Two Springs real estate agents disciplined in fraud case

A mortgage meltdown on a Colorado Springs street where five houses went into foreclosure amid allegations of fraud has resulted in disciplinary action against two Colorado Springs real estate agents.

The Colorado Real Estate Commission voted to ask Stephen Teegardin, of Teegardin Realty & Investments, to surrender his license and pay a $25,000 fine for his "dishonest dealings" and "unworthiness or incompetency" in the Balsam Street sales, state regulators said Monday.

The commission also asked for the license of his son, Robert B. Teegardin, and fined him $20,000.

The Teegardins are accused of being key players in a mortgage fraud scam in which straw buyers were recruited and paid a kickback to buy houses at inflated prices that they never intended to live in. In typical schemes, the developer, builder, mortgage broker, appraiser, real estate agent and others might split the profits from the sale while the house slipped into foreclosure. The lender would absorb the loss and the buyer would be left with ruined credit.

"The commission took swift and decisive action to revoke the licenses of these real estate brokers once we learned they were engaged in this activity which could lead to foreclosures," said Erin Toll, director of the Colorado Division of Real Estate, which regulates real estate brokers. "I'm real pleased with their decision."

The disciplinary action was sent to the Teegardins as a settlement offer dated Jan. 14. The Teegardins were given 10 days to accept the settlement, submit a counterproposal or request a hearing before an administrative law judge. As of Monday, they had not responded, said Marcia Waters, investigations and compliance director for Toll's agency.

"Typically, if 10 days passes, we try for a couple more weeks to reach a settlement. If that fails, we transfer the case to the attorney general's office to bring charges against their license," Waters said.

She cited a laundry list of allegations against the father-son real estate agents, including "misrepresentation" and "failure to disclose the actual purposes and recipients of funds" from the loans. Other allegations included failure to provide closing statements required by rules and use of unlicensed brokers. Another allegation cited them for "unworthiness or incompetency" for "conducting business in a manner that endangers the public interest."

Stephen Teegardin said his Boulder attorney was handling the settlement offer.

"I'm inclined to fight it," Teegardin said from his office at 3812 Platte Ave.. "They got the whole thing backwards. We didn't do anything wrong. It's not us that's dishonest. You can legally do what we did, which wasn't much."

Robert Teegardin did not return calls seeking comment.

Allegations against the Teegardins stem from a Gazette investigation last spring into five foreclosures on Balsam Street on the city's northeast side. The probe led to Andrew C. Aranda of Red Mountain Landscaping who claimed he was the buyer in such a kickback scheme.

In the Gazette story, Aranda said he bought all five houses on Balsam within a 48-hour period in November 2006, using $1.9 million obtained from five lenders. The houses subsequently were sold out of foreclosure for about $100,000 less, apiece, than their original appraised values and Aranda's purchase prices. Aranda said Robert Teegardin solicited his participation, promising dozens of landscaping jobs in return.

Teegardin said his son, Robert, simply told Aranda he could make some extra money buying new houses, finishing their landscaping and selling them.
"We never told him to buy five houses at once from five lenders," Teegardin said.

Like Aranda, Teegardin blamed mortgage broker Zengiro J. "Zengi" Wilson for hatching the kickback deal and builder Contour Homes for writing the contracts used to obtain the loans.

Teegardin said his company made just $25,000 on the five house sales, or a 2 percent commission, after he returned to Wilson the bulk of the $300,000 he originally received. He said Aranda received $30,000 per house. Teegardin said he did not know who pocketed the rest of the money.

"State real estate rules allow kickbacks for someone who sends you business," he said. "It was legal. That's all we did."

Waters said the rules do permit rebates to buyers. But they must be disclosed, and lenders rarely allow them.

Teegardin said regulators are singling him out because he was an easy target instead of going after the real people who profited from the deals.

The state Division of Real Estate got involved after a complaint was filed by El Paso County Assessor Mark Lowderman against Robert Teegardin. On Monday,  Lowderman urged the Teegardins to help bring to justice everyone involved in the mortgage meltdown.

"I didn't try to pick and choose among who the bad guys were," Lowderman said. "In my initial complaint, I singled out Teegardin because he was the only one of the players who I could identify as having a real estate license.

Waters said the case could be referred to the Fourth Judicial District Attorney's Office for consideration of criminal complaints once her agency's case is further along.

Waters also said her agency has an open investigation into Wilson for his alleged activities in the Balsam Street deals as well as others on Fossil Butte Drive, both in the northeast part of Colorado Springs.

Contour Homes principal Robin Mitchell has denied any wrongdoing in the Balsam transactions. He has said he is a victim because his company is being unfairly associated with the scheme.