintiff Ranger defaulted, the property was subsequently
eca a he I e for a purchase price of $40,000.00 more than Ranger paid (upon
information and belief demonstrating the value and improvements contributed by Ranger, for
which it was never compensated).37 Si i a , P ai iff E i jae e a eca a he
Investor for a purchase price of $23,000.00 more than Elinjae paid.
132. No matter how much the property was re-sold for upon default, the Investor
received no excess proceeds, none of its $10,000 back, and none of the money it put into the
property, even where the proceeds from the sale were more than sufficient to satisfy the Total Loan
Amount, along with any outstanding taxes, liens, or sale costs.
133. This forfeiture of the excess proceeds was with the full knowledge and consent of
the Permanent Lenders, the true beneficiary of the trust.
37
Notably, the Initial Mark-U he Ra ge e a a ead $29,900.00. The eca ice a e ha
double what Build had paid for the property on the Buy Side.
56
134. Those who had enough of their own capital in reserves and were fortunate enough
to make it through to the conclusion of the Build Scheme still often faced challenges as a direct
result of the Build Scheme.
135. For example, many national title underwriters issued bulletins into local title
agencies specifically instructing them not to close transactions involving Build and/or the Build
Companies. Upon information and belief this was because of the fraudulent or otherwise improper
nature of the transactions. An example of one of these bulletins is included below:
136. As a result, many Investors faced challenges finding a title company willing to close
on the sale to an end-buyer if such end-buyer did not wish to use First Title.
57
137. Additionally, many Investors were, for a time, unable to sell their properties. These
be e e, i fac , i e i e ha a ia e d be c e ed b a egi i a e e
policy of the type purportedly sold to Investors at the Sell Side closings (i.e., as opposed to the
I O e P icie ).
138. As previously discussed, when Investors sought to make a claim as to title issues,
Edgar Construction as trustee refused to make a claim under the policy, and Stewart refused to
honor it without such claim being made by the trustee, as shown below:
139. N ab , i he ab e i a ce, S e a de ia had hi g d i h he
underlying claim but, rather, who brought it. Thus, even though Investors were told that the
I O e P ic d ec he a d they paid for such protection, they are not and
were not a a ed i ed a de [ he ic ] a d, he ef e, he e [was] no policy
coverage.
140. Upon information and belief, he I O e P icie eea e-planned
mechanism by which First Title could further capitalize on the volume of business they were
receiving under the Build Scheme, charging Investors for coverage that they knew would never be
honored.
Defendan F a d e C cea e
141. Starting in July 2017, when Defendants Build and Edgar Construction refused to
answer simple interrogatories in a now-dismissed state-court action, Defendants have acted
repeatedly and consistently to obstruct discovery and fraudulently conceal the members of the
58
Build Scheme. Because of this systematic obstruction of discovery, Plaintiffs and the members of
the putative Class did not discover, and could not until recently have discovered, the scope and
extent of the Build Scheme and conspiracies alleged herein, and the roles many Defendants played
in participating or directing the actions that proximately injured Plaintiffs and Investors.
142. For example, after nine months of repeated attempts to understand some of the key
a e in the Build Scheme in the state-court action, Plaintiffs were forced to notice limited
Ohio Rule of Civil Procedure 30(B)(5) depositions of Build and GT Financial simply to obtain the
names and roles of the Permanent Lenders. Although Plaintiffs were able to obtain the names Five
Mile and Smith Graham at these depositions, they were not at the time able to understand their
complete role and authority in the Build Scheme and within the Build Enterprise (defined below).38
143. As part of one of those 30(B)(5) depositions that took place on April 25, 2018, Mr.
Triantafilou clai ed ha he a j a e de , ha he a i ed i B i d affai , a d
ha he did k ha [Ga Bai e a ] d i g i h ha e . Thi a fa e. D c e
later produced in discovery show that, prior to his deposition, Mr. Triantafilou was integrally
involved and knowledgeable regarding the details of the Build Scheme. For example, in just the
few months prior to his April 25, 2018 deposition, Mr. Triantafilou participated in multiple
telephone meetings of the Build Executive Committee, including one resulting in a February 14,
2018 email where it was made clear that Scott Whiteside, George Triantafilou, and Stephen King
were the owners of G2 Technologies, which was going to purchase Build, and had already
migrated over and transferred ownership of the key software and the name. For years before his
38
Notably, Mr. Bailey testified under oath in April of 2018, as a corporate representative of both Build and Edgar
Construction, that (i) Five Mile and Smith Graham (not Fund IV or V) purchased the loans by wiring funds to GT
Fi a cia e ace i e a fi a ci g, (ii) ha B i d agreements relative thereto were with Five Mile and
Smith Graham (not Fund IV or V), and (iii) that Five Mile and Smith Graham received security in the properties by
virtue of assignments of several of the 17 Documents signed by Investors at the Sell Side closings.
59
deposition he had taken an active role in decision-making with respect to Build and the Build
Scheme. For example:
a. On June 7, 2018, Mr. Triantafilou emailed the Build office coordinator to let
he k ha he had e a ed $50,000 f B id eai g
acc a di a GT Fi a cia acc a S e e a d Ga ;
b. Just two hours later, that same day, Mr. Triantafilou responded to an email from
Mr. Bailey expressing concern over B i d age J a ha Peak capability by
i g M . Bai e i hi ace: D de, e j had hi c e ai e e da .
I NOT ca a e. P ea e ha e c ce i h hi , I m not
de c i g GM ;
c. On January 11, 2018, Mr. Triantafilou participated in an email exchange with
Build agents and employees instructing Build on how to move funds between
ai B i d acc i de a B i d bi ( ch a e ) beca e Build
did not have adequate funds to meet such obligations;
d. On November 8-9, 2017, Mr. Triantafilou engaged in an email exchange with
Build employee, Chris Robertson, regarding office tension within Build
involving Mr. Bailey;
e. On October 26-27, 2017, Mr. Triantafilou participated in an email exchange
with Ste he Ki g ega di g B i d hi d-quarter profits and losses; and
f. I 2015, M . T ia afi a i ed a a B i d ad i a d e be f he
B id a age e ea i a K Y C e Q e i ai e e
Investors and/or Permanent Lenders.
60
144. The foregoing is inconsistent with the fraudulent representations made by Mr.
Triantafilou at his deposition, when he stated that he wa j a e de .
145. A a he e a e f Defe da fraudulent concealment, nine months after
Defendants Build and Edgar Construction had a e ed P ai iff Sec d Se f Re e f
Admission in the related state-court proceeding, their new counsel ded a e e a
response to P ai iff . I he e e , e f i c e de ia e e cha ged
admissions. These included the admissions that outside lenders or note buyers (i.e., the Permanent
Lenders) retained a secured interest in the properties, that Build requires Investors to be organized
as a corporation or LLC before it would provide financing, and that prior counsel had received
correspondence advising him that Build and/or Edgar Construction were required to be registered
as trust businesses. Build and Edgar Construction even went so far as to deny that Edgar
Construction served as a trustee for one or more trusts containing real property in Ohio, which
discovery demonstrated is a fundamental part of the Build Scheme.
146. When Defendants did produce documents, they did so in a digital data dump, with
each of multiple productions being so plagued by deficiency that it took Plaintiffs months and
several thousands of dollars to be able to do basic searches on the hundreds of thousands of
(significantly internally duplicative) pages.
147. Even the state court g e i ed f B i d Defe da ac i , a d i June 2018,
issued discovery sanctions of $10,000 against Defendants Edgar Construction and Build, alongside
a court order requiring Build and Edgar Construction to produce specific supplemental discovery
on a monthly rolling basis and to detail by Bates-number which documents corresponded to which
f P ai iff Re e f P d ci . Defe da c i e ig ed he b k f he a e c
order, provided no monthly supplement, provided no monthly update on the names of the Investors
61
and those property addresses that Build had taken from Investors without going through judicial
proceedings, and argued that they had no obligation to provide any reference to Bates-number. It
was not until January 2019 that Defendants began producing again, and each production contained
substantial and significant deficiencies.
148. These are only a few examples of the constant and deliberate concealment of the
matters indicated above in the state-court discovery.
149. Plaintiffs and the members of the Class could not have discovered the alleged
unlawful activity at an earlier date by the exercise of reasonable diligence because of the deceptive
practices and deliberate obstruction of discovery employed by the Defendants and their co-
conspirators to avoid detection of, and fraudulently conceal, their unlawful conduct.
150. Because the alleged unlawful conduct was affirmatively concealed by Defendants,
Plaintiffs and members of the Class had no knowledge of much or all of the alleged unlawful
conduct, nor could they have had any knowledge of the alleged unlawful conduct, before late 2018
or early 2019. This action was initially filed in February of 2019, and Plaintiffs are still learning
of new and pervasive illegal conduct undertaken as part of the Build Scheme.
V. CLASS ALLEGATIONS
151. Plaintiffs bring this action on behalf of themselves and the following Class
including one Subclass pursuant to Rule 23 of the Ohio Rules of Civil Procedure:
CLASS DESCRIPTION
Plaintiffs and all other persons and entities, individually and collectively, that
invested in real property and were named as beneficiaries to a trust created through
an unlawful real estate transaction engaged in by, through, or with any of the
Defendants named herein, using the Build Scheme further described and defined
he ei , f he ge e i d a ed b a ( he C a ).
62
SUBCLASS DESCRIPTION
Members of the Class that had their properties reclaimed and resold as a result of
default, without access to judicial foreclosure proceedings and the opportunity to
redeem, and without receiving the excess proceeds (if any) upon subsequent sale of
the property by Build.
152. The Class excludes the officers and directors, and current or former employees
and/or agents, as well as immediate family members thereof, of Defendants and their parents,
subsidiaries, and affiliates.
153. The Class consists of hundreds of Investors, and is therefore so numerous and
dispersed that joinder of all members is impracticable.
154. The Subclass consists of more than 35 Investors, and is therefore sufficiently
numerous and dispersed that joinder of all members is impracticable.
155. There are questions of fact or law common to the Class and the Subclass. These
questions include, but are not limited to:
a. Whether the Build Scheme is illegal;
b. Whether Build conspired to and did engage in a pattern of deceptive
misrepresentations that had the intended effect of making Investors
beneficiaries of a trust, rather than title holders of property;
c. Whether misrepresenting the investment scheme violated Ohio law;
d. Whether Defendants violated Federal RICO and/or Ohio Corrupt Practices Act;
e. Whether Defendants engaged in civil conspiracies to unlawfully injure
Plaintiffs;
f. Whether Build attempted to mislead potential Investors, and conceal the
existence of, their fraudulent, illegal, and corrupt scheme;
g. Whether Defendants were and are engaged in a pattern of corrupt activity;
63
h. Whe he he c ea ed b B i d a fe f e i efa ee a e
void or voidable as against public policy, for self-dealing and for granting the
Trustee a beneficial interest in the property;
i. Whether, notwithstanding whether the Trusts are void or voidable, Edgar
Construction and the other Defendants breached their fiduciary and other
obligations as trustee of the Trusts;
j. Whether First Title and Pat Conners breached their fiduciary duties to Investors
or acted negligently in misrepresenting material aspects of the Trust
Transactions and/or Build Scheme and/or acting in furtherance of the fraud
being perpetrated upon Investors;
k. Whe he he e i e B i d Sche e i e c g I e igh f
redemption and right to excess proceeds in violation of Ohio law by requiring
Investors to sign away such rights in order to invest with Build;
l. Whether Defendants committed fraud in the inducement and/or theft by
deception against Investors by luring them into the Build Scheme by uniform
written and oral misrepresentations, including but not limited to the purchase
contract for the properties with the non-refundable down payment;
m. Whether Defendants committed fraudulent concealment in order to prevent
Plaintiffs from understanding who the players in the Build Scheme were and
the full extent of the misconduct ; and
n. Whether Defendants violated Ohio and/or Kentucky law by mishandling funds
relative to the Investors and the Build Scheme.
64
o. Whether each of the following defined frauds are illegal or otherwise improper:
Initial Mark-Up; Down Payment Fraud; Closing Cost Cap Fraud; Rehab
Estimate Fraud; Title Fraud; Failure to Obtain Contract Assignment Fraud;
I e e Ra e S ead; Rehab E c F a d; I O e P ic F a d; a d
each of the Fraudulent HUD-1 Charges, as defined.
156. P ai iff c ai ae ica f he C a a d he S bc a a d P ai iff a e
subject to any unique defenses.
157. Plaintiffs will fairly and adequately protect the interests of the Class and the
S bc a . P ai iff interests do not conflict with the interests of the Class or the Subclass.
158. With the help of qualified counsel who are experienced in such litigation, Plaintiffs
are capable of adequately representing the proposed Plaintiff Class and Subclass for any and all
purposes in that Plaintiffs, like the other members of the proposed Plaintiff Class and Subclass,
have been proximately injured by the acts of the Defendants. Each Plaintiff was injured in the same
way by the Build Scheme, as were other members of the Class and the Subclass.
159. Ce ifica i f P ai iff c ai f ca ac i ea e i a ia e a
to Rules 23(a) and 23(b) of the Ohio Rules of Civil Procedure. Under Rule 23(b)(2), Build, by
entering into and carrying out this unlawful scheme, acted on grounds generally applicable to the
class, thereby making appropriate final injunctive or corresponding declaratory relief with respect
to the Class and Subclass as a whole, halting the scheme and reversing its harmful effects.
Moreover, under Rule 23(b)(1)(A), the prosecution of separate actions over these transactions by
individual members of the Class or Subclass would create the risk of inconsistent adjudications
with respect to the individual members of the Class and Subclass that would establish incompatible
standards of conduct for the Defendants regarding the trust structures and misrepresentations.
65
160. Certification is also appropriate under Ohio Rule of Civil Procedure 23(b)(3),
because the classwide questions concerning the Build Scheme and the harm thereby inflicted on
Class and Subclass members predominate over any questions affecting only individual Class and
Subclass members and a class action is superior to any other available method for fairly and
efficiently compensating Class and Subclass members for the harm they suffered as a result of the
Build Scheme.
161. A class action is superior to other available methods for the fair and efficient
adjudication of this controversy. Individual lawsuits are economically infeasible and procedurally
impracticable.
162. Plaintiffs know of no difficulty to be encountered in the management of this case
that would preclude its maintenance as a class action.
VI. CLAIMS ALLEGED AND RELIEF SOUGHT
COUNT I
Violations of the Federal RICO statute, 18 U.S.C. 1961, et seq., and the Ohio Corrupt
Practices Act ( OCPA ), R.C. 2923.31, et seq.
163. Plaintiffs reallege and incorporate by reference each of the allegations contained in
this Complaint as though fully alleged herein.
164. P ai iff eek eb e da age , a e fee , a d e i ab e e ief de 18 U.S.C.
1964 and Ohio R.C. 2923.34, for violations of 18 U.S.C. 1962(c) and (d), and Ohio R.C. 2923.31,
et seq., and conspiracy to violate Ohio R.C. 2923.31, et seq.
165. This claim is brought by the Plaintiffs against all named Defendants except Build
Realty, Inc. Throughout this Cause of Action only, Defendants refers only to these entities.
166. The Defe da ae e within the meaning of 18 U.S.C. 1961(3) and Ohio
R.C. 2923.31(G), who conducted or participated in the affairs of an enterprise through a pattern of
66
corrupt activity, in violation of 18 U.S.C. 1962(c) and Ohio R.C. 2923.32(A)(1), or conspired to
do so, in violation of 18 U.S.C. 1962(d) and Ohio R.C. 2923.34(A). Plaintiffs allege that the
following Defendants violated 18 U.S.C. 1962(c) and Ohio R.C. 2923.32(A)(1): Gary Bailey;
George Triantafilou; Scott Whiteside; Pat Conners; Edgar Construction; Cincy Construction, LLC;
McGregor Holdings, LLC; Cowtown Holdings LLC; Build NKY LLC; Build SWO LLC;
Greenleaf Support Services; G2 Technologies; GT Financial; and First Title. Plaintiffs allege that
those same Defendants, along with the Permanent Lenders, violated 18 U.S.C. 1962(d) and Ohio
R.C. 2923.34(A).
167. P ai iff a e e , a ha e i defi ed i 18 U.S.C. 1961(3) a d Ohi R.C.
2923.31, h e e i j ed i hei b i e e a a i ae e f Defe da
wrongful conduct.
A. Violation of 18 U.S.C. 1962(c) and Ohio R.C. 2923.32(A)(1)
168. To prove a violation of 18 U.S.C. 1962(c) and Ohio R.C. 2923.32(A)(1), Plaintiffs
must show, as to each Defendant, that the Defendant: (i) conducted, (ii) an enterprise, (iii) through
a pattern of racketeering activity. Plaintiffs must also show that they have been injured in their
business or property by reason of such conduct. These requirements as they relate to the Build
Scheme are set forth below.
1. Conduct
169. T c d c he affai fa e e ie ea ead, , a age, di ec
th e affai , a d a ici a e, di ec i di ec ,i he c d c f ch e e ie affai
means to take part in the direction of the affairs. Reves v. Ernst & Young, 507 U.S. 170, 177-79
(1993). RICO iabi i is not limited to those with a formal position in the enterprise, but some
a i di ec i g he e e ie affai i e i ed. Id. a 179 (e ha i i igi a ). Di ec i g
67
a e e i e ca be acc i hed ei he b aki g deci i beha f f he enterprise or by
knowingly ca i g he . Ouwinga v. Benistar 419 Plan Servs., Inc., 694 F.3d 783, 792 (6th
Cir. 2012) (quotation omitted). Set forth below are the facts relating to each Defendant alleged to
have been involved in conducting the affairs of the enterprise associated with the Build Scheme.
2. Enterprise
170. Build Realty, Inc. i a e e ie i hi he ea i g f 18 U.S.C. 1961(4) a d
Ohi R.C. 2923.31(C) ( he B i d E e i e ).
171. Whi e he defe da e be di i c f he e e i e, c ae
defe da a e di i c f e e ie he he a e f ci a e a a e, a he he
perform different roles within the enterprise or use their separate legal incorporation to facilitate
acke ee i g ac i i . In re ClassicStar Mare Lease Litigation, 727 F.3d 473 (6th Cir. 2013).
172. As described above, each of the Build Companies named as Defendants in this
count were functionally separate from Build Realty, inasmuch as they performed different roles
within the Build Enterprise and used their separate legal incorporation to facilitate the racketeering
activity conducted in furtherance of the Build Scheme.
173. The Build Enterprise was an ongoing and continuing business organizations that
existed for a common purpose beyond and in addition to legal business it conducted, and that
common purpose was to carry out and unlawfully profit from the pattern of racketeering that
comprised in large part the Build Scheme. The Build Enterprise had an identifiable structure
separate and apart from the pattern of racketeering activity described below.
174. Each Defendant was integral to the Build Scheme. For the Build Scheme to
succeed, it required participating real estate professionals, real estate holding companies, a
68
complicit title agency, up-front short-term financing, and longer-term permanent lenders.
Defendants fulfilled and actively participated in and/or directed these roles.
3. The Role of Each Defendant in the Build Enterprise
Gary Bailey
175. Gary Bailey was at the center of the Build Scheme. As sole beneficiary of the sole
member of Build Realty, Mr. Bailey exercised control of the following companies: Edgar
Construction, LLC; Cincy Construction, LLC; Cowtown Holdings LLC; McGregor Holdings,
LLC; Greenleaf Support Services, LLC; and Build SWO LLC, and upon information and belief,
Build NKY LLC.
176. Mr. Bailey developed and ran the Build Scheme with its 17 Documents alongside
George Triantafilou during the Relevant Time Period, until Stephen King was brought in to help
run the Build Scheme. Mr. Bailey thereafter retained a leadership role, but under the authority and
direction of Mr. Triantafilou, Stephen King, and eventually Mr. Whiteside. Mr. Bailey was the
face of the Build Scheme and held many leadership positions at Build and its alter egos, including
Owner, President, and Chief Technology Officer.
George Triantafilou
177. Although Gary Bailey started the Build Scheme, George Triantafilou was the brains
behind the Build Scheme. As early as 2012, Mr. Bailey and Mr. Triantafilou were communicating
in emails about the Build Scheme, describing the 17 D c e a a de de e ped to protect
he Le de i ee i he e ab e a e e. I ga i a i a cha a d eg a B i d
executive team calls Mr. Triantafilou was listed as part of the executive ea , he CEO ea ,
and in deposition testimony former Build agent Derek DeVerna called Mr. Triantafilou the de
facto CFO. Mr. Triantafilou was a member of the Build Executive Leadership team, each member
69
of which had hiring and firing ability, and the authority to sign checks and enter into contracts on
behalf of Build. Mr. Triantafilou met regularly with Build executives to discuss properties that
were under risk of or actively in default, and other matters related to the direction and operation of
Build and the Build Scheme. Mr. Triantafilou is a co-trustee of the Bailey Investment Trust, which
was legally the sole member of Build during much of the Relevant Time Period.
178. Mr. Triantafilou participated in the exchange of thousands of internal Build
communications (including relating to internal policies and procedures), was intimately aware of
the nature of the Build Scheme, and directed the Build Enterprise. For example, on December 15,
2017, Mr. Bailey emailed Mr. Triantafilou with a list of sales for the last six months and the
statement that Build was spending about $1,000 a week on signs. Mr. Triantafilou responded,
a i g G ea feedback, e eed add e hi . I e ie i h Ch i a d S e e. J h
before, Mr. Bailey had emailed Mr. Triantafilou about restructuring the distribution of tasks
i g he B i d Sche e, hich M . T ia afi e ded: I i e ie i h S e e,
hich I a ead ha e a a deg ee. I ea 2018, M . Bai e a d B i d O e a i Ma age
Chris Robertson wrote to Mr. Triantafilou to ask how to work through B i d ca h-flow problems;
M . T ia afi e back, e i g he h d ff a i g e beca e he a d d i
a ki g e .
179. Mr. Triantafilou profited directly from every transaction under the Build Scheme.
In addition to the interest payments and fees received by his company, GT Financial, for much of
the relevant time period Mr. Triantafilou received a flat fee from G2 Technologies (of which he is
an owner) for every transaction.
70
Scott Whiteside
180. Scott Whiteside acted as the CEO of Build Realty, directing the activity of the
enterprise within the Build Scheme. Mr. Whiteside chaired at least 30 Build Executive Leadership
Committees from his home in Georgia, during which he and others discussed and directed the
ongoing Build Scheme and the operation of Build. Mr. Whiteside is also an owner of G2
Technologies, which B i d ke i e ec a e .
Pat Conners
181. Pat Conners was a Vice President at First Title in 2014. He was Bui d i a
point of contact with First Title. His role in directing and leading the Sell Side portion of the double
closing was to assure Investors that what they were entering into was normal and good, so that
they would quickly sign the hundreds of pages of documents without reading them. He led almost
every closing that was part of the Build Scheme by presenting each Investor with the 17 Documents
comprising almost 100 pages of small-size font, in addition to another dozen First Title and Stewart
Title documents.
182. Mr. Conners knowingly carried out decisions on behalf of Build under the Build
Scheme. This included not only presenting Investors with the appearance of legitimacy for the
Build Scheme, but also knowingly carrying out fraudulent financial aspects at closing, and then
falsely certifying the accuracy of the associated HUD-1 statements.
183. For example, on April 25, 2015, Pat Conners signed a HUD-1 Ack edge e
f Recei f Se e e Sae e f he Se Side c i g 4344 C iff d A e e, the
property that Plaintiff Pyramid Investment believed it was purchasing before it entered the Trust
T a ac i . Pa C e ig ed de ea h he ae e : T he be f k edge, he
HUD-1 Settlement Statement which I have prepared is a true and accurate account of the funds
71
which were received and have been or will be disbursed by the undersigned as part of the
e e e f hi a ac i . B Pa C e k e ha he $25,386.13 ha a i ed a
disbursed for Rehab Escrow on the HUD-1 was never received or disbursed by First Title, and
knew that in fact the funds would not be disbursed into the Rehab Escrow Account for weeks, or
longer.
Edgar Construction
184. While Edgar Construction was an alter ego of Build, it carried out specific and
separate roles from Build in the Build Scheme. It occasionally acted as the buyer in the Buy Side
transaction, and thus the seller in the Sell Side transaction. It almost always acted as the buyer in
the Sell Side transaction, purporting to be a trustee of a trust set up for the benefit of the Investors.
As such, Edgar Construction acted as an illegally unlicensed trust company for the void or voidable
trusts that are central to the Build Scheme. While presented as a trustee acting for the benefit of
the Investor, it was touted by other Defendants as not actually bound to act for the benefit of the
Investor. In this role, it both directed and carried out decisions relating to Build and the Build
Sche e. I i h gh Edga C ci ea ee ha the Permanent Lenders profited so
considerably with so little risk: because Edgar Construction purported to be a trustee but did not
actually abide by any of the obligations of a trustee under Ohio or Kentucky law, the risk outside
lenders took in buying a note on a property was minimal (excepting fraud by its co-Defendants).
Cincy Construction
185. Cincy Construction, LLC ( Ci c C ci ) was an alter ego of Build, but it
too carried out a specific and separate role in the Build Scheme. It acted as a buyer in the Buy Side
transaction and the Seller in the Sell Side transaction.39 It was one of several wholly-owned real
39
Upon information and belief, Cincy Construction ha ac ed a ee f a fe f he T T a ac i ,b B i d
standard operating procedure is to have Edgar Construction named as trustee.
72
estate holding companies that actively participated in Build and knowingly carried out unlawful
decisions with respect to Build and the Build Scheme.
186. The only purpose of using Cincy Construction to acquire the property before
conveying it to Edgar Construction as trustee was to effectuate the initial undisclosed markup of
the property and charge the Investor for closing costs that were either fraudulent or breached Edgar
C ci fid cia d he I e . O he i e, he e i e a ac i c d have been
accomplished by having Edgar Construction, as trustee, purchase the property from the third-party
seller from the beginning.
McGregor Holdings
187. McGregor Holdings, LLC ( McG eg H di g ) was another alter ego of Build.
It generally carried out the same role as Cincy Construction with respect to Build and the Build
Scheme. The properties McGregor Holdings purchased on the Buy Side of the transaction were
often from he U i ed S a e De a e f H i g a d U ba De e e ( HUD ). In
connection with these transactions, McGregor regularly and falsely certified that it was a e-
cc a cha e a d ha i ould cc the property as [its] primary residence for at least
12 h. U i f ai a d be ief, he fa e certification allowed McGregor Holdings to
obtain priority status when placing a bid on a HUD-owned property.
188. In connection with the purchase of properties from third-party sellers on the Buy
Side of the transaction, McGregor Holdings also engaged in a pattern of submitting spurious bank
account statements and photocopies of checks that had been digitally altered.
Cowtown Holdings
189. Cowtown Holdings LLC ( C H di g ) was another alter ego of Build,
which generally carried out the same role as Cincy Construction and McGregor Holdings with
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respect to Build and the Build Scheme. It acted as the buyer in the Buy Side transaction and the
seller in the Sell Side transaction. It is one of several wholly-owned real estate holding companies
that actively and knowingly carried out unlawful decisions made by the other participants in the
Build Enterprise. At one time, Cowtown Holdings was designated as the real estate holding
company for properties found in the Columbus area, but has also been used in the greater
Cincinnati area for this purpose.
Build NKY
190. Build NKY LLC ( B i d NKY ) was another alter ego of Build, which generally
carried out the same role as Cincy Construction, McGregor Holdings, and Cowtown Holdings with
respect to Build and the Build Scheme, except focusing on properties found in Northern Kentucky.
191. Similar to the other real-estate holding companies, the only purpose of using Build
NKY to acquire the property before conveying it to Edgar Construction as trustee was to effectuate
the Initial Mark-Up of the property and charge the Investor for closing costs that were either
fraudulent or breached Edga C ci fid cia d he I e r. Otherwise, the entire
transaction could be accomplished by having Edgar Construction, as trustee, purchase the property
from the third-party seller from the beginning.
Greenleaf Support Services
192. Greenleaf Support Services was another alter ego of Build. Greenleaf Support
Services carried out two roles in the Build Scheme. The first one was to act as the contracting party
with the Permanent Lenders related to the flow of interest payments to them. The second was to
maintain and control the Rehab Escrow Accounts held in trust for the Investors. Mr. Triantafilou
had full signatory authority over the account (PNC account ending in 7217), and used this authority
to unlawfully transfer money in and out of this account.
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Build SWO
193. Build SWO LLC ( B i d SWO ) was another alter ego of Build, to which the real
estate brokerage license is attached. Only Ohio-licensed real estate agents can make offers on or
negotiate the sale of real estate in Ohio. Only through Build SWO can the other Build Companies
buy, sell, and transfer properties as part of the Build Scheme. At each Sell Side closing, Build
SWO receives a $195 administrative fee.
194. When a Build Company, such as McGregor Holdings, purchases a property from
HUD, a Build SWO broker regularly falsely certifies that the property has been sold to an owner-
occupant purchaser (rather than an investor). Upon information and belief, the false certification
allows the Build Company that is purchasing the property to obtain priority status when placing a
bid on a HUD owned property.
G2 Technologies
195. G2 Technologies was a company that was set to transfer ownership of Build to
Scott Whiteside, Stephen King, and George Triantafilou, but in fact just acted as the de facto owner
when the contract to purchase was delayed pending, upon information and belief, this lawsuit. The
license for the most valuable intellectual property owned by Build its list of contacts and form
documents held on Salesforce.com is owned in full by G2 Technologies. G2 Technologies also
served to help funnel money away from the Investors and into the pockets of Scott Whiteside,
Stephen King, George Triantafilou, and Gary Bailey. It provided an extra layer of corporate
insulation for the transfer of funds from the Investors through First Title to G2 Technologies and/or
another Build Company, before ultimately being distributed to the Build leadership. G2
Technologies received proceeds from each transaction, and directed the conduct of Build.
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196. Additionally, G2 Technologies is a party to confidentiality, non-compete, non-
disparagement, and compensation agreements with certain employees and/or independent
contractors that performed k beha f f B i d, ch a B i d office coordinator/closing
coordinator Leah Storie.
197. In 2018, G2 Technologies implemented a new commission and bonus structure for
B id e ee a d/ i de e de c ac ha i efe ed a he G2 P a f S cce
(c efe ed a GPS ).
GT Financial
198. GT Financial acted as the short-term financing lender in the Build Scheme. It was
directed by George Triantafilou and knowingly carried out decisions on which properties to fund,
when to fund those properties, and how much to fund. GT Financial issued the funds used to pay
for the Buy Side transaction and portions of the Sell Side transaction, and then was reimbursed
when a Permanent Lender bought a pool of loans. All of the mortgages on the properties held in
trusts were owned by GT Financial, who assigned them to a Permanent Lender.
199. For his leadership role in Build, Stephen King was paid by GT Financial.
200. With full knowledge of the Build Scheme, including the 17 Documents, GT
Financial provided a revolving line of credit to Build to purchase homes from third-parties and
participated materially in the direction and management of the Build Scheme. GT Financial
profited by receiving interest on the revolving line-of-credit used by Build and by receiving flat-
fee payments for each unlawful real estate transaction. For example, despite not preparing any
documents, GT Financial received a $450 fee for Document Prep relative to the Sell Side closing
on the property located at 2270 Adams Avenue, Cincinnati, OH 45212. All emails from Build
requesting funds from GT Financial, and all delivery of funds from GT Financial to Build, flowed
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through Mr. Triantafilou. Mr. Triantafilou had complete control over GT Financial and used his
control over GT Financial to effectuate the unlawful and corrupt activity alleged in this Amended
Complaint.
201. Build acted at the direction and with the support of GT Financial and of the
Permanent Lenders in dealing with the Investors (its named beneficiaries) and the properties.
Because they provided the vast majority of financing for the Build Scheme, GT Financial and the
Permanent Lenders instructed Build on when to allow note extensions, when to allow late
payments, whether and how to collect deficient payments from the eventual sales of properties if
they were near completion, and whether to take back properties in viola i f he I e
statutory and common law rights, all with extensive knowledge of the Build Scheme and illegal
structure of the Trust Transactions. Build and the Build Companies effectively acted as a broker
for GT Financial and the Permanent Lenders f d i he i ega B i d Sche e, upon the express
agreement of GT Financial and the Permanent Lenders, who were fully-informed of the nature of
the transaction.
202. GT Financial and the Permanent Lenders not only encouraged and assisted, but
actually directed and instructed Build and the Build Companies to act as set forth above, breaching
the fiduciary duties owed to the Investors and knowingly i a i g he I e igh including
the right to redemption, the right to excess proceeds, and the right to a loyal and disinterested
trustee for the profit and benefit of Defendants.
Five Mile Capital
203. In 2014, a group of officers and employees of investment company Five Mile
Capital, including Brian Tortorella, Michael Tessitore, Brendan DeTommaso, and Michael
Fassnacht, met with Build and Mr. Bailey, learned the business model and how it was set up to
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dupe Investors and then protect lenders, and began supporting the Build Scheme by buying rights
he a i ed b B i d dba G ee eaf F di g. The e officers and employees, and therefore
Five Mile Capital, were aware of the Build Scheme. Eventually, Five Mile was funding up to and
sometimes more than 90% of the loans issued by Greenleaf Funding. As part of this relationship,
the people listed above were in regular contact with Build, demanding granular information about
each loan Five Mile owned, and even visited Ohio numerous times to personally meet the members
of the Build Enterprise and to physically inspect the properties Five Mile owned.
204. Using money it had raised and placed in an investment vehicle such as Five Mile
Capital Residential Bridge Loan Venture IV, Five Mile provided substantial capital to the Build
Scheme by purchasing the rights to receive 80% of the interest payments on a property and then
its principal back after the property is sold. Five Mile used its investment vehicle to take an interest
in the properties that are part of the Build Scheme in a way that other lenders refused to. For
example, a previous lender on a mortgage-by-mortgage basis, Caroline Lending, refused to engage
in the Sche e ce i de dh i ked. A Ca i e Le di g aid, Ga , e cannot do
hi . O a di d e e e acce a Assignment of Collateral Assignment of Beneficial
Interest. I c a , he e e ed i h he e ac a e ii , Michael Tessitore at Five
Mi e a ed G ea .I i ha e ea c e e the review this week. I think if the loans look
OK, e h d be ab e ge hi f ded e eek.
205. Discovery has shown that before the relationship began, Mr. Bailey took the time
a k Fi e Mi e h gh B i d b i e de . Th , Fi e Mi e a ici ated in and supported
the Build Scheme by providing capital to Build to knowingly and deliberately advance the
continuation of the Build Scheme to the direct detriment of Plaintiffs and the putative Class
members. In exchange, Five Mile generally received interest rates of 12.5% on the capital it
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provided to Build and always received a secured interest in the properties involved in the Build
Scheme. Five Mile also directed Build as to the actions to be undertaken if and when an Investor
defaulted under the B i d Sche e ha h e . Th , Fi e Mi e i i g ea ed benefits from
its deliberate and knowing role in the fraudulent Build Scheme, to the detriment of the Investors.
Five Mile specifically agreed to enter into this scheme with Build, allowing Build to be its agent
for the purpose of securing the loan transactions that were fraudulently procured and are
impermissible under Ohio and Kentucky law.
206. A a f Fi e Mi e b a ding its relationship with Build, Five Mile asked Build
fi a K Y C e Q e i ai e. U i f ai a d be ief, hi e i ai e
was then used by Build to pitch the Build Scheme to another lender similar to Five Mile. In a
January 5, 2016 email to this other lender, Build included the Know Your Customer Questionnaire
a g ih a f he ag ee e be ee Fi e Mi e i e e ehic e f d a d he B i d
C a ie . Tha K Y C e Q e i ai e, fi e Fi e Mi e pon information
and belief, contained the following affirmative statements:
a. The primary feature of all of our loans is that we do not allow the Borrower to
take title to the property. At closing, property is transferred into an individual
Land Trust with the Borrower named as the Beneficiary. The Borrower can take
no action without written consent of the Trustee. We have a local entity that can
serve as Trustee or each lender is permitted to appoint their own attorney or 3rd
party Trustee company. ;
b. Holding each property in an individual trust that is controlled by the Lender-
appointed Trustee provides an additional layer of protection and control for the
Lender. ; a d
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c. 60 Days after a Borrower does not pay, the Borrower is removed as
Beneficiary and property is resold to a new qualified Borrower by the Build
Realty Sales Associate.
207. In addition to the conversations with Build and the Know Your Customer
Questionnaire, for each loan Five Mile held as collateral sixteen documents, including the
Construction L a Ag ee e , P i N e, T Ag ee e , Be eficia U de aki g,
Title Insurance, HUD, Mortgage, Memorandum of Trust, and the Collateral Assignment of
Beneficial Interest.
208. Upon purchasing the loans from Build, the Permanent Lenders were vested with
full decision-making authority on what to do if an Investor failed to make a payment. When this
happened, the Permanent Lenders made the decision whether to change the locks and take back
the property, or to simply sell the property and keep the proceeds in derogation of the statutory
rights of redemption and to excess proceeds.
Smith, Graham & Co.
209. In 2017, Smith, Graham & Co. acquired the real estate investment group at Five
Mile Capital, led by Brian Tortorella, and engaged in the same active support of the Build Scheme
that Five Mile did. Because GT Financial and Mr. Triantafilou were limited in the amount of
money that they could ide, S i h G aha provision of tens of millions of dollars over
several years allowed the Build Scheme to continue to flourish. Smith Graham knew of illegality
of the Build Scheme, and also knew of the lawsuit against Build based on the illegality almost a
year before it was named in this suit. Despite this, Smith Graham continued to engage in regular
transactions supporting the Build Enterprise.
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210. Discovery has shown that Smith Graham, following the initial state-court lawsuit,
was supposed to receive an opinion letter f B id c e, idi g c e b opining that
the Trust Transaction central to the Build Scheme was lawful. However, discovery has shown that
Smith Graham never received that letter and yet continued to cause millions of additional dollars
to be provided for funding of the Build Scheme.
211. Discovery has shown that the investment company S i h G aha actions were
independent of the actions of its investment vehicles. Smith, Graham & Co. treated the Funds as
fungible for example modifying the sales agreement between Build and a Five Mile Bridge Loan
to be a sales agreement between a SGIA Bridge loan, formerly known as the Five Mile Bridge
Loan. Smith, Graham & Co. and Build officers and executives discussed the relationship between
Smith, Graham & Co. and its investment funds as one where Smith, Graham & Co. used the
investment funds for their own purposes. In one email in late 2018, Smith Graham employee
B e da DeT a e B i d ab a i a B idge L a : A , he a be ae e
of the last Build loans in a fund that we are looking to close shortly. Could you please provide the
latest on each jec a ? Ga Bai e e ded b f a di g M . DeT a e ai ,
a g he , Ge ge T ia afi , a d a i g: I k ike i h g aha i i g c e
F d IV
212. Smith Graham participated in and supported the Build Scheme by providing capital
to advance the continuation of the Build Scheme knowingly and deliberately, to the direct
detriment of Plaintiffs and the putative Class members. In exchange, Smith Graham generally
received an interest rate of 12.5% on the capital it provided to Build and always received a secured
interest in the properties involved in the Build Scheme. Smith Graham also directed Build as to
the actions to be undertaken if and when an Investor defaulted unde he B i d Sche e ha h
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terms. Thus, Smith Graham willingly reaped benefits from its deliberate and knowing role in the
fraudulent Build Scheme, to the detriment of the Investors. Smith-Graham specifically agreed to
enter into the Build Scheme, allowing Build and the Build Companies to be its agent for the
purpose of securing the loan transactions that were fraudulently procured and are impermissible
under Ohio and Kentucky law.
First Title
213. First Title is an Ohio for-profit corporation with offices in Hamilton County. First
Title carried out the Build Scheme and profited off of Investors through, inter alia: (a) inflated
settlement costs; (b) the creation of fraudulent paperwork and the inducement of Investors to sign
this paperwork showing payments by check and wire transfers that never took place and/or entirely
fictional closing costs with terms that were directly contrary to the terms of the purchase contract
Build had the Investors sign at the beginning of the transactions;40 and (c) further perpetuation of
the misrepresentation that the Investors we e b i g he e ie .
214. With full knowledge of the Build Scheme and in order to advance the Build
Scheme, First Title substantiated the fraudulent misrepresentations in the Build Scheme relating
to the initial purchase of a property by Build and created the illusion of legitimacy for the Investors
with respect to the Trust Transaction by its express representation at the closing. First Title had
full knowledge of the 17 D c e , a i i Fi Ti e agents that produced them for Investors
to sign. In exchange, First Title received a significant, steady, and exclusive volume of closings
through the Build Scheme.
40
First Title received a copy of the purchase contract at the beginning of every transaction. In addition to representing
that the Investor will take title to the property, the purchase contract also represented that the Seller (i.e., Build or its
alter ego) would pay certain closing costs that were, instead, passed along to the Investor by virtue of the HUD-1
Settlement Statement created by First Title.
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215. The Build Scheme required the sale and transfer of properties, and that was done
almost 100% through one title and closing company First Title. As far back as 2014, Mr. Bailey
was introducing First Title and Pat Conners as having done over 800 closings for his company in
the previous six years. When Five Mile began supporting the Build Scheme, Mr. Bailey sent Five
Mile agent Michael Tessitore a i f a ed e ice ide , ha i c ded e i e
agency First Title. First Title was the only agency willing to engage in the double closing, and
he age c i i g acce he B i d C a ie h h ed ea e e check . I
orde b ai f di g h gh G ee eaf F di g, I e were required to choose First Title
as their title agency for the closing.
216. This is precisely because Build knew that First Title turned an intentional blind eye
to the improprieties of the Build Scheme and made affirmative, knowing and material
misrepresentations that advanced the Build Scheme and Trust Transactions, resulting in great
profit for both Build and First Title. First Title thus participated in, and was one of many direct
beneficiaries to the detriment of the Investors of the illegal and fraudulent Build Scheme. First
Title also knowingly colluded with Build and/or Mr. Bailey and Mr. Triantafilou by representing
to property sellers such as Auction.com that Build and/or Mr. Bailey and Mr. Triantafilou had
deposited valid earnest money checks with First Title, when First Title and its agents knew that
the earnest money checks attached to signed offers to purchase properties were photoshopped and
have no real value.
217. First Title was also instrumental in the behind-the-scenes flow of money that
actually took place. Money from GT Financial/Mr. Triantafilou was wired to First Title in one sum
to close both the Buy Side and Sell Side transactions. First Title paid the neutral third-party seller,
and then distributed the rest of the funds to itself and to other Defendants, via electronic wire or
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ACH or via a check in the mail. Until Five Mile insisted otherwise, First Title kept Rehab Escrow
funds in its IOTA account and charged a fee for each distribution.
218. When it held Rehab Escrow, and even after, First Title would certify on the Sell
Side HUD-1 forms that the total amount of Rehab Escrow funds had been distributed to the Rehab
Escrow Account for the benefit of the Investors. At each closing, First Title made this certification
knowing it was a federal crime to fraudulently certify, and also knowing that it had made no such
distribution to any escrow account at that time and that no such distribution was likely to be made
within 24 hours.
219. First Title knew that Build through the Build Companies entered into contracts to
sell to Investors the properties that formed the corpus of the trusts, that the Build Companies never
intended to actually sell the properties and convey legal title to the properties, and that at the double
closing the properties were not sold to the Investors but to Edgar Construction. Still, First Title
never presented or had any Investor sign an assignment of the right to purchase document.
220. As closing agent for both the Buy Side and Sell Side transactions, First Title also
knew that the purchase price for the Investor was marked up thousands of dollars without the
I e k edge.
SGIA Residential Bridge Loan Venture IV LP
221. The SGIA Residential Bridge Loan Venture IV LP, formerly known as Five Mile
Capital Residential Bridge Loan IV LP was the investment vehicle used by investment companies
Five Mile Capital and subsequently Smith, Graham & Co. to purchase loan pools from the Build
Companies, through a contract between the Fund IV and Build Realty dba Greenleaf Funding.
Investment companies Five Mile Capital/Smith, Graham & Co. then used Fund IV to receive
interest payments from the Investors through a loan servicing contract with Build Company
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Greenleaf Support Services. Under this agreement, approximately 83% of the Investor i ee
payments flowed from the Investors to the Fund through Greenleaf Support Services, which kept
approximately 17% f he I e a e . Plaintiffs allege, in the alternative, that Fund IV is
liable for the allegations against the investment companies Five Mile Capital and Smith, Graham
& Co. by virtue of the employees and officers of he i e e c a ie e a age a d
managers of Fund IV.
SGIA Residential Bridge Loan Venture V LP
222. The SGIA Residential Bridge Loan Venture V was the investment vehicle used by
investment company Smith, Graham & Co. to purchase loan pools from the Build Companies,
through a contract between Fund V and Build Realty dba Greenleaf Funding. Investment company
Smith, Graham & Co. then used Fund V to receive interest payments from the Investors through a
loan servicing contract with Build Company Greenleaf Support Services. Under this agreement,
approximately 83% f he I e i ee a e f ed from the Investors to the Fund
through Greenleaf Support Services, which kept approximately 17% f he I e a e .
Fund V is liable for the allegations against the investment company Smith, Graham & Co. by virtue
of the employees and officers of the inve e c a e a age ts and managers of Fund
V.
4. The Pattern of Racketeering Activity
223. The pattern of racketeering activity involved in this case consisted of multiple and
repeated acts of wire fraud, in violation of 18 U.S.C. 1343; money laundering, in violation of 18
U.S.C. 1956; and Transportation of Stolen Money in interstate commerce, in violation of 18 U.S.C.
2314. The OCPA pattern of corrupt activity involved in this case consisted of multiple and repeated
acts of wire fraud, in violation of 18 U.S.C. 1343; money laundering, in violation of Ohio R.C.
85
1315.56; theft by deception, in violation of Ohio R.C. 2913.02(A)(3); telecommunications fraud,
in violation of Ohio R.C. 2913.05; tampering with records, in violation of Ohio R.C. 2913.42; and
forgery, in violation of Ohio R.C. 2913.31.
224. All of the acts constituting the pattern of corrupt activity (as defined in 18 U.S.C.
1961(5) and Ohio R.C. 2923.31(E)) were related and continuous in that they were in furtherance
of the Build Scheme and occurred repeatedly over a number of years, with a threat of continuing
illegal activity. All of the acts amounted to a common course of conduct, with a similar pattern
and purpose, intended to deceive and victimize Plaintiffs and Investors. The Defendants used the
same method, the same documents, similar participants and methods of execution, and had the
same results affecting the same type of victim.
225. The Defendants took these actions with the specific intent to deceive and defraud
by carrying out the Build Scheme described above. Plaintiffs and the Investors actually and
reasonably have relied, to their detriment, on the misrepresentations and omissions that form a part
of the pattern of racketeering activity.
226. The pattern of racketeering activity alleged and the Build Enterprise are separate
and distinct from each other. Likewise, the Defendants named in this count are distinct from the
Build Enterprise.
i. Wire Fraud
227. Wire fraud generally involves a scheme or artifice to defraud and the use of
interstate wires in furtherance of the scheme. 18 U.S.C. 1343. Interstate wires includes not only
telephone but also, for example, internet. The wire transmission does not need to convey a specific
fraudulent misrepresentation or omission and a plaintiff need not show reliance on any specific
86
fraudulent misrepresentation or omission; the wire transmission simply needs to be used in
furtherance of the Build Scheme.
228. The total number of wire fraud violations committed by Defendants in furtherance
of the Build Scheme which is a scheme or artifice to defraud and forming part of the pattern of
corrupt activity are too voluminous to recount, given that the scheme continued unabated for many
years. Specific examples of wire fraud include, inter alia:
a. Marketing materials and videos found B id eb i e ha were transmitted
over interstate wires and include at least the following misrepresentations:
i. We b di e ed e ie i b k, e he a e ice ea
estate investors like yourself, and then provide you with all the resources
41
you need to successfully complete your project a addi i a c .
This is a misrepresentation because Build did not actually sell homes to
Investors. Instead, Investors were named as the beneficiary of a trust
controlled by Build, which quickly assigned the Inves igh a
beneficiaries over to Permanent lenders. Moreover, Build charged
addi i a c f ea a fi e ice . E a e i c de, b ae
not limited to: charging over $100 for each inspection of the home; charging
$500 to list the home after the rehabilitation is complete; a 4.9% loan
origination fee; and manipulated settlement costs, on top of the Initial Mark-
Up of several thousand dollars and the retained Interest Rate Spread. Many
41
Buildrealty.net/what-we-do/, 9/11/14 screen capture from Wayback Machine.
87
Investors were required to put in tens of thousands of dollars of their own
money to complete the rehab.
ii. We e dee di c ed, di e ed h e ea e a e i e a d
then provide those investors with all of the resources they need to fix up and
42
resell the house at addi i a c . This more recent instance of wire
f a dc ai he a e i e e e ai a i, ab e.
iii. B id cha e e ie i b k f e 20 diffe e ce a d he

43
a e he a i g . This was a misrepresentation because Build
obtained most of its properties in single sale auctions from websites such as
Auction.com or Hubzu.com, or from the MLS. Former Build COO Chris
Robertson has admitted that Build had no ability to get a better price for a
property than any other buyer with online access. Additionally, Build did
not pass any savings on to the Investor. Build received these homes for the
same value as anyone else who could have placed a bid. To make matters
worse, Build marked up the price of the home by several thousand dollars
when transferring it to the Investor as noted previously, sometimes by as
much as $28,000. The Investor was not made aware of the Initial Mark-Up.
b. Video recordings from Build seminars, uploaded by Gary Bailey, that were
transmitted over interstate wires and contain the following misrepresentations:
i. We d ie a hi g e e ha ha e. Y c aea i
he h e i e f. Tha i.S e hi g ha e . Y a ,I j d e,
42
http://buildrealty.net/#step3, accessed 9/10/18.
43
Buildrealty.net, 5/17/14 screen capture from Wayback Machine.
88
j a k a a , igh ? We d g af e c edi c e. We d
44
a ach a hi g e e. N hi g.
ii. If , hea e f bid, c e i a d d a ehab a ih a di
d e g e a d defa , e e g i g i ife. We e
not going to go in and attach all your bank accounts and destroy your credit.
You just walk away and the only people that ever knew about it was you
45
a da b d e ek e ed a h e. Tha i.
iii. These statements were misrepresentations, as Build threatened and, in fact,
attempted to pursue Investors for alleged losses relating to the properties.
For example, Build threatened to change the locks and pursue legal action
against an Investor, if it did not immediately pay $3,000. Similarly, in this
ac i a e-court predecessor, Build filed a counterclaim against one or
more Investors seeking to recover damages, despite the fact that such
property had been taken back by Build and immediately resold for a profit.
c. Postings on social media that were transmitted over interstate wires include at
least the following misrepresentations:

46
i. Thi e i i a ai ab e i h i c edib e fi a gi f 200%+.
This was a misrepresentation because it implied that an Investor that
purchases this home would receive at least double the value of the
44
Uploaded to YouTube by Gary Bailey on February 15, 2018, available at
https://buildrealty.wistia.com/medias/juix1ycfwz.
45
Uploaded to YouTube by Gary Bailey on May 16, 2017, available
https://buildrealty.wistia.com/medias/3rrn70hmrw.
46
Lorena Anticoli Facebook Post, 1/14/18.
89
e purchase price and money spent making additions to the home.
In reality, Investors were ck b eak e e ah e cha ed f
Build.
ii. G ee eaf F di g ide h e ehab a ea e tate investors

47
for the purchase and renovation of inve e e ie . This was a
misrepresentation because it stated that the loans are for the purchase of
properties. In reality, Investors became the beneficiary of a trust controlled
by Build, rather than a purchaser.
iii. We e di e ed e ie Cincinnati real estate investors who are

48
i ed f i i g a f he g ea dea i . This was a
misrepresentation for the same reason as above.
iv. 52% f he h e ha e d e e ff market they were not on the

49
market at all not available o he e a ke . This was a
misrepresentation because most of the homes purchased by Build for
Investors were from websites such as Auction.com or Hubzu.com, or
listings in the MLS. Contrary to M . Bai e ae e , he e h e were
available for purchase by anyone.
47
Greenleaf Funding Facebook Page About,
https://www.facebook.com/pg/greenleaffunding/about/?ref=page_internal, accessed October 26, 2018.
48
Build Realty Facebook Page About, https://www.facebook.com/pg/Buildrealty/about/?ref=page_internal,
accessed October 26, 2018.
49
Gary Bailey, 4 House Flipping Lessons in Under 5 Minutes, Mar. 6, 2018,
https://www.youtube.com/watch?v=i7uXFCiYou0, at 3:36.
90
d. Postings by Build agents, such as the Internet posting by Build agent Jamie
Cai ad e i i g B i d e ice he e he a ed $10,000 d , c edi

50
check, no personal guarantee. The d a e was not a down
payment and, upon information and belief, every Investor was charged for a
credit check.
e. Hundreds of additional wire communications between Defendants and outside
parties conveying fraudulent information, including:
i. In a June 3, 2014 email from Build agent Mark Arbino (licensed to transact
ea e a e de B i d SWO b ke age ice e) to an Investor, Arbino
d he I e ha he d eed he $6500 check a c i g, a d
ha A bi eeded k he Name or entity that [the Investor] will take
Title of Propert . Thi h ed the ongoing misrepresentation told to
Investors that they would take title and own the property. The
misrepresentation continued until on or about the date of closing (and after
the Investor has already made a non-refundable payment), when Build
switched tactics and told them that they must pay for Edgar Construction,
as trustee, to own the property.
ii. In an October 21, 2014 email from Build agent Cedric Pashi (also licensed
a ac ea e a e de B i d SWO b ke age ice e) to an Investor,
M . Pa hi a ed ea e ge he fi a ci g a ica i d e da .
There is no credit check and it bab ake 10-15 i e c e e.
This Investor was charged a $50 credit check fee by Build Realty dba
50
https://connectedinvestors.com/company/build-realty, accessed 11/02/2018.
91
G ee eaf F di g he he cha ed a h e f B i d a 3318
Monteith Avenue, Cincinnati, OH 45242.
f. False statements that were sent through wire in contracts for the purchase of
homes from Auction.com, HUD, and other online property brokers. These
contracts required proof of funds and Mr. Bailey, acting with Build employees
or agents, submitted over the internet proofs of earnest money deposits that had
been falsified using Photoshop. For example:
i. For the September 21, 2015 online application to purchase a property at
3937 Kirkup Avenue described above, Mr. Bailey included a document
showing that the earnest money would be held in a trust account and
showing a copy of a check payable to First Title. Discovery to date has
h ha hi ca hie check a Ph h ed. Fi Ti e, as named
endorsee, acted in collusion to transmit this false document. Among other
indicia that the document in question was forged, the check number listed
is 18055971, which is the same check number that had already been used,
for the same purpose twice in the year before (although with different dates).
ii. On June 12, 2014, Mr. Bailey acting on behalf of Edgar Construction sent
an application through the wires to purchase the bank-owned/REO home
property at 6092 Yosemite Drive through Bang Realty. Included in the
d c e a a ea e e ca hie check f $4,000, a ab e Fi
Title. The check number of 18156902 is listed next to a Fifth Third Bank
account belonging to Edgar Construction. This check was dated June 11,
2014, and the check number in the upper right (which should match the
92
lower numbers) was 18055971. This is the same check number used on the
3937 Ki k e ca hie check. The fac ha he check be
the top right and the routing line are different shows that this check was
altered. Photoshopped copies of this same check number relative to two
different properties are shown below:
iii. Discovery to date has shown that Build had saved a copy of this particular
check in .psd (or Photoshop editing) form, and that the following layers
(e ) f he ca hie check had bee edi ed a i e e he ea i
the following places: Check Number in Routing Line, Numeric Amount,
93
Memo and Purchased-by line, Pay to the Order line, Check Number in the
top right, Date, Signature, and Background.
iv. Upon information and belief, various versions of this fraudulent check and
others were transmitted via email to First Title, and First Title knew that
such checks were illegitimate and non-negotiable, yet continued to act in
furtherance of the Build Scheme notwithstanding such knowledge.
v. Build also submitted Photoshopped bank statements to online sellers such
as Auction.com and HUD-brokers as proof of funds. The bank statements
below provide an example. The bank statement on the top was transmitted
to Auction.com on June 10, 2014, and purports to show proof of funds in a
Fifth Third bank account for Edgar Construction in the amount of
$189,004.32. This bank statement was edited using Photoshop from the
bank statement on the bottom. Build edited and changed the account holder,
the funds available, and the date and last login time and date. After
succeeding in winning the property through Auction.com, Build transferred
the property to Edgar Construction as Trustee of Trust 126, with Investor
403 Karenlaw LLC as beneficiary, on June 30, 2014.
94
95
vi. Tha he h h ed ba k a e e a d ca hie check ee ed i
online applications for properties is also confirmed by the April 25, 2014
email string between Gary Bailey, former Build agent Sean Cole, and the
Build office coordinator at the time, Je Wi ia , i ed f ff d
ad be fi e. I hi e ai , a 12:06 , Mr. Bailey emailed Sean Cole,
a i g Sea , ge ha e ai e ge he e, he e i he
original photoshop file. Mr. Cole then forwarded this message to Jen
Wi ia , a i g, Je , ea e add hi [ ic] i f fi e e ei
Ph h ( he ca hie check a be he he e). Whe ca
ae c e f ac e f i e , I d ike b rrow it to work
hi fi e f We d.
vii. The day before the April 25, 2014 email string discussing photoshopping
and the Wrenwood property, Build agent Sean Cole had emailed an
application specifically referring to a bank statement as proof of funds
to he e e age f he e a 157 W e ood Lane. As proof of
funds to purchase the property, they submitted a screenshot of what purports
be Ci c C ci Fif h Thi d Ba k acc e di g i 2989, a
login Thursday, April 22, 2014. This was false and Photoshopped. For
example, the purportedly computer-ge e a ed gi f Th da , A i
22, 2014 i i c ec April 22, 2014 was a Tuesday.
g. Statements sent over wire containing false certifications. For example, in
contracts for the purchase of homes by McGregor Holdings from HUD,
96
McGregor Holdings routinely certified that it was submitting the offer to
cha e he e a a e - cc a cha e . I a ce ified that it
would cc he e a [i ] i a e ide ce for at least 12 h.
Additionally, in each transaction, a Build employee acted as broker and falsely
certified that the home had not been sold to an Investor. Furthermore, in
conjunction with each application to purchase a home from HUD, HUD
required proof of funds or availability of funds for the application to be accepted
and considered. In each application, Build created a fraudulent letter whereby
it purported that Greenleaf Funding was vouching for the availability of funds
for McGregor Holdings, when Greenleaf Funding and McGregor Holdings are
both simply alter egos of Build Realty and in fact at the time, upon information
and belief, shared the same bank account. Greenleaf Funding had no funds of
its own, as averred in the letter to HUD, but relied entirely on the backing of
Mr. Triantafilou and GT Financial. Examples of this wire fraud include:
i. HUD contract signed by Gary Bailey on behalf of McGregor Holdings on
June 19, 2013 for purchase of home at 146 Junedale Drive, Cincinnati, OH
45218. The contract was received electronically by HUD on June 20, 2013.
ii. HUD contract signed by Gary Bailey on behalf of McGregor Holdings on
May 16, 2016 for the purchase of home at 7524 Winton Road, Cincinnati,
OH, 45224. The contract was received electronically by HUD June 16,
2016.
97
iii. HUD contract signed by Gary Bailey on behalf of McGregor Holdings on
March 23, 2017 for purchase of home at 2438 Duck Creek Road, Cincinnati,
OH 45212. This contract was received electronically on March 24, 2017.
h. In addition to the use of interstate wires to transmit false or fraudulent
information or documents, Defendants regularly committed wire fraud through
use of the interstate wires in furtherance of the Build Scheme, a scheme to
defraud. Every wire transfer in this case is an act of wire fraud. This would
include, for example,
i. On August 28, 2017, Smith Graham employee Lucy Karongo confirmed to
Gary Bailey that Build had transferred by wire $375,523.73 on August 21,
2017, as payment for interest on the loans Smith Graham held on several
properties, including the property at 1915 Acorn, with CPM as the Investor.
ii. On January 1, 2015, Defendant GT Financial transferred by wire
$67,126.67 to Defendant First Title to be used in conjunction with Edgar
C ci cha e f he e at 124 Joyce Avenue as trustee for
a beneficiary Investor.
iii. The da bef e, Fi Ti e i ed Edga C /G ee eaf $4,047.50 a he
Closing Proceeds, in conjunction with the transfer of the property at 124
Joyce through a Trust Transaction.
ii. Money Laundering
229. Defendants also committed several predicate acts of money laundering in violation
of 18 U.S.C. 1956 and Ohio R.C. 1315.55. At all times, Defendants have been aware that they are
involved in an unlawful scheme to defraud Investors. Defendants profit from these acts of fraud.
98
Defendants used the proceeds from this illegal and unlawful scheme in subsequent transactions
with the intent to promote, manage, establish, carry on, and/or facilitate the promotion,
management, establishment, or carrying on of the illegal Build Scheme. As an example:
a. On October 20, 2017, an Investor, dba NLB Investment Properties, LLC was
induced into signing a purchase contract for a property located at 2270 Adams
Avenue, Cincinnati, Ohio 45212.51 The I e aid $2,000 a d
payme f he e , hich a be d he b Ci c C ci ,
represented by Gary Bailey. The check was made out to Build Realty.
b. On November 1, 2017, the Investor arrived at closing and was informed that it
would not actually be taking title to the property. Instead, it had the option of
g i gf a d i h he a ac i , i g he $2,000 d a e . The
Investor did not understand the unlawful trust structure it was forced to accede
to, but based upon the promises of Build and First Title, went forward with the
transaction. The documents memorializing the unlawful real-estate transaction
were signed by then-Build Realty Chief Operating Officer Chris Robertson, and
notarized by Pat Conners, of First Title. The HUD-1 attachment was prepared
by Mr. Conners of First Title. The Investor never signed any document
assigning the right to purchase the property to Build.
c. At closing, the Investor paid an additional $8,000 in cash, which went to pay,
inter alia, Build SWO $195 for an administrative fee, Greenleaf Funding $450
f a Rehab i ec i fee, GT Fi a cia $450 f Document Prep, and First
Title $175 for Settlement Services, $175 for an Abstract or Title Search, $75
51
Unsurprisingly, Build had placed the property under contract the month earlier using a fraudulent earnest money
check made out to deposit with First Title.
99
for a Title Binder, and $1,172.25 for Title Insurance, despite the fact that the
Build Enterprise was purchasing the property from itself. The principal amount
of the loan was $233,022.08.
d. The Investor paid 15% on the loan to the Build Enterprise, which forwarded
that 15% to Mr. Triantafilou and GT Financial. This amounts to $34,953.31 in
interest per year, or $2,912.78 per month. The Investor paid 15% interest on the
Rehab Escrow funds, even though there was no money placed in the escrow
account at closing, and no money in that account until the loan was bought by
Smith Graham.
e. On November 20, 2017, nearly three weeks after the Sell Side closing, $228,000
of the loan was placed in a pool with other loans and sold to Smith Graham. All
the documents from each property were reviewed by, accepted, and then sold
to Smith Graham. On this property alone, Smith Graham made 12.5% on the
principal, $2,375 per month. The Build Enterprise kept $475 per month on this
property alone. This particular pool G 35 f S i h G aha was
small and had only three properties, but from these three properties alone Smith
Graham/Fund V could expect to make $83,156.25 per year ($6,929.69 per
month), and Build could expect to make $16,631.25 per year. Upon information
and belief, Smith Graham retained a portion of the proceeds derived from Fund
V i e e i hi f a ,a c i i f i a age e a d
agency.
f. S i h G aha /F d V cha e f he e f eed b a ia ca i a f
he B i d E e ie e i g i e f c edi i h GT a d M . T ia afi .A
100
a result, Build was able to purchase additional homes, to be sold in the next pool
to Smith Graham/Fund V. Smith Graham knew about the fraud used by the
Build Enterprise to induce Investors into paying the down payment, and then to
accede to the unlawful real-estate transaction. This knowledge eliminated Smith
G aha c ce ab he ec i fi i e e .
g. Mr. Bailey, Build (or the Build Companies), Mr. Triantafilou, Smith Graham,
Fund V, Mr. Whiteside, and First Title received proceeds from the unlawful
Trust Transaction depicted above with knowledge of and in furtherance of the
Build Scheme.
230. As shown above, much of what First Title did was move unlawfully obtained
proceeds through its IOTA account and spread the proceeds to different Defendants in what
appears to be lawfully obtained funds. For example, on February 6, 2018, Investor/Plaintiff Jeffrey
Randall through Elinjae, LLC wired $8,000 to First Title as the second portion of its down payment
for the property located at 228 Eaton Avenue. That money was placed i Fi Ti e IOTA
account and then distributed, f a d a e , for seemingly legitimate costs: for
e a e, $50 f a c edi check, $195 f a ad i i a i e fee, $450 f a Rehab i ec i fee,
$450 for Document Prep to GT Financial and almost $600 for Title Insurance, despite the fact that
the seller and actual buyer are alter egos of each other and of Build. There was no credit check,
there was no official rehab inspection, and instead of the administrative fee paying for
administration, these three fees were balled up alongside other fraudulently obtained funds, such
as the property mark-up and the origination fee. This total was split, upon information and believe,
50% to the ownership of Build (transferred eventually through G2 Technologies), and 50% to
c i i a db e f B id e ee a d age .B he i e he e fa d e
101
obtained from the Investor was issued from Build acc e ,e ee , a d age ,
there was no way to know that it had started as funds obtained unlawfully.
231. Each Sell Side closing by First Title, as part of the Build Scheme, was used the
same way by the Defendants to inject unlawful proceeds into lawful activities for the purposes of
laundering that money.
232. As another example, G2 Technologies was set up to act as the owner and manager
of Build. In this, the ownership of G2 Technologies Stephen King, George Triantafilou, and
Scott Whiteside carried out the activities of Build and G2 Technologies in tandem, as they are
often identical. However, G2 Technologies is also the recipient of several fees per transaction, and
i he eh d f a i g e ea f B id e ec i e ea . Thus, fees derived from unlawful
transactions are passed through enough entities and given enough different names, such by the
i e he ecific fee ae e i G2 Technologies, and G2 Technologies issues salaries or
other payments to the Defendants, he a ea c ea .
233. As indicated above, each of the Defendants conducted a transaction with the
purpose of promoting, managing, establishing, carrying on, or facilitating the promotion,
management, establishment, and carrying on of the corrupt activity the theft by deception and
telecommunications or wire fraud. As more Investors were duped by the Build Scheme, each
Defendant makes more money, and so acted to encourage these corrupt activities.
iii. Transportation of stolen money in interstate commerce
234. Defendants also committed several predicate acts of transportation of stolen money
in interstate commerce, in violation of 18 U.S.C. 2314. This statute prohibits the transportation,
transmission, or transfer in interstate or foreign commerce of any money, of the value of $5,000
or more, knowing the same to have been stolen, converted ake b f a d. Wi h each a ful
102
and fraudulent sale of a property to an Investor, Defendants violated this statute in furtherance of
their scheme by sending such sums of money through the Internet. As examples:
a. On or about March 20, 2018, one of the putative Class members was victimized
by the Build Scheme related to a property at 2177 Crane Avenue in Hamilton
County, Ohio. Having already paid a non-refundable $2,000 down payment
against the purchase of the property, this Investor paid another $8,000 to First
Title. On that same day, First Title wired Build $6,443.50 as settlement for
G ee eaf F di g L a O igi a i Fee. The e a he ef e
transmitted in interstate commerce, with First Title and Build both knowing that
the money had been stolen or taken by fraud.
b. On or about March 29, 2018, one of the putative Class members was victimized
by the Build Scheme to a property at 1086 Benz Avenue in Hamilton County,
Ohio. Having already paid a non-refundable $5,000 down payment relative to
the purchase of the property, this Investor paid another $5,000 to First Title. On
that same day, First Title wired Build $5,096 as settlement for Greenleaf
F di g L a O igi a i Fee. The e a he ef e a i ed i
interstate commerce, with First Title and Build both knowing that the money
had been stolen or taken by fraud.
c. Upon information and belief, each of Mr. Bailey, the Build Companies (other
than Build Realty, Inc. for purposes of this section), Mr. Triantafilou, Smith
Graham, Fund V, Pat Conners, Scott Whiteside, and First Title received
proceeds from the Build Scheme with knowledge of its improprieties and
received such proceeds through the use of interstate wires.
103
iv. Theft by Deception
235. Defendants also repeatedly engaged in theft by deception in furtherance of the
Build Scheme and forming part of the pattern of corrupt activity. Under Ohio R.C. 2913.01 et seq.,
e a , ih e de i e he e f e . . . knowingly obtain or exert
control over . . . the property . . . b dece i . Dece i i k i g y deceiving another or
ca i g a he be decei ed b a fa e i eadi g e e e a i . Beca e he down
payment would never be considered as equity in the property, but would instead go to the pockets
of Defendants as a non-refundable fee, the aki g f a I e d a e a part of the
cha e c ac c i ed theft by deception, in violation of Ohio R.C. 2913.02. For
example:
a. The property at 7801 Quarter Maine Ave, Cincinnati, Ohio 45236, was placed
under purchase contract by Ronnie and Gwendolyn Broadnax, dba R&G. On
May 24, 2017, the Broadnaxes signed a contract with Cincy Construction,
represented by Gary Bailey, to purchase this property, paying $2,000 as down
payment. The check was paid to Build Realty. Build never intended for R&G
to purchase and take title to the property, R&G never was allowed to purchase
and take title to the property, a d he $2,0000 a a d a e . This
exchange therefore constituted theft by deception.
b. Build heavily advertised that it did not run credit checks on Investors. However,
every Investor paid a fee f a C edi Re , hich he HUD-1 showed was
remitted to Build by First Title at the second closing. At that point, the Investor
had ch ice b a he C edi Re fee or back out of the transaction
a d e he e i e f hei d a e , hich a a a e ea
104
thousand dollars. In reality, the Investor had no choice but to pay for a credit
check that Build expressly represented would not take place. This constituted
theft by deception.
c. The HUD-1 , c ea ed b Fi Ti e a d/ M .C e Fi Ti e beha f,
contained various other deceptive or fraudulent fees, including (without
limitation): the Initial Mark-Up, the Cap on Closing Costs Fraud, Conveyance
Fees/Transfer Tax, Deed Prep, Wire Fees, Pre-Paid Interest on Unfunded
Rehab, Document Prep; C edi Re ;a dI O e P icie . Each of
these fees were collected by Build and/or First Title through improper,
deceptive, or fraudulent means, constituting theft by deception.
v. Ohio Telecommunications Act
236. Many of the specific predicate acts of wire fraud above were also violations of the
Ohio Telecommunications Act, Ohio R.C. 2913.05. This statute prohibits any person from
knowingly disseminat[ing], transmit[ting], or caus[ing] to be disseminated or transmitted by means
of a wire . . . telecommunication, telecommunications device . . . any writing, data, sign, signal . .
. i age i h he e f ca i g afa d e che e. Each ac f wire fraud above
therefore also constituted a predicate violation of the Ohio Telecommunications Act.
vi. Tampering With Records
237. Mr. Bailey and agents of Build committed several additional predicate acts of
tampering with records in violation of Ohio R.C. 2913.42(A)(1). This statute prohibits a person,
ih e def a d, f fa if [i g] a i i g. W i i g i defi ed de Ohi
R.C. 2913.42(F) a a d c e , e e, e a d , e, a e he hi g ha i g i
upon it any written, typewri e , i ed a e . A di c ed ab e, e he c e f ea ,
105
Mr. Baile a d age f B i d fa ified ca hie check a d ba k a e e i h he i e
obtain properties as a benefit to Build. For example:
a. The ca hie check da ed Se e ber 18, 2015, suggesting that McGregor
Holdings had deposited a $1,000 check with First Title to be held as earnest
money for a property at 3937 Kirkup Avenue, Cincinnati, Ohio 45213 in the
event that McGregor Holdings did not purchase the property from U.S. Real
E a e Se ice . A de c ibed ab e, he ca hie check a Ph h ed and
had no value.
b. The ca hie check da ed J e 11, 2014, gge i g ha Edga C ci
had deposited a $4,100 check with First Title to be held as earnest money for a
property at 683 Crenshaw Lane, Cincinnati, Ohio 45240 in the event that Edgar
Con ci did cha e he e f Fa ie Mae. The ca hie
check was photoshopped and had no value.
c. The ca hie check da ed J e 18, 2014, gge i g ha Edga Construction
had deposited a $1,000 check with First Title to be held as earnest money for a
property at 1 Apache Court, Hamilton, Ohio 45140 in the event that Edgar
C ci did cha e he e f a i a e e e . The ca hie
check was Photoshopped and had no value.
vii. Forgery
238. Under the same set of facts, and in each of these examples, Mr. Bailey and agents
of Build committed several predicate acts of forgery in violation of Ohio R.C. 2913.31. This statute
hibi a e , ih e def a d, f f g[i g] a ii g ha i be
genuine when i ac a i i . I addi i he ca hie check , a di c ed ab e, Ga
106
Bailey and agents of Build forged proof of funds documents to send to property sellers such as
HUD, with the purpose of obtaining the properties. For example:
a. The photoshopped screenshot of what purports to be McGregor Holding Fif h
Third Bank checking account ending in 2989, altered to try to make a screenshot
taken in August 2013 appear as if i a c ee h ake i Oc be 2013. Thi
document was sent as part of an online application to purchase a property from
HUD. I i ge i e, b i , a d a ed fa d e b ai
property from HUD.
b. The photoshopped screenshot of what purports to be McGregor Holding Fif h
Third Bank checking account ending in 2989, altered to try to make it appear
as if the screenshot was taken on Thursday, September 18, 2015. September 18,
2015 a a F ida . I i ge i e, b i , a d was used to
fraudulently obtain property from U.S. Real Estate Services.
c. The h h ed c ee h f ha be Ci c C ci Fif h
Third Bank checking account ending in 2989, altered to try to make it appear
as if the screenshot was taken on Thursday, April 22, 2014. April 22, 2014 was
a T e da . I i ge i e, b i , a d a ed fa d e b ai
property from seller Joann Washburn.
239. The foregoing examples of Build and the Build Companies photoshopping bank
statement a d ca hie check f he ed the overarching fraud being perpetrated against
the Investors, but were integral to the Build Scheme. Without tampering with these documents to
h f d ha a e ea a ai ab e ha ee ac a de ited, Build and the Build
107
Companies would not have been capable of acquiring the volume of properties that were ultimately
the corpus of the trusts used in the Build Scheme.
5. Predicate Acts By Defendant
240. In addition to what has been alleged above, Each Defendant alleged to have violated
18 U.S.C. 1962 (c) and Ohio R.C. 2923.32(A)(1) committed two or more predicate acts in
furtherance and as part of the pattern of racketeering and the Build Scheme. Examples for each
such Defendant are set forth below:
Gary Bailey
241. Mr. Bailey regularly committed wire fraud by using the wires in furtherance of the
Build Scheme. For example, Mr. Bailey committed at least the three following predicate acts of
wire fraud as part of the pattern of racketeering alleged:
a. In January 2018, Gary Bailey led a seminar which he recorded and then
uploaded on YouTube on February 15, 2018. That upload contains
misrepresentations by Gary such a 50% f he h e e e ae a ai ab e
a he e b igh he e.
b. On June 19, 2017, Gary Bailey uploaded to YouTube a video recording of
hi ef a i g he de ab fa e ae e ha B i d a a ha[ ] a
inventory of 5-10 houses availab e.
c. On June 6, 2017, Gary Bailey uploaded to YouTube a video recording of
himself stating the misrepresentation that Build developed detailed rehab
escrow category costs by going back through 700 houses it had sold and
determining the average cost per category.
108
George Triantafilou
242. Mr. Triantafilou regularly committed wire fraud by using the wires in furtherance
of the Build Scheme. For example, Mr. Triantafilou committed at least the three following
predicate acts of wire fraud as part of the pattern of racketeering alleged
a. On January 17, 2018, Build agent Rachel Blackburn emailed then-Operations
Manager Chris Robertson, Gary Bailey, and George Triantafilou, describing a
training plan for another agent to take over her tasks, which supported the Build
Scheme. On January 18, 2018, George Triantafilou emailed back, giving
direction on how the program should be modified to help carry out the Build
Scheme.
b. On October 30, 2017, in response to Build purchasing properties for the Build
Scheme and where the money will come from to buy the properties, George
T ia afi e ded: We i fi d he f d either u e S i h G aha
ei b e e ie ec acc ie .
c. On April 29, 2018, Mr. Triantafilou emailed that he had wired money out for
a e he e da , a d e ed $100,000 each B id e a i g acc a d
to the rehab escrow account. The wires taking $100,000 from the rehab escrow
account and then returning that amount are each an individual act of wire fraud,
as is the email.
Scott Whiteside
243. Mr. Whiteside regularly committed wire fraud by using the wires in furtherance of
the Build Scheme. For example, Mr. Whiteside committed at least the three following predicate
acts of wire fraud as part of the pattern of racketeering alleged
109
a. On January 15, 2019, Scott Whiteside via telephone (and recorded via Zoom)
attended and led a Build executive meeting to discuss and direct the Build
Scheme with the other Defendants.
b. On January 14, 2019, Scott Whiteside via telephone (and recorded via Zoom)
c. On December 4, 2018, Scott Whiteside via telephone (and recorded via Zoom)
244. Collectively, Mr. Whiteside led through the wires at least thirty Build executive
meetings during the Relevant Time Period.
Pat Conners
245. Pat Conners regularly communicated with Build agents about the documents used
in the Build Scheme through the use of emails. Because these emails were to carry out various
aspects of the Build Scheme, these communications constitute use of the wires in furtherance of
the Build Scheme. For example:
a. On January 31, 2017, Pat Conners exchanged several emails with Build agents
discussing when and how to schedule the closings on properties in the Build
Scheme, including 3975 Warwick Avenue.
b. On January 25, 2017, Pat Conners emailed back and forth with an Investor on
h e da i e a fe Fi Ti e, i c di g a ki g, D hi k he
money will be i ed da ?
110
c. On April 16, 2017, Pat Conners and Build agents emailed back and forth to
confirm that the double closing of a property as part of the Build Scheme would
ake ace a B i d ffice a a ce ai da e.
McGregor Holdings
246. McGregor Holdings regularly committed wire fraud by using the wires in
furtherance of the Build Scheme. For example, McGregor committed at least the three following
predicate acts of wire fraud as part of the pattern of racketeering alleged:
a. On February 6, 2018, McGregor Holdings executed a contract using dotloop52
to sell to Investors E&E Remodel LLC and TDS Home Investments LLC the
property located at 6014 Clephane Avenue, taking $2,000 as a non-refundable
deposit from the Investors. However, McGregor Holdings never intended to sell
the property to the Investors.
b. On January 22, 2018, McGregor Holdings executed a contract using dotloop to
sell to Investor Elinjae Partners the property located at 228 Eaton Avenue,
taking $2,000 as a non-refundable deposit from the Investors. However,
McGregor Holdings never intended to sell the property to the Investor.
c. On March 10, 2017, McGregor Holdings executed a contract using dotloop to
sell to Investor JOP Investments LLC the property located at 4137 Chambers
Street, taking $2,000 as a non-refundable deposit from the Investors. However,
McGregor Holdings never intended to sell the property to the Investor.
52
dotloop is an online platform/program designed to effectuate document review and signatures, and is used widely
by the real estate industry to effectual real estate contracts.
111
Edgar Construction
247. Edgar Construction regularly committed wire fraud by using the wires in
furtherance of the Build Scheme. For example, Edgar Construction committed at least the three
following predicate acts of wire fraud as part of the pattern of racketeering alleged:
a. On September 18, 2014, Gary Bailey on behalf of Edgar Construction emailed
Pat Conners at First Title closing instructions for the Sell Side HUD-1 on a
property located at 5624 Pemberton Avenue, instructing Mr. Conners as
f : P ea e ake e ha Edga C ci i i ed as trustee of Trust
127 he HUD.
b. On May 27, 2015, in response Fi Ti e e ai idi g b i d a Sell
Side HUD-1 f he ae f he e a 4707 Wi a Te ace, Ga Bai e
beha f f Edga C ci e ded: P ea e cha ge B e ead
as follows: Edgar Construction LLC, Trustee of Trust 115, Chasse Properties
LLC, Be eficia fT 115.
c. On October 17, 2017 Edgar Construction executed a contract using dotloop to
sell to Investor Woodford Enterprises the property located at 1724 Fallbrook
Lane, taking $5,000 as a non-refundable deposit from the Investor. However,
Edgar Construction never intended to sell the property to the Investor, and
instead deeded the property to itself as trustee of a trust.
Cincy Construction
248. Cincy Construction regularly committed wire fraud by using the wires in
furtherance of the Build Scheme. For example, Cincy Construction committed at least the three
112
a. On January 29, 2019 Cincy Construction executed a contract using dotloop to
sell to Investor Halo Mgt Productions the property located at 3593 Kenoak
Lane, taking $2,000 as a non-refundable deposit from the Investors. However,
Cincy Construction never intended to sell the property to the Investor.
b. On January 29, 2019 Cincy Construction executed a contract using dotloop to
sell to Investor Pilcher Homes the property located at 4510 Plainville Road,
taking $2,000 as a non-refundable deposit from the Investors. However, Cincy
Construction never intended to sell the property to the Investor.
c. On January 22, 2019 Cincy Construction executed a contract using dotloop to
sell to Investor Woodford Enterprises the property located at 6631 Ravenal
Court, taking $2,000 as a non-refundable deposit from the Investors. However,
Cincy Construction never intended to sell the property to the Investor.
Cowtown Holdings
249. Cowtown Holdings regularly committed wire fraud by using the wires in
furtherance of the Build Scheme. For example, Cowtown Holdings committed at least the three
a. On March 8, 2018, Cowtown Holdings executed a purchase contract via dotloop
ihI e Z Tech, LLC f he cha e fa e a 1802 Catalina
Avenue, Cincinnati, OH 45237. However, Cowtown Holdings never intended
e he e to the Investor. As a result, the Investor was defrauded of
a ea $2,000 ( he a f he D Pa e .
b. On June 12, 2018, Cowtown Holdings executed a purchase contract via dotloop
ihI e REIIS C a f he cha e fa e a 5868 Turpin
113
Hills Drive, Anderson Township, OH 45244. However, Cowtown Holdings
e e i e ded e he e he I e .A a e , he I e
a def a ded f a ea $2,000 ( he a f he D Pa e . ).
c. On October 3, 2017, Cowtown Holdings filed a general warranty deed with the
Hamilton County Recorder for a property at 3128 Glenaire Drive, Cincinnati,
OH 45251. The deed granted Edgar Construc i a ee ea e f
a ab e c ide a i , e e h gh c ide a i as actually paid
(Cowtown Holdings received no money from Edgar Construction).
Greenleaf Support Services
250. Greenleaf Support Services regularly committed wire fraud by using the wires in
furtherance of the Build Scheme. For example, Greenleaf Support Services committed at least the
three following predicate acts of wire fraud as part of the pattern of racketeering alleged
a. On June 21, 2018, Mr. T ia afi a G ee eaf S Se ice age
transferred $300,000 electronically to Defendant GT Financial so that GT
Financial could fund the purchase and placement of properties into new trust
models, as a part of duping additional Investors.
b. On April 24, 2018, Mr. T ia afi a G ee eaf S Se ice age
transferred $100,000 electronically to Defendant GT Financial so that GT
Financial could fund the purchase and placement of properties into new trust
models, as a part of duping additional Investors.
c. On March 5, 2019, acting through agents, Greenleaf Support Services sent two
wires from the Rehab Escrow account to First Title to fund the purchase of
properties placed in trusts for the purpose of duping additional Investors.
114
Build SWO
251. Build SWO regularly committed wire fraud by using the wires in furtherance of the
Build Scheme. For example, Build SWO committed at least the two following predicate acts of
a. On or about December 2, 2015, Cedric Pashi on behalf of Build SWO put in a
bid through an electronic bidding application, listing the bidder as Edgar
Construction, for a property at 5016 Bristol Court in Loveland, Ohio. The
purpose of this bid was to obtain properties for the Build Scheme.
b. On or about February 3, 2015, Matt Ostendorf on behalf of Build SWO as a real
estate broker put in an offer through an electronic bidding application on behalf
of McGregor Holdings to purchase a property at 2430 Little Dry Run Road,
Cincinnati, Ohio 45244. The purpose of this bid was to obtain properties for the
Build Scheme.
Build NKY
252. Build NKY regularly committed wire fraud by using the wires in furtherance of the
Build Scheme. For example, Build NKY committed at least the two following predicate acts of
a. On January 2, 2018, Build NKY executed a purchase contract via dotloop with
MHC, LLC f he cha e fa e a 3521 G e A enue in Latonia,
Kentucky, taking $2,000 as a non-refundable deposit from the Investor.
H e e , B i d NKY e e i e ded e he e he I e .
b. On February 21, 2018, Build NKY executed a purchase contract via dotloop
i h 814 Pe , LLC f he cha e fa e a 814 Pe S ee i
115
Covington, Kentucky, taking $2,000 as a non-refundable deposit from the
Investor. However, Build NKY never intended e he e he
Investor.
G2 Technologies
253. G2 Technologies regularly committed wire fraud by using the wires in furtherance
of the Build Scheme. For example, G2 Technologies committed at least the three following
predicate acts of wire fraud as part of the pattern of racketeering alleged:
a. All of the licenses and usability of Salesforce has been the sole property of G2
Technologies since at least the end of 2016. On May 2, 2019, G2
Technologies Sa e f ce ga e e ia i e Wa er Huckaby a
a da d ice a i g ha he had bee e-a ed f a ha d-money loan,
the terms of which were a $10,000 down payment. This wire was sent to try to
lure in another Investor.
b. On April 29, 2019, G2 Technologies Sa e f ce ga e potential
i e Sc B chh a ice he had bee e-a ed f a ha d-money
loan, which required only a $10,000 down payment. This wire was sent to try
to lure in another Investor.
c. On April 26, 2019, G2 Technologies Sa e f ce ga e ential
i e A d e H ghe a ice he had bee e-a ed f a ha d-money
loan, which required only a $10,000 down payment. This wire was sent to try
to lure in another Investor.
254. Over three years, G2 Technologies, owning and running Build and Salesforce, sent
hundreds of these notices to potential investors in furtherance of the Build Scheme.
116
GT Financial
255. GT Financial regularly committed wire fraud by using the wires in furtherance of
the Build Scheme. For example, GT Financial committed at least the three following predicate acts
of wire fraud as part of the pattern of racketeering alleged:
a. On February 22, 2019, the office coordinator at Build submitted a wire request
to GT Financial, asking for $145,283.85 be wired to First Title that day, with
the c e Thi i he a a i he ehab e c . Tha a e da
Mr. Triantafilou confirmed he had sen he i e i a e ai ai g d e. B h
the wire and the follow up email are individual instances of wire fraud.
b. On January 4, 2019, the office coordinator at Build submitted a wire request to
GT Financial, asking for $55,839.40 to be wired to First Title that day, with the
c e : Thi i he a a i he ehab e c . Mr. Triantafilou
on that same day confirmed he had sent the wire b e di g: d e kee
he c i g :). B h he i e a d he f e ai a e i di id a i a ce
of wire fraud.
c. On October 31, 2019, the office coordinator at Build submitted a wire request
to GT Financial, asking for $147,728.48 be wired to First Title that day, with
he c e REVISED: Thi i he a a i he ehab e c .
That same day Mr. Triantafilou confirmed he had sent the wire in an email
ai g d e. B h he i e a d he f e ai a e i di id a i a ce
of wire fraud.
117
First Title
256. First Title regularly committed wire fraud by using the wires in furtherance of the
Build Scheme. For example, First Title committed at least the four following predicate acts of wire
fraud as part of the pattern of racketeering alleged:
a. On July 28, 2016, a closing occurred for property located at 1822 Lincrest
Drive, Cincinnati, OH 45240. At closing, First Title received a wire from GT
Financial for $57,382.10 and a wire from the Investor for $8,000. That same
day, First Title sent out a wire to Greenleaf Funding/Edgar Construction LLC
for $4,071. It also electronically transferred $73.95 to Stewart Title for title
insurance that First Title knew the Investor had no access to should there be an
issue with the title. The receipt of the I e $8,000 a d he ii ga d
electronic transfer of funds are each instances of wire fraud.
b. On January 8, 2018, Build office coordinator sent an email to First Title agents
Tina Mills and Pat Conners, indicating that Build was intending to purchase a
property at sheriff s sale for the Build Scheme, and asking First Title for a
HUD-1 form so that Build could request a specific amount of money from Mr.
Triantafilou and GT Financial. Pat Conners responded with a HUD-1 pre-filled
in. Because the intention was to use this property as part of the Build Scheme,
this act by Pat Conners was wire fraud.
c. On February 26, 2016, First Title employee Kristyn Ernst emailed the office
c di a a B i d Rea a d a ked ha he h d e a e e age ha
inquired about earnest money First Title was purportedly holding for Build,
stating in pa : ha a I e a i ce I d ha e he ea e e
118
from you guys as of yet. she is really pushing to know everything and I am
trying to only give her as i e i f a ib e.
d. On July 18, 2017, First Title employee Tina Mills emailed a HUD-1 containing
Fraudulent HUD-1 Charges B i d Rea office coordinator. This HUD-1
was used to defraud Investor Lovely Homes Rehab and Remodeling, LLC.
B. Conspiracy in Violation of 18 U.S.C. 1962(d) and Ohio R.C. 2923.32
257. A defendant is liable for a conspiracy in violation of 18 U.S.C. 1962(d) and Ohio
R.C. 2923.32 if they know of the racketeering activity at issue and agree to facilitate the actions of
the enterprise in carrying out those actions. Lester v. Percudani, 556 F. Supp. 2d 473, 485-487
(M.D. Pa. 2008). A conspiracy may be inferred from circumstantial evidence that can reasonably
be interpreted as participation in the common plan. United States v. Elliott, 876. F.3d 855 (6th
Cir. 2017). Plaintiffs need not demonstrate that each Defendant was aware of every detail of the
scheme or that each knew what the other participants were doing. In re ClassicStar Mare Lease
Litig., 823 F. Supp. 2d 599, 638 (E.D. Ky. 2011). Once evidence of a conspiracy is shown, the
evidence linking an individual Defendant to that conspiracy need only be slight. Id.
258. Each of the Defendants that violated 18 U.S.C. 1962(c) and Ohio R.C.
2923.32(A)(1), as described above, demonstrated from their role and their actions in those
violations that they had agreed to participate in a common plan the Build Scheme and are liable
for conspiring to do so under 18 U.S.C. 1962(d) and Ohio R.C. 2923.32.
259. In addition to those Defendants, the Permanent Lenders conspired to violate 18
U.S.C. 1962(c) and Ohio R.C. 2923.32, including through the following acts:
119
Five Mile
260. As detailed in the Amended Complaint, Five Mile knew and understood the
unlawfulness of the Trust Transaction and how the Build Scheme worked. Each time it provided
Build funds to repeat the Build Scheme, it was an overt act in support of the Build Scheme, and
therefore an overt act in support of a violation of Federal RICO and the OCPA. For example:
a. On December 5, 2014, using its investment vehicle, Five Mile wired Build
$429,800 in support of the Build Scheme, providing these funds to remove five
loans that the Build Enterprise had on its books, so that Build could continue to
defraud Investors.
b. On October 18, 2016, using its investment vehicle, Five Mile wired Build
$463,712.90 in support of the Build Scheme, providing these funds to remove
three loans that the Build Enterprise had on its books, so that Build could
continue to defraud Investors.
c. On February 9, 2017, using its investment vehicle, Five Mile wired Build
$889,883.17 in support of the Build Scheme, providing these funds to remove
nine loans that the Build Enterprise had on its books, so that Build could
continue to defraud investors.
Smith Graham
261. As also detailed in the Amended Complaint, Smith Graham knew and understood
the unlawfulness of the Trust Transaction and how the Build Scheme worked. Each time it
provided Build funds to repeat the Build Scheme, it was an overt act in support of the Build
Scheme, and therefore an overt act in support of a violation of Federal RICO and the OCPA. For
example:
120
a. On March 19, 2019, Brendan DeTommaso of Smith Graham sent an email to
B i d, a i g P ea e ee f di g d c f e e e da . The bjec
f hi e ai a G 066 - Da a a e f e ie . Th e d c e ,
e a d e a ed b S i h G aha , i c de ha i i ed a P cha e
Memo SG Bridge L a Ve e B i d Rea BLV 03.19.19. , a E ce fi e
containing three tabs. The first tab summarizes the pool as having 9 loans,
$1,341,468 in proceeds, with wire instructions to send the funds to a PNC
account owned by GT Financial. The second tab shows that the settlement cut
off date is March 19, 2019, lists the properties, the balance of the loan on each
property, the interest rates, and when the next payment is due. The third tab
goes into more detail for each loan, and includes the date of the note (some
almost a month before the settlement cut-off date) and how much money has
not yet been funded on the note, on a loan by loan basis. For these nine loans,
the total unfunded amount exceeds $525,000. Knowing that Build is charging
and keeping (or passing on to Smith Graham) the 15% interest on this more
than $525,000 for money that is not funded until Smith Graham funds it, Smith
G aha ac i i e di g B i d hi e i a e ac i f he
Build Scheme.
b. On April 24, 2019, Charles Helm of Smith Graham prepared and sent the same
documents for Group 068. These documents showed a pool of four loans with
a settlement cut-off date of April 24, 2019. The notes on some of these loans
had been signed almost a month before, and over $200,000 of the loan amount
for the four loans was unfunded. Smith Graham knew that Build would charge
121
15% interest on the over $200,000 that was unfunded, and keep and/or pass on
the proceeds to Smith Graham, even though the Investors were paying interest
on money that did not exist.
c. Smith Graham sent these prepared documents and then wired the money to
Build to support the Build Scheme over 40 additional times, including on July
30, 2018, when Brendan DeTommaso sent Build an email on Group 49, which
contained seven loans valued at just over a million dollars with a cut off date of
July 30, 2018. The loan detail shows that at least one of the notes had been
signed over a month before, and that the Investors had been paying 15% interest
on over $330,000 in unfunded Rehab Escrow funds the entire time. Smith
Graham supported and/or profited off this unlawful interest charge, in support
of the Build Scheme.
262. All Defendants have knowingly entered into a conspiracy and are, therefore, jointly
and severally liable for the injuries the conspiracy has caused. Each Defendant provided a
necessary service to the conspiracy, and each Defendant knowingly benefited from its participation
in the conspiracy. The Plaintiffs and Investors have been proximately injured as a result of this
conspiracy to violate Federal RICO and the Ohio Corrupt Practices Act.
COUNT II
Civil Conspiracy
264. Defendants have engaged in a civil conspiracy to unlawfully injure Plaintiffs and
the Class. Their actions evidence a malicious combination with the purpose of causing injury to
122
the property of Plaintiffs and the Class in a way not competent for one alone, resulting in actual
damages.
265. Apart from liability for a conspiracy to engage in racketeering or corrupt practices
violations, and independent of those violations, the actions of Defendants previously described
demonstrate a civil conspiracy under state law to commit fraud, theft, breach of fiduciary duty,
and the other illegal acts previously described as comprising the Build Scheme. This includes a
conspiracy to commit the following frauds:
a. The Initial Mark-Up/Mark-Up Fraud;
b. The Down Payment Fraud;
c. The Closing Cost Cap Fraud;
d. The Rehab Estimate Fraud;
e. The Title Fraud;
f. The Failure to Obtain Contract Assignment Fraud;
g. The Interest Rate Spread;
h. The Rehab Escrow Fraud;
i. The I O e P ic F a d; a d
j. The Fraudulent HUD-1 Charges.
266. The unlawful or tortious acts of the Defendants are attributable to one another. All
Defendants have agreed to and acted in pursuance of a common plan or design to commit unlawful
i ac , ac i e k a i i , a d a ified a d ad ed he gd e ac d e for their
benefit.
267. The Plaintiffs and Investors have been proximately injured as a result of
Defe da ci i c i ac .
123
COUNT III
Breach of Fiduciary Duty
(as against Build and the Build Companies)
269. Notwithstanding that the trusts created by the Build Scheme are unlawful and void
or voidable, Plaintiffs and Investors were all beneficiaries under trusts for which Edgar
Construction or another Build Company served as trustee.
270. Both Ohio and Kentucky law imposes strict obligations on trustees, including the
obligation of fiduciary duties to the beneficiaries of the trust.
271. The trustee in the Build Scheme (generally Edgar Construction) owed certain
fiduciary duties to the Plaintiffs and Investors, including a duty to administer the trust in good faith
and in accordance with the interests of the Plaintiffs and Investors and a duty of loyalty (which
prohibits self-dealing), among others.
272. Specifically, each of the Trust Codes (Ohio R.C. 5801.01, et seq./KRS 386B)
require one or more of the following key duties of trustees, without limitation:53
a. Good faith;
b. [T]ha he ha e a e ha i a f [a d] contrary to public
ic ;
c. Tha he ee ha ad i i e he e i he i e e f he
be eficia ie ;
d. Loyalty/not to engage in self-dealing;
e. To accept o ea ab e c e ai f ac i g a ee;
53
The trusts involved in the Build Scheme are non-charitable inter vivos trusts under Ohio R.C. 5801.02.
124
f. To keep the beneficiary reasonably informed about the administration of the
a d he fac ece a ec he be eficia i ee ;a d
g. All duties arising from equity or common law.
273. As previously discussed, Build and the Build Companies, including Edgar
Construction, are all alter egos of one another. Former Operations Manager Chris Robertson
testified under oath that Edgar Construction employees are Build employees. Therefore, inasmuch
as employees and agents of Edgar Construction are obligated to act with the care of a trustee, so
too are Build and the other Build Companies.
274. Relative to every trust, Build and the Build Companies routinely act with a
complete disregard of their duties as trustee and breach the same by:
a. administering the trusts in bad faith;
b. making material misrepresentations to their Investors/beneficiaries relative to
the terms and structure of the Trust Transactions, including, without limitation,
falsely representing that the Investor is purchasing the property (the Title
Fraud);
c. failing to secure an assignment of the purchase contract to Edgar Construction,
as trustee (the Failure to Obtain Contract Assignment Fraud);
d. engaging in self-dealing by purchasing properties as trustee from themselves
and/or their alter-egos at marked-up prices, none of which is disclosed to the
Investors (the Initial Mark-Up);
e. inducing the Investors to go along with the Trust Transactions using improper
means such as fraud, both misrepresentations and omissions, and by threatening
to improperly take back the properties and sue the Investors;
125
f. structuring the Build Scheme for the benefit of Build, the Build Companies, and
the other named Defendants herein rather than for the sole interest of the
Investors as both the Ohio and Kentucky Trust Codes require, including, for
example designing the Build Scheme to allow for Build to take title to the
property before it conveys it to itself as trustee, for the sole purpose of marking
up the purchase price for which the Investor is responsible;
g. taking undisclosed and improper fees and markups at nearly every stage of the
improper Trust Transactions, including, without limitation, the Initial Mark-Up
of the purchase price and the Interest Rate Spread;
h. taking entirely fictional or otherwise improper and/or fraudulent fees at closing,
including, without limitation, each of the fees listed in the Fraudulent HUD-1
Charges;
i. acting in collusion with others to take money from the Investors to pay for
B id ac uisition closing costs in excess of the Closing Cost Cap set forth
in the purchase contracts (the Closing Cost Cap Fraud);
j. requiring the Investors to execute the Collateral Assignment of Beneficial
Interest in favor of Build at the time of the mortgage and other Trust Transaction
documents, which is an unequivocal and legally impermissible violation of the
Investors right to redemption under both Ohio and Kentucky law;
k. failing to keep the Investors informed about the material aspects of the Trust
Transactions and even providing false information relative to the same;
l. failing to disclose GT Financial , M . T ia afi , he Pe a e
Le de e ec i e i e e i he Trust Transactions, including the fact that
126
Build gives such lenders secured interests in the individual properties held in
trust for the Investors;
m. f e ef i g e ea e he I e Rehab E c f d , eadi g a
significant increase in likelihood of default;
n. ia ia i g a d i ha d i g I e Rehab E c f d f her
improper purposes, thereby creating a delay or inability of the Investors to
access such funds, leading to a significant increase in the likelihood of default;
o. ca i a i i g ff f he I e i abi i c i h he e e e ha h
and one-sided terms of the Trust Transactions that Defendants had structured;
p. aki g c e ai ha i ea ab e de he ci c a ce ;54
q. profiting from their role as trustee as a business and in ways not permitted,
especially considering the lack of required licensure;
r. selling the properties to a third-party buyer without giving notice to or obtaining
consent from the Investors, who held/hold a beneficial interest in those
properties, as to the sale, upon instances of default;
s. stripping the Investors of their interest in their respective properties upon
default, without opportunity to cure or redeem the properties, by selling the
properties without notice or foreclosure and retaining all profits, including but
not limited to the Initial Mark-Up, the Interest Rate Spread, the improvements
54
For example, not even the $10,000 payment to Build and other Defendants is acceptable or reasonable, as Build
profits from the payment and to the extent that, if he I e d e accede B i d de a d a d ig the
d c e i ed Be eficia U de aki g, he I e i e he fa e de c ibed d a e i aid
Build. Moreover, a substantial portion of this payment was procured through fraud, as it was paid with the
understanding that the Investor d be cha i g a d aki g i e he e f hich he e de ed he
payment. Essentially, if the Investor decides not to move forward with the Trust Transaction once they learn its true
a e, he e he i i ia d i f fei ed a d e ai ed b B i d. Thi i c e ai ha i
ea ab e de he ci c a ce , a i i ed b Ohi R.C. 5807.07.
127
attributable to the Investors funds or work, and the excess proceeds to which
Plaintiffs would have been entitled55 had Build foreclosed on the properties;
and
t. administering the trust for an improper purpose allowing Build, the Build
Companies, GT Financial, First Title, the Individual Defendants (Mr. Bailey,
Mr. Triantafilou, Mr. Whiteside, and Mr. Conners) and/or the Permanent
Lenders to profit from the Trust Transactions to the detriment of the Investors
and to take back the properties without affording the Investors their statutory
and equitable rights, such as the right of redemption and the right to the excess
proceeds that may result from a foreclosure sale.
275. The foregoing list is, unfortunately, not exhaustive of the ways in which Build and
the Build Companies acted in breach of the fiduciary obligations set forth under Ohio and/or
Kentucky law.
276. Discovery to date has shown a complete absence of training or understanding by
Build that Build, Edgar Construction, or their agents or employees owed a fiduciary duty to the
Investors/beneficiaries. Instead, Build, Edgar Construction, and their agents and employees
be ie ed he e ee d ie he e , e e he de i e f he I e /be eficia
and acted in fidelity only to themselves and to other Defendants, most significantly, the Permanent
Lenders.
277. A a di ec a d i ae e fB id e b eache f hei fid cia
duties to the Investors, the Investors have been damaged in excess of the jurisdictional amount, in
55
What this means in practice is that when a property claimed to be in default is re-sold to a third-party buyer, if the
sale price is in excess of the note amount outstanding, Build does not give the proceeds to the Investor, but simply
keeps the excess pr ceed a addi i a fi . Thi e ce i d ea d i g he I e de b h
Ohio and Kentucky law.
128
an amount to be proven at trial, including but not limited to all damages specifically identified
elsewhere herein.
COUNT IV
Breach of Fiduciary Duties
(as against First Title and Mr. Conners)
278. Plaintiffs reallege and incorporate by reference each of the allegations contained
279. The roles and legal duties of a title agent, generally, and of First Title, specifically,
as to the buyer, seller and lender in real estate transaction are several:
a. First, the title agent is to close a real estate transaction pursuant to the contract
documents and specific escrow instructions it has received, if any.56 Th , he
ec i a fid cia age f b h a ie a cha e ag ee e . Saad v.
Rodriguez (1986), 30 Ohio App.3d 156, 158, 30 Ohio B. 275, 506 N.E.2d 1230;
Waffen v. Summers, 6th Dist. Ottawa No. OT-08-034, 2009-Ohio-2940.
b. Second, every title company, by law, has an IOTA account through which
transaction monies flow (e.g., earnest money, loan proceeds and net
buyer/borrower funds). It has a duty to the parties to the transaction to receive,
hold and disburse the funds in a transaction in accordance with federal and state
statutes and the Contract to Purchase and as set forth in the closing statement
(known as a HUD-1). For example, it is a violation of law for a title company
in Ohio [ ] c e[] ce ai a ac i a a fa -transacti fi , i g
56
See Squire v. Branciforti (1936), 131 Ohio St. 344, 2 N.E.2d 878; Pippin v. Kern-Ward Bldg. Co. (1982), 8 Ohio
App.3d 196, 8 Ohio B. 266, 456 N.E.2d 1235; Gove v. Jablonski (Feb. 7, 1985), Cuyahoga App. No. 48411, 1985
Ohio App. LEXIS 5743, unreported. See also Union Sav. Bank v. Lawyers Title Ins. Corp., 191 Ohio App. 3d 540,
548 (10 h Di . 2010) ( The ai f c i fa e c agent is to hold documents and funds until the conditions of
the purchase agreement are met whereupon the escrow agent releases he d c e a d f d . ).
129
a ceed i e ded f d he ec d a ac i f d b h In re
Newtown, 375 S.C. 531, 654 S.E.2d 536, 537 (2007). This is precisely what
First Title and Mr. Conners did throughout the Build Scheme. Mr. Conners
himself acknowledged this duty in his state-court deposition:
Q: Do you believe that First Title has a duty to make sure what s shown on the
closing statement is, in fact, what s disbursed?
Pat Conners: Yes.
Q: And that everything that is shown on there is, in fact accurate. So, in other
words, each item of money coming in, in fact, came in and each item of money
going out. Do ou believe it s our dut to show that accuratel on the closing
statement?
Pat Conners: Correct.
c. Further, Mr. Conners signed the First Title Certifications on behalf of First
Title, knowingly and falsely swearing to the truth and accuracy of the same.
d. Fi a , hi i e, Ohi ha ha i ca ed a G d F d La , R.C.
1349.21, which requires that Escrow Agents in Ohio disburse only on good
funds, and which reads as follows:
No escrow or closing agent knowingly shall make, in an escrow transaction, a

disbursement from an escrow account on behalf of another person, unless the
following conditions are met:
(A) The funds necessary for the disbursement;
(1) Have been transferred electronically to or deposited into the escrow account
of the escrow or closing agent and are immediately available for withdrawal
and disbursement;
(2) Are in an aggregate amount not exceeding ten thousand dollars, have been
physically received by the agent prior to disbursement and are intended for
deposit no later than the next banking day after the date of disbursement; or
(3) Are funds drawn on a special or trust bank account as described in division
(A)(26) of section 4735.18 of the Revised Code.
130
e. Third, First Title sells and issues title insurance policies as a licensed insurance
agent in Ohio, subject to Ohio insurance laws and regulations. It has a duty to
issue such insurance in conformity with such laws and regulations and in
conformity with the representations made at closing. It also has a duty not to
knowingly sell insurance that provides no coverage to the buyer thereof
(including Investors), i.e., illusory coverage.
f. Fourth, it acts as an escrow agent for escrowed funds, instruments, or property.
In such instance it has a duty to receive, hold and disburse the funds in
accordance with the agreement of the parties.
280. In the Build Scheme, First Title served in each of these four roles and owed the
aforementioned duties to the Investors as a result.
281. First Title breached each of these duties, and did so in a repeated, methodical, pre-
planned manner, as is further discussed below.
The Wai er of Rights Abo e Set Forth in the Document Entitled General Closing
Pro isions is not Effecti e
282. First Title fully anticipated this particular type of breach of fiduciary duty claim by
placing among 29 or more documents signed at each Sell Side closing (the 17 Documents plus the
Fi Ti e D c e )a i e i ed Ge e a C i gP ii , which unassumingly
informs Investors that First Title will, in fact, not follow contractual provisions and that they need
to protect their own interests. But such instrument is not and cannot be an effective waiver of the
I e igh a he b igations of First Title set forth above.
131
283. First, these fiduciary duties and statutory duties of a title agent are not waivable
absent full disclosure to and consent of the Investors. There was not full disclosure to or consent
of the Investors.
284. For example, the industry standard of performance when a buyer/grantee is changed
at closing from what is reflected in the purchase contract would be to formally assign the contract
to the new buyer/grantee, which did not occur in the Build Scheme.
285. As another example, when the financial terms are agreed by the parties to be altered
at the closing from those set forth in the purchase contract, the industry standard of performance
would be to have the parties execute a formal amendment to the purchase contract at closing
reflecting these new terms. This was also not done in the Build Scheme.
286. Inasmuch as many of the numbers and statements represented on the HUD-1 and
other documents to be true, and expressly certified by First Title to be true (in the case of the HUD-
1), were false, the Investors did not know and could not have known of the serial
misrepresentations in the closing documents.
287. Problems with this purported waiver are further exacerbated by the fact that the
Build Companies brought hundreds of transactions over six years to First Title and, in each
transaction, were the seller, grantor, grantee (as trustee), lender, realtor and trustee. Although First
Title claims, contrary to law, fidelity to the lender only in terms of closing instructions, they fail
to disclose to the Investor that this lender (Build) has these multiple roles in the Trust Transactions
(e.g., ha Fi Ti e i ac a f i g he e e i ci , he Rea i ci ,
replacing the buyer/grantee and following the buyer/grantee i ci , e c.).
132
288. They also fail to disclose to the Investor that First Title has conducted hundreds of
these transactions for the Build Companies and has an undeniable interest in continuing to make
Build happy in order to secure this continuous volume in the future.
289. By direction and requirement of Build, First Title was the exclusive, or nearly-
exclusive, agent for the closing of the Trust Transactions in the Build Scheme. Indeed, Build
e e e ed I e ha i g Fi Ti e a a e ie e f he a .
290. This relationship gives rise to a concerning conflict of interest that was also not
disclosed to the Investors.
291. Upon information and belief, the Build Scheme transactions constituted at least 10-
15% of the total volume of business to First Title from 2014 to 2019.
292. The premeditated and methodical process of baiting the Investors to enter into the
contemplated transaction by means of the fairly straightforward purchase contract with the Build
Companies and the switch inside the closing room of documents that are entirely inconsistent with
the purchase contract makes the waivers set forth in such documents a contract of adhesion that,
buried among dozens of other documents that bear little to no resemblance to the contract to
purchase, is ineffective.
293. The General Closing Provisions were drafted exclusively by First Title. The
Investors did not have equal bargaining power and could not negotiate, alter or supplement the
General Closing Provisions at closing. The General Closing Provisions were sprung on Investors
at or just before the Sell Side closing, and they did not have an adequate opportunity to obtain
independent counsel to review the same. First Title was in a superior bargaining position, knowing
the volume and intricacies of the Build Scheme, when the Investors knew none of these things.
The terms of the General Closing Provisions were unfair. The terms of the General Closing
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Provisions were unconscionable. The General Closing Provisions were procured by fraud and
surprise.
294. The cited provisions of the General Closing Provisions are, thus, not an effective
waiver of the rights of Investors to have their transaction closed pursuant to the provisions of the
cha e c ac , G d F d a , a d he he a ii a d c mon law
fiduciary duties of First Title.
295. Further, they do not constitute a waiver of the fraud and misrepresentations
committed by First Title in falsifying the First Title Certifications.
Breach of Fiduciary Duty to Close the Transaction

Pursuant to the Contract to Purchase
- Fundamental Title Structure
296. In the Build Scheme, First Title had a duty to close the transaction pursuant to the
purchase contract as to the fundamental title structure of the transaction.
297. The express language in the purchase contracts executed as part of the Build
Scheme dictates that the Investor will receive a deed and title to the properties at closing.
298. Mr. Conners of First Title personally conducted nearly every one of the Build
Scheme closings and acted as an agent of First Title.
299. Build, First Title, and Mr. Conners planned and implemented the Build Scheme in
an attempt to mislead and defraud the Investors.
300. One significant breach of the duty of First Title to close the transaction pursuant to
the contract documents was that the fundamental nature of the transactional documents executed
and delivered inside the closing room by Build and First Title were contrary to what was set out
in the signed purchase contract and documents, previously received and reviewed by First Title
(the Title Fraud).
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301. First Title affirmatively led Investors inside the closing room to believe that the
documents were in fact consistent with the purchase contract (i.e., title being vested in the Investor)
by consistently saying things such as:
a. "This is the same kind of thing of when you buy your own home."
b. The e a e he a e documents when you close on your house."
c. The e d c e a e a da d f a ea e a e c i g."
d. "This is no different than buying your house."
302. First Title and Pat Conners consistently breached their duty to the Investors by
failing in each transaction in the Build Scheme to adhere to the contractual agreement between the
parties in the closing of the transaction, including in the fundamental title structure as set forth
above.
Breach of Fiduciary Duty to Close the Transaction Pursuant to the Contract to Purchase and
Fraudulent Handing of Monies at the Closings
Financial Terms
303. In the Build Scheme, First Title had a duty to close the transaction pursuant to the
purchase contract as to the financial terms therein.
304. First Title also had a duty to close the transaction in a manner consistent with the
HUD-1s and the express First Title Certification.
305. As set forth above, the certification on each HUD-1 must be both accurate and self-
contained (i.e., it is impermissible to comingle funds between two closings to ba a ce each i
i ai f G dF d a ).
306. Upon information and belief, as to each closing in the Build Scheme, each First
Title Certification signed by First Title as part of the Build Scheme was false.
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307. Upon information and belief, as to each closing in the Build Scheme, Pat Conners
signed such First Title Certification on behalf of First Title knowing that such certification was
false.
308. Furthermore, the Rehab Escrow Accounts are not funded at closing, but often
weeks later. Mr. Conners knew this.
309. Closing costs to Investors were to be capped between $1,750 to $2,990 per the
purchase contract, yet Investors were charged far in excess of such amounts. Mr. Conners knew
this.
310. Investors were charged pre-paid interest as of the date of the Sell Side closing on
such amounts that included the Rehab Escrow, which was neither funded nor available to Investors
at such time. Mr. Conners knew this.
311. Investors were charged for Document Prep fees payable to GT Financial or Jack
Donenfeld, neither of whom prepared any documents relative to their particular closings. Mr.
Conners knew this.
312. I e e e cha ged a e i f a e ic f i ei a ce a ab e
to Stewart (with First Title retaining a commission, upon information and belief) despite the fact
that they were not owners, the policy did not protect them, and their claims would not be honored.
Mr. Conners knew this.
313. Finally, the Wire Fees charged to Investors were well in excess of the charges
incurred by any party relative thereto and are, thus, fraudulent. Mr. Conners also knew this.
314. These overcharges at closing are not clerical errors, but a pre-planned design by
First Title and Mr. Conners to fleece the Investors in furtherance of the Build Scheme.
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Illusor O ner s Polic of Title Insurance
315. F he i i a i g Fi Ti e a d M . C e di ec a ici a i i he B i d
Scheme and the profits derived therefrom, First Title charged each Investor at the Sell Side closings
f a e ic f i ei a ce (a e f h ab e), hich purported to provide coverage
I e (a) a he e f he bjec e a d (b) agai a ega c ai f hi d
a ie . S ch ic a ffe ed a e fee a d e e e a cia ed i h a defe e f i e
claims.
316. Two separate forms we e ed ake a ffe f a e ic f i e
insurance to each Investor by First Title.
317. The fi f h e f , e i ed N ice f A ai abi i f O e Ti e
I a ce, c ai i g he f i g addi i a ae e :
a. [The e de icy] does not protect your ownership interests in the

e .
b. T ec ef f e i he i e e a i a i a d f hidde
defec i your title to your residence, cha e a O e P ic
f Ti e I a ce ( O e P ic ).
c. A O e P ic , f e a e, i ec if he i e e a i e i e
a previously recorded mortgage on your property during the records search and
a e he e de h ha gage a e e f ce i agai .
d. The O e icy also protects you against hidden defects in your title to
your property including, but not limited to, fraud missing heirs to a probate that
have an interest in your property, incorrect legal descriptions, unreported
easements, incompetent prior owners, Medicaid liens, and other matters that
could affect your ownership.
e. If ha e cha ed a O e P ic a d ha e a c e ed c ai , he i e
insurance company will pay the legal fees, whether or not the covered claim is
valid, and if the claim is valid, the title insurance company will pay the amount,
ic i i , c ea he be .
(emphasis added throughout).
137
318. The ec d f h e f , e i ed Ti e P ec i f Y P e c ai
following additional statements:
a. P ea e e ha he e i a f f i e ec i k a O e Ti e
Insurance. This policy protects you, the homeowner, hich he e de ic
d e .
b. Whe b O e P ic f Ti e I a ce, you are protected up to the

full amount of the purchase price for as long as you have an interest in the
e e e af e ha e d he e .
(emphasis added throughout).
319. While the above form does contain both Edgar Construction as trustee and the
I e a e a he P cha e (s)/Borrowe ( ) i he ca i / ig a e b ck, i i he I e ,
not Edgar Construction as trustee, who elects whether or not to purchase this purported coverage.
Upon information and belief, Edgar Construction as trustee never elects to purchase coverage and
ne e a f ch c e age. I ead, he I e d e , be ie i g i i f he I e be efi .
Thus, First Title represents that the policy will cover and protect the Investor.
320. Mr. Conners explained at the First Title Ohio Civil Rule 30(B)(5) deposition that
he started each closing (before getting to the other documents, i.e., before they saw the trust
agreement) with this offer of coverage.
321. The cha ge f he O e P ic i a ab e Se a , de ie f Fi Ti e,
as shown below (highlighted):
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322. Upon information and belief, First Title receives a substantial portion of the
ceed f he e ic cha ge f Se a a ac i i .
323. Numerous other First Title Documents are intentionally deceptive in making the
Investor believe it i i fac he b e f he e a d he e f he e .
324. As set forth above, i f ai a d be ief, he O e P ic eddled by
First Title and Stewart relative to the Build Scheme was and is illusory.
325. First Title breached its duty to the Investors by selling them a knowingly illusory
title insurance product.
326. Upon information and belief, First Title and Pat Conners acted at all times with the
intent to harm the Investors or with substantial certainty that harm to the Investors would result,
and placed their own interests and fidelity to Build and the Build Scheme, from which they derived
substantial financial benefit, above their fiduciary duties owed to the Investors.
Actual Notice to First Title and Their Refusal to Stop their Improper Conduct
327. Even assuming arguendo that First Title could, at any point, claim any ignorance
as to the Build Scheme, its impermissibility, or its harm to Investors (it cannot), such plausible
deniability ceased to exist for First Title as of January 22, 2018, at the latest, when Pat Conners
a d Da O e (P e ide a dO e f Fi Ti e) e e ade a a e f P ai iff c ai .
139
328. Nevertheless, First Title and Pat Conners willfully ignored the harm being done to
Investors via the Build Scheme, in which they were an active participant, and not only continued
to breach their fiduciary duties to Investors in furtherance of the Scheme, but accelerated the rate
at which they were doing so by closing approximately 200 more such transactions, at a
continuously increasing volume, between January of 2018 and April of 2019.
329. A a di ec a d i ae e f Fi Ti e a d Pa C e e
breaches of their fiduciary duties to Investors, the Investors have been damaged in excess of the
jurisdictional amount, in an amount to be proven at trial, including but not limited to all damages
specifically identified herein, punitive damages, and reasonab e a e fee a d c .
COUNT V
Negligence
(as against First Title and Pat Conners)
331. As set forth above, First Title and Mr. Conners breached their fiduciary duties to
Plaintiffs and, as a result, the Investors have been harmed.
332. Alternatively, in the event the Court finds the Investors waived the fiduciary duty
owed them by First Title and Mr. Conners, or that First Title and/or Mr. Conners did not breach
their fiduciary duties to Investors, then First Title and Mr. Conners were negligent in failing to
close the transactions in accordance with the purchase contract and in their handling of funds
relative to the Sell Side closings in the Build Scheme.
333. Even if the fiduciary duty owed by an escrow agent is waived, the escrow agent
owes a duty of ordinary care in fulfilling its obligations, and a claim for negligence can lie against
the agent.
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334. As set forth above, in its role as title agent, First Title and Mr. Conners owed duties
to the Investors either fiduciary duties or, at the very least, a duty to facilitate the closings in
accordance with the agreement between the parties and to act, with reasonable care, in accordance
with industry standard relative to the handling of funds deposited, held, and disbursed through
Fi Ti e IOTA acc unt.
335. As specifically set forth above in Count IV, Fi Ti e a d M . C e c d c
actions fell well below the industry standard, custom, and practices for an escrow or title agent in
similar circumstances with regard to their charging improper, fraudulent, or phantom fees on the
HUD-1s they created, misrepresenting in various respects the fundamental nature and structure of
the Trust Transactions, and mishandling of the funds that flowed (or purportedly flowed) through
Fi Ti e IOTA acc .
336. The foregoing constitutes numerous breaches of the duties owed to Investors.
337. As a direct and proximate re f Fi Ti e a d Pa C e e
breaches of their duties to Investors, the Investors have been damaged in excess of the
jurisdictional amount, in an amount to be proven at trial, including but not limited to all damages
specifically identified he ei , i i e da age , a d ea ab e a e fee a d c .
COUNT VI
Unjust Enrichment
339. In all Trust Transactions, Build marked up the price of the property from Buy Side
closing to the Sell Side. The closings were generally simultaneous, and the Initial Mark-Up was
always thousands of dollars. As discussed above, this was done entirely to profit off the unwitting
Investors it served no other purpose.
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340. When the property was sold to an end buyer, Build (and/or other Defendants)
retained the price markup as profit, having done nothing but create a double closing for the sole
purpose of making this profit. Thus, the Investors conferred a benefit on Defendants that
Defendants knew of, and it is unjust to allow Defendants to retain the markup, or the profits earned
off the interest paid on the markup principal.
341. Moreover, the Investors often paid for various improvements at their respective
properties using their own funds, either by choice or, in many cases, as a direct result of Build
refusing to release the Rehab Escrow or causing a delay relative to the same, in part due to its
mishandling or misappropriation of the Rehab Escrow funds as set forth herein. These expenses
often caused or contributed to the Investors ultimate default.
342. Upon default, Build sold the properties with all such improvements, improvements
that increased the value of the properties.
343. Build had actual knowledge of all such improvements, as it often received
incremental photographs of the properties as improvements were being made and/or conducted
inspections of the properties prior to sale. These photos and knowledge of such improvements was
also shared with the Permanent Lenders to the Build Scheme.
344. Upon default, Defendants retained the proceeds from the sale of the properties
including the proceeds derived from and directly attributable to the improvements made by the
Investors, and the Excess Proceeds to which the Investors are statutorily entitled.
345. In addition to the statutory mandate that the Excess Proceeds be returned to the
defaulting borrower, Build acknowledged that the Excess Proceeds belonged to the Investors in
the Collateral Assignment of Beneficial Interest and the Combined Security Agreement and
Assignment of Rents and Leases.
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346. The Permanent Lenders knowingly received a benefit from Investors, including
high interest only payments despite the improprieties of the Build Scheme, as well as the benefit
fI e f cke e e di e a d ea e i , e ecia i such cases where the
properties are taken back. Under the circumstances, it would be unjust to allow Permanent Lenders
to retain such benefit(s).
347. Finally, Plaintiffs and Investors conferred a benefit upon First Title and Stewart
with respect to their purcha e f he I O e P icie ha S e a ha a d i
honor. First Title and Stewart knowingly retained this benefit in a manner that was unjust, as
Investors received no consideration for the same.
348. Under the circumstances, it was unjust to allow Defendants to retain the proceeds
derived from the Initial Mark-Up or improvements. As such, the Investors have been damaged in
excess of the jurisdictional minimum, in an amount to be determined at trial.
COUNT VII
Declaratory Judgment that he B d Sche e V a e he I e R gh f Rede
and Right to Excess Proceeds
350. Ohio and Kentucky statute and common law require that mortgage loans be
accompanied by certain rights in a defaulting mortgagor, including a statutory right of redemption
(Ohio R.C. 2329.33/KRS 426.530) and that excess proceeds from the re-sale of the property
through foreclosure be remitted to the mortgagor (Ohio R.C. 5723.11/KRS 426.500).
351. Both the Ohio and Kentucky Supreme Courts have zealously guarded these rights
a d a ided a a e ci c e he igh f ede i a a i e i ib e c g he
b e igh . See Shaw v. Walbridge, 33 Ohio St. 1 (1877); Panagouleas Interiors v. Silent
143
Ptnr. Group, Inc., 2d Dist. Montgomery No. 18864, 2002 Ohio App. LEXIS 1305, *25 (Mar. 22,
2002); Sebastian v. Floyd, 585 S.W.2d 381 (Ky. 1979).
352. While a mortgagor may subsequently part with the right of redemption by
agreement, no agreement can be made at the making of the mortgage which causes the mortgagor
to waive or forfeit its right of redemption. Additionally, any subsequent agreement must include
independent and adequate consideration and be fundamentally fair, e.g., not induced by fraud or
undue influence.
353. Courts have applied this concept to deeds in lieu of foreclosure executed at the same
time as the mortgage, as well as land installment contracts, demonstrating the strength with which
the law favors such rights.
354. Here, the Defendants required the Investors to sign the Collateral Assignment of
Beneficial Interest with the making of the Mortgage. This document is akin to a deed in lieu of
foreclosure in that it causes the Investor to waive its right of redemption in the event of default. It
is akin to a land installment contract inasmuch as it is financed by Build or a Build Company with
a Build Company retaining title.
355. While Edgar Construction is named as Mortgagor in the Mortgage executed as part
of the Trust Transaction, this is a farce. Edgar Construction has essentially no obligations under
he a ac i d c e .I ead, he Be eficia U de aki g e i ca ae ha he
Investor is obligated as the mortgagor under the Trust Transactions.
356. Defe da e e ec g i e he I e igh of redemption, as the Collateral
Assignment of Beneficial Interest explicitly asks them to waive it.
357. Under both Ohio and Kentucky law, the Trust Transactions are void or voidable as
violating the right of redemption. See Panagouleas Interiors, a *35 ( Since the deed in lieu of
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foreclosure is invalid [as depriving the mortgagor of the equity of redemption], foreclosure
proceedings must take place and excess proceeds, if any, should be e ed [ he gag ]. );
Watkins v. Eads, 2014 Ky. App. Unpub. LEXIS 369, *10 ( The f fei eca ea i ei hi
case clearly violates the holding in Sebastian and Slone and also contravenes KRS 426.525 and
KRS 426.530. The forfeiture clause i Wa ki c ac i id a d f effec . The ci c i c
erred as a a e f a i e f ci g he a e. )
358. The C h d dec a e he T T a ac i i a e he I e igh f
redemption and right to excess proceeds and return to class members all excess proceeds that were
retained by Build, the Build Companies, GT Financial, or the Permanent Lenders.
COUNT VIII
Declaratory Judgment that the Trusts are Void or Voidable as Induced by Fraud
360. Ohi a a e ha a a be c ea ed he e e ha i e ae
lawful, not contrary to public policy, and possible to achieve. A trust exists, and its assets shall be
held, for the benefit of its beneficiaries in accordance with interests of the beneficiaries in the
. Ohi R.C. 5804.04. Si i a , KRS 386B.8-010 a e : he ee ha ad i i e he
in good faith, in accordance i h i e a d e a d he i e e f he be eficia ie . See
also KRS 386B.8-020(1) ( A ee ha ad i i e he e i he i e e f he
be eficia ie . ). N e f he a i ei hi ca e c ai ed a e he d f he benefit of the
beneficiaries instead, the trusts were created to hold assets for the benefit of the Defendants. As
such, the trusts themselves were created for purposes contrary to public policy, and to support an
unlawful transaction.
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361. Under Ohio law, a t i id he e e i c ea i a i d ced b f a d,
duress, or undue inf e ce. Ohi R.C. 5804.06. A a eged ab e, each f he a i ei
this case was seeded with a corpus only as the result of fraud upon the Investors.
362. The Court should declare these trusts void ab initio, or voidable, return to class
members all money that they paid as subjects of the trust scheme, and where a property has not
yet been sold to an end-buyer, appoint an impartial third-party receiver to assist class members
finalize rehab and sale of the property.
COUNT IX
In the Alternative, Declaratory Judgment that Trusts are Void or Voidable as Against
Public Policy
364. Defendants profited off of Investors through use of the trusts created by Build.
365. These trusts were created by having Build transfer real property to itself, in direct
contradiction of longstanding Ohio and Kentucky law. Going back more than seventy years, it has
been the law of Ohio that a trustee may not e hi efa ee hi i di id a e
property in which he ha a e a be eficia i e e . In re Binder s Estate, 137 Ohio St. 26,
27-28 (1940); see also Ulmer v. Fulton, 129 Ohi S . 323, 335 (1935) ( I i a a a e f ng
recognition that a trustee cannot sell his individual property to him e f a ee. ). The Ke ck
Supreme Court then cited In re Binder s Estate in the Bryan case for the proposition that trustees
are not to engage in self-dealing by transferring property from one trust or entity in which it has
an interest to another. Bryan v. Security Trust Co., 296 Ky. 95, 101 (1943). Build also had a
beneficial interest in the property as Greenleaf Funding was the Assignee in the Collateral
Assignment of Beneficial Rights that Build Realty required Investors to sign.
146
366. Although Plaintiffs have alleged numerous and substantial injuries, f a a ic a
undertaking to be against public policy, actual injury need not be shown. It is enough if the
potentialities for ha ae e e . Ulmer, 129 Ohio St. at 336
367. The a e f a ee f its own property to the trust is void as against public
ic , a d [ ]he ei i e a i e ha a ee ca b hi e f hi eff
the purpose of the trust. It makes no difference that the sale is intrinsically a fair one and for a full
c ide a i . The ic fe i i e ee e ib e e ai f he ee. Id.
(internal citations omitted).
368. Like i e, i Ke ck , a a e, e c b a ce, her transaction involving the
investment or management of trust property entered into by the trustee for the trustee's own
personal account or which is otherwise affected by a conflict between the trustee's fiduciary and
personal interests is voidable by a be eficia affec ed b he a ac i [.] KRS 386B.8-020(2).
369. The trusts created by Build are void against public policy because they were created
by Build transferring its own property to itself as trustee.
370. The trusts created by Build are additionally void against public policy because they
constituted self-dealing.
371. The trusts created by Build are also void against public policy because Build had a
beneficial interest in them through Greenleaf Funding.
372. The Court should declare these trusts void ab initio, or voidable, return to class
members all money that they paid as subjects of the Build Scheme, and where a property has not
yet been sold to an end-buyer, appoint an impartial third-party receiver to assist class members
finalize rehabilitation and final sale of the property.
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Punitive Damages
374. The conduct of the Defendants was knowing, intentional, done with malice and/or
aggravated or egregious fraud, demonstrated a complete lack of care, and was done in conscious
disregard of the rights of Plaintiffs and the Plaintiff Class with a great probability of causing
substantial harm to them. Plaintiffs and the Plaintiff Class are therefore entitled to an award of
punitive damages, in conjunction with the foregoing claims for relief.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs respectfully pray:
A. That the acts alleged herein be adjudged and decreed to be unlawful in violation of
federal statutory law and state statutory and common law and that the Court enter
a judgment declaring them to be so;
B. That Plaintiffs and the Class recover all measures of damages allowable under the
federal and state statutes identified herein and the common law, and that judgment
be entered against Defendants in favor of Plaintiffs and the Class;
C. That the Court declare that the Build Scheme/Trust Transactions violate the
I e igh ede i a d igh e ce ceed ;
D. That the Court declare that the trusts, induced by fraud and/or created in
contravention to public policy, are void or voidable;
E. That the Court appoint an independent Trustee or Receiver to oversee the trust
c e a de e ha he be eficia ie i ee ae ec ed h gh the sale
of the properties to end buyers;
148
F. That Defendants be ordered to pay restitution, including disgorgement of all profits
rendered from the Build Scheme, as provided by law;
G. That Plaintiffs recover the costs and expenses of suit, and reasonable attorne fee
as provided by law;
H. That Defendants be ordered to pay treble damages as provided by law;
I. That Defendants be ordered to pay punitive damages; and
J. That the Court order such other and further relief as the Court deems just, necessary
and appropriate.
Respectfully submitted,
/s/ Christopher P. Finney

Christopher P. Finney (0038998)
Casey Taylor (0095966)
Rebecca S. Heimlich (0064004)
FINNEY LAW FIRM, LLC
4270 Ivy Point Blvd., Suite 225
Cincinnati, Ohio 45245
Telephone: (513) 943-6665
Facsimile: (513) 943-6669
chris@finneylawfirm.com
casey@finneylawfirm.com
rebecca@finneylawfirm.com
W.B. Markovits (0018514)

Paul M. De Marco (0041153)
Terence R. Coates (0085579)
Zachary C. Schaengold (0090953)
Justin Walker (0080001)
Dylan J. Gould (0097954)
MARKOVITS, STOCK & DeMARCO, LLC
3825 Edwards Road, Suite 650
Cincinnati, Ohio 45209
Phone: (513) 651-3700
Fax: (513) 665-0219
bmarkovits@msdlegal.com
pdemarco@msdlegal.com
tcoates@msdlegal.com
149
zschaengold@msdlegal.com
jwalker@msdlegal.com
dgould@msdlegal.com
Counsel for Plaintiffs and Putative Class
JURY DEMAND
Plaintiffs hereby demand a trial by jury.
/s/ Christopher P. Finney
150

Compound Property Management, LLC Et Al. v. Build Realty, Inc., Et Al, First Amended Complaint

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Compound Property Management, LLC Et Al. v. Build Realty, Inc., Et Al, First Amended Complaint

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Case: 1:19-cv-00133-DRC Doc #: 145-3 Filed: 07/13/20 Page: 1 of 151 PAGEID #: 2727

UNITED STATES DISTRICT COURT

COMPOUND PROPERTY MANAGEMENT : Case No. 1:19-CV-00133

PAT CONNERS, Individually :

N c e P ai iff , C d P e Ma age e LLC ( CPM ), Leone1, LLC

( Le e1 ), R & G Cincy Investments, LLC ( R&G ), E e a ed b E a LLC ( E e a ed ), Ra ge

H e , LLC ( Ra ge ), Ra i M de LLC ( Ra i ), E i jae Pa e LLC ( E i jae ), P a id

I e e G LLC ( P a id ), a d Magg Rea LLC ( Magg ), (c ec i e ,

Ca A ega i ( A e ded C ai )i he ab e-captioned matter state as follows:

1. Build Realty, Inc. dba Greenleaf Funding ( B i d Rea , B i d, G ee eaf

F di g ) is at the center of a long-running real-estate scam. Along with a bevy of co-conspirators,

it bilked putative class members/i e (he eaf e I e ) i g bai -and-switch tactics,

Re e a Ti e Pe i d ).1 In recent years, as counsel for Plaintiffs made it abundantly clear to

harm to Investors.2 I a i ece ha B i d c d c ed ceased, and only

resulting harm to hundreds of Investors remains.

2. De i e Defe da a e ac i e a dfa d e c cea he a e a d

( RICO )), a e a a dc a i ai , a d dec a a j dg e . P ai iff eek

c e a a d eb e da age , dec a a e ief, a e fee , i i e da age , a d a

other relief deemed appropriate by the Court.

II. JURISDICTION AND VENUE

under 28 U.S.C. 1367.

omissions giving rise to the claims occurred here.

both of which are described below.

Class and Subclass, both of which are described below.

of the putative Class, as described below.

Subclass, both of which are described below.

both of which are described below.

15. P ai iff Magg i a Ohi i i ed iabi i c a . Magg ha e e be

45237. D e he ac i f Defe da , Magg e f h a d fd a eai e i

transaction and i e e i h B i d. Magg i a e be f he a i e Class, as described

17. Defe da Ga Bai e ( M . Bai e ) i a e ide f Ha i C y and, upon

leadership positions with Build.

18. Defe da Ge ge T ia afi ( M . T ia afi ) i a e ide f Ha i

carried out the Build Scheme.

19. Defendant Robert Sc Whi e ide ( M . Whi e ide Sc Whi e ide ) is a

team that carried out the Build Scheme.

20. Defe da Pa C e ( M .C e ) i a e ide f Ha i C a d, upon

Services LLC c ec i e i h B i d, he B i d C a ie ) ha e fi , c i g e funds,

alter egos of one another and of their principal, Mr. Bailey.

the Build Scheme, in which all Defendants herein were involved.

24. Defe da GT Fi a cia LLC ( GT Financial ) i a Ohi i i ed iabi i

short-term transactional funding for the Build Scheme.

(collectively, with Five Mile Capital Partners, LLC, Fi e Mi e ), ha d e ubstantial business

cha i g g f a f Build to replace the short-term financing of GT

Graham & Co., S i h G aha ), ha d e b a ia b i e i h B i d. Wi h f k edge

f a f B id e ace he h -term financing of GT Financial. Five Mile and

S Se ice ) with servicing the a f he Pe a e Le de i a a de c i e

suffered by Plaintiffs and other Investors.

IV. SUBSTANTIVE ALLEGATIONS

A. THE BUILD SCHEME

(referred to herein as the Buy Side f he a ac i ). A he ec d c i g, hich typically

Construction LLC (another Build Company, efe ed he ei a Edga Construction ), as trustee

signing away all of its rights as beneficiary) ( efe ed he ei a he Sell Side f he

knowledge of its fraudulent nature and other associated illegalities.

learning of its illegal nature.

Build Scheme worked as follows:

investors how ake e fi i g h e ih i e e d a d c edi check .

2015 and mid-2018, Build planted more than 5,000 signs.

34. Following this paragraph is a picture of an advertisement for Greenleaf Funding on

Above the Greenleaf Funding logo, i ae Rehab Fi a ci g f Rea E a e I e . Be

March 6, 2018. I he ide , he a e ha 52% f he h e ha B i d e I e c e

average of $10-20 h a d e f i ; (c) ha B i d c ed $15 illion in loans in 2017 and $40

ge a de ai ed b eakd fe e hi g he eed f he ehab, a d B i d e e e ai e i