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Is the Maumelle Co.'s bubble bursting?

Is The Maumelle Co.'s Bubble Bursting?

With $40 Million In Lots Sold, The Maumelle Co. Accumulates Real Estate Complaints, Lawsuits, Allegations

When Martha and Richard Waymire visited The Maumelle Co. on Aug. 29, 1989, and bought lot 335 in the Edgewater II addition in Maumelle, they thought they had made a good deal.

Sales action was brisk that day and the Waymire's salesman, Jim Anderson, assured them, they say, that all improvements in the lot would be finished by January 1990, and the lot would be ripe for resell.

Anderson told them the lot had become available the day before by another owner and was appraised at $34,800, but they could have it $2,000 less.

Anderson said The Maumelle Co. was obligated to put in all roads, utilities, etc. within 12 months of selling the first lot in the subdivision and "the 12 months that are promised would be up for the owner of the corner lot on that particular block" by January 1990, according to the Waymire's complaint filed with the Arkansas Real Estate Commission last year.

The Waymires say Anderson repeatedly assured them they could sell their improved lot six months later in the peak spring selling season through The Maumelle Co., make a nice profit and get rid of something they didn't want -- a $10,000 recreational vehicle they traded in for the downpayment.

Even better, the trade-in allowed them six months' worth of prepaid mortgage payments and $4,089 in cash back.

Sound too good to be true? It was.

From January to June 1990, the Waymire's listed their lot at $36,500 with The Maumelle Co.'s reselling division -- the Shelter Division -- but the Waymire's complaint notes "the paved road was not there."

By June, there were no offers on the lot and the couple now was making the $318 monthly payment. Ms. Waymire, who had sold real estate for three years and thought she knew something about it, was upset. She went to talk to Maumelle resell-brokers Mary Peyton and Kris Zumbrunn and came away disillusioned.

"Anything they said you can forget it," she says. "I had no idea anybody could get by with that."

For example, Waymire says, Zumbrunn promised her in February 1990 that his best agent would handle the lot, but the agent went on maternity leave; the lot was never listed on the MLS service in April as promised; she discovered real estate records showed the lot was not a resell and had never belonged to anyone else but The Maumelle Co.; and the road wasn't finished until June despite Anderson's promise of a January deadline.

But Jay DeHaven of The Maumelle Co. blasts back at Richard Waymire. DeHaven claims Waymire was trying to scam him for $15,000 by holding the title on the recreational vehicle for weeks and using other ploys.

"Waymire is an absolute con," DeHaven says. "He's an absolute crook."

In June 1990, the Waymires filed a complaint against The Maumelle Co. at the AREC hoping to break the contract. "I couldn't trust anyone (at The Maumelle Co.), because everything I was told wasn't true," Ms. Waymire says.

After months of what she describes as getting the runaround, Ms. Waymire met with Mary Peyton in November. After Waymire refused to make any more payments on the lot, Peyton eventually offered to see if the company could get rid of it and the Waymires signed the lot over. She estimated her overall loss at around $6,000.

"The Maumelle Co. is scamming the public by fast sell (sic) and not following through with statements made in their sales pitch!" the Waymire's AREC complaint reads.

DeHaven says the company bought the Waymire's lot back just to get rid of the couple, not because the company had done anything wrong.

Meanwhile, an angry Ms. Waymire compiled a list last summer of approximately 15 other unhappy owners. Many of those disgruntled owners have made other lists.

Some buyers have even resorted to making surreptitious tape recordings of The Maumelle Co. statements because they no longer trust the company and are trying to protect themselves as the number of formal complaints lodged against The Maumelle Co. grows.

Mounting Complaints

Only 200 real estate complaints were filed in all of Arkansas last year. Ten of those were directed at The Maumelle Co.

(A total of 13 have been filed against the company with three filed in 1989, the first full year of operation.).

But DeHaven says the company has sold 2,000 lots in the past 30 months and these complaints are a small percentage of the overall sales. "Anyone that's got any problem, I want to deal with it up front," DeHaven says.

DeHaven admits that some sales staff may occasionally mislead customers, but they are dealt with promptly.

"Every now and then, I catch somebody in a bald-faced lie," he says. Overall, customers are happy. "There has been no malice and no damage."

Compounding Maumelle's troubles, some sales personnel, who have left the company claiming back wages (by one estimate well over a $100,000), are counseling with lawyers. Many now question sales promises and practices made by the company to close prospective buyers.

DeHaven says all sales staff have been properly paid and no pay checks have been missed. Some paychecks are deferred until completion of bond funding requirements, he says.

But another issue plaguing DeHaven is not back pay or mounting complaints, but a sales manual that DeHaven admits was used briefly, but quickly trashed.

The 3-Day Manual

Salespeople contacted last week wouldn't talk in detail about it, but many acknowledged there exists -- or existed -- a Maumelle Co. sales manual that spells out in detail misrepresentations that sales staff were urged to use in closing deals.

"There was a training manual and I have seen it," says one salesman no longer with the company. "I know somebody who has got a copy of the original."

DeHaven says such a manual existed but it was only used three days in January 1990, and he promptly had it destroyed. He says ex-sales manager Kim Horrell, now with Alltel, and ex-sales employee Ray Pickens and three other employees assembled it from sales pitches from other time-share programs like Cooper Communities.

"I came in and killed the manual. I called them up and said, |Throw them all away,'" DeHaven says of the document. He says the manual was unclear and could confuse the sales staff about completion deadlines on subdivisions and other sales techniques.

Others who have seen the sales manual say it combines high-pressure sales techniques with outright deceit. Sections urge employees to make up stories about themselves and their work histories.

One passage reportedly encourages salesmen to tell customers that they are Realtors, not just ordinary salesmen, and to explain to prospects that Realtors ascribe to higher levels of ethics, selling standards, etc.

The manual reportedly contains misrepresentations about The Maumelle Co. and it's obligations to property owners.

In another example -- as many who have complained to the AREC allege -- the manual reportedly teaches sales personnel incorrectly that all improvements to a lot will be completed within 12 months of its purchase or lot buyers will get a full refund.

In actuality, the company is only required to have sufficient funds by the end of 12 months to develop the subdivision, not complete it. DeHaven admits the issue has confused his own sales staff.

Proving the point, one Maumelle lot buyer last summer secretly taped a sales presentation in which the salesman promises the Dogwood Subdivision will be completed by the summer of 1991. Currently, Dogwood isn't slated for completion until well into 1992. That tape is currently in an attorney's office for safekeeping.

The tentative date for completion of a subdivision is crucial for lot buyers who are buying in hopes of selling for a quick profit. The longer the delay, the less the lot owner can hope to make.

Bill McCumber was such a buyer.

McCumber bought lot 89 in the North Ridge Addition for $30,900 on Sept. 28, 1989. He says he specifically asked his salesman, Steve Faulk, and supervising broker, Mike Gulitz, at the closing if the improvements would be in within a year or he would get a complete refund.

Faulk had told him this in the sales presentation, but he noticed it wasn't in the contract, McCumber says. Both salesmen assured him that, even though the clause wasn't in the contract, he would get the refund because it was a Maumelle law.

The following spring, McCumber read a May 7 Arkansas Business article citing DeHaven saying the Maumelle ordinance only required sufficient funds to be placed in an escrow account within 12 months or buyers would get their money back. He called Faulk and says he was assured the article was wrong and the streets would be completed by Sept. 28, 1990, or he would get his money back.

On Sept. 27, when the paving was months from beginning, he called to ask for his money back and was assured by Faulk he could get it. On Oct. 3, Mike Gulitz told him his initial understanding was wrong, the Arkansas Business article was right, and he couldn't get his money back.

By the time McCumber filed his AREC complaint in October 1990, he concluded: "I feel that what the Maumelle Co. and their salesmen told us is, at the least, misrepresentation if not outright fraud."

DeHaven admitted last week that Gulitz has gotten confused repeatedly over dates when subdivisions will be completed. But in the McCumber complaint, the company never said it might have been in error.

Slanted Articles

In a two-hour meeting Wednesday afternoon of last week, DeHaven accused Arkansas Business of trying to defame his company by its reporting and by asking leading questions to lot owners about possible problems.

"If all of this (successful lot sales) is happening, it couldn't be illegitimate," DeHaven says of the success of the project.

But Beverly and Jeffery Ellison disagree.

The Ellisons are a young couple from Iowa who moved to Little Rock eight years ago. Jeffery had gotten a job with the North Little Rock Electric Department.

They filed a complaint on Jan. 30, 1990, with the AREC trying to escape a lot contract with the Maumelle Co., but the case was dismissed after an AREC investigation. The Ellisons say their case revolved around promises made by their salesman, Tom Tullos.

Tullos repeatedly assured the Ellisons that The Maumelle Co. could find a builder who could construct them a new home for $30 per SF, they say.

"Jeff even argued with the guy (that the price was too low)," Beverly Ellison says about the June 3, 1989, lot sale.

When bids came in with a higher square-footage building cost, the Ellisons couldn't afford to move into a new home and now are stuck with the lot and a payment they can barely afford.

The Maumelle Co. has denied the Ellisons' statements. And the Real Estate Commission's investigation didn't discover sufficient proof to warrant a commission hearing.

That left the Ellisons mistrusting both the AREC and the Maumelle Co.

"We found out the Real Estate Commission wasn't going to help us," Jeffery Ellison says.

This week, Jeffery and Beverly Ellison are filing a lawsuit against The Maumelle Co. for what they claim were misrepresentations in the purchase of their lot.

The AREC Investigations

Property owners who had filed complaints and other disgruntled property owners contacted generally perceived the AREC as unwilling to really investigate The Maumelle Co. and questioned whether DeHaven has some control over the commission.

They point to DeHaven enlisting Sen. Cliff Hoofman as an attorney on retainer for a handsome fee and a passive attitude by the AREC.

DeHaven says Hoofman has done legal work for the company since its inception and resents the implication that Hoofman's presence is for political purposes.

And, in a prepared statement, Roy Bilheimer, executive secretary of the AREC, says: "An investigation of a complaint is conducted in an even-handed manner, without prejudice or favoritism to either the complaining party or the real estate broker or salesperson named in the complaint."

Many times, complaints revolve around verbal promises made during sales pitches and there is no supporting evidence for the complaint. Also, Bilheimer's statement notes, that when a complaint is settled, the AREC stops the investigation.

A Class Action Lawsuit

Martha Waymire approached attorney Mike LeBoeuf last summer about possibly filing a class action lawsuit against Maumelle for its sales operation. Beyond those who have filed AREC complaints, Waymire has been in touch with eight other property owners who believe The Maumelle Co. sold them a bill of goods.

When contacted, many of those other property owners knew the names of other disgruntled owners. All said they had been taken in by Maumelle misrepresentations.

"Man, I've attempted to sell through the Arkansas Democrat want ads since I bought it," says one owner, a 75-year-old retiree who asked not to be identified because he was still trying to sell his lot. Originally, he paid $21,000 for the lot in April 1989, but has since cut the price to $18,500.

"Stupidly, I listed it with Maumelle for six months and never even got a prospect," he says. "Once you sign up with them, it's put into a forgotten file and they keep it there just as long as they can."

Another unhappy buyer is Floyd Emmerling, a North Little Rock minister of 34 years. He filed a complaint against Maumelle in December 1990 and estimates he lost about $3,000 when they finally bought his lot back from him last week.

"If it's too good to be true, it probably isn't," Emmerling says. "I'd have been better off if you'd broken into my house and stolen my furniture."

DeHaven vigorously denies that anything is "going on" at The Maumelle Co. and says stories about the sales manual are an attempt to blackmail him and smear his company.

"I will not be intimidated or blackmailed."

PHOTO : FIGHTING BACK: The Maumelle Co.'s Jay DeHaven vigorously denied last week any improperties at his 30-month-old real estate company that he says has sold 2,000 lots. A handful of lot owners say the company can't be trusted and misrepresentations abound.

PHOTO : STUCK WITH A LOT: Jeffery and Beverly Ellison and their son, Justin, bought a Maumelle lot in June 1989 in hopes of building a house. They claim their salesman, Tom Tullos, told them they could build the house for $30 per SF, a figure that proved much too low. This week, they are suing the Maumelle Co.

PHOTO : AN UNHAPPY BUYER: Martha Waymire and her husband, Richard, bought a Maumelle lot in August 1989, but a year later after filing a complaint with the Arkansas Real Estate Commission, the Maumelle Co. bought it back from them. Waymire says she lost $6,000 on the deal and says the company scammed her. In response, Jay DeHaven calls Waymire's husband "an absolute crook."

PHOTO : INVESTIGATING COMPLAINTS: Mary Izard is head of the investigation division of the Arkansas Real Estate Commission. Izard's office list 13 complaints against the Maumelle Co., but as of last week most have been settled or dismissed.

PHOTO : LOTS FOR SALE: The Maumelle Co. has reportedly sold 2,000 lots in less than 30 months. Last week, company owner Jay DeHaven says business is great and prospects have never been brighter. But numerous lot owners question the company's sales tactics.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:complaints against Maumelle Co. for scamming the public
Author:Walker, Wythe, Jr.
Publication:Arkansas Business
Date:Jan 21, 1991
Previous Article:Filtering business.
Next Article:$15 million splash.

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