A new lawsuit against the lender of controversial real estate consulting firm iFLIP Chicago accuses the company of exploiting inexperienced black investors to secure land near the future site of the Obama Presidential Center on Chicago’s south side.
Life turned upside down
For months, dozens of Chicagoans have heard from NBC 5 Responds that a real estate camp supposed to teach them how to renovate and sell homes has turned their lives upside down.
“We are at risk of losing over $200,000,” said Ameera Haamid, an iFLIP investor who told us her story earlier this year.
Haamid is one of at least 20 amateur investors recruited by iFLIP Chicago.
The company is led by Ramo Bey and describes itself on its now-defunct website as a “premium real estate group focused on providing new real estate investors with hands-on learning experiences in the purchase, rehab and sale of single-family homes in the greater Chicago area.”
Under Bey’s guidance, the investors said they took out high-interest commercial loans to purchase investment properties on Chicago’s South Side and finance necessary renovations.
It was marketed as a turnkey opportunity, with a team of iFLIP contractors, lawyers and lenders on hand to assist. Haamid said this offering was part of iFLIP’s appeal.
“(iFLIP) has a team that will walk you through the process. They will find the property for you. They will put you in touch with the lender who will provide the financing,” Haamid said.
And this is where the investors claim things went wrong: In lawsuits, they stated that after taking out the commercial loans, they were charged thousands of dollars in unexpected late payment interest, even though they had made their monthly payments on time.
This setback was enough to trigger foreclosure for several investors, including Haamid and local real estate agent Tatianna Barnett.
“We’re just stuck in limbo with properties that we bought and couldn’t get completed,” Barnett said.
Earlier this year, Barnett told us that after purchasing an investment property with Bey, she couldn’t access the money on the loan to pay the contractors or materials for the renovation. Haamid was in the same situation.
So where did the money go?
“We have no idea where the money is. I lost $169,000,” Barnett said. “I have a lender who says, ‘I’m not going to give you that money … Your money is gone.'”
WHERE IS THE MONEY?
As part of their agreement with iFLIP Chicago, the investors said they had to apply for business loans from Roc360 Capital.
The investors’ loan agreements contained a “cross-collateralization and cross-default” clause, which essentially meant that in the event of a default or default on other loans, the lender could automatically take money from the borrower’s account to pay off the debt.
In two lawsuits filed earlier this year, Bey was accused of exploiting this clause by using investors’ loan money to pay off his own debts, essentially running an alleged “real estate pyramid scheme.”
Attorney Alex Loftis told NBC Chicago that this was not the case.
“(The investors) were under the impression that Mr. Bey was the bad guy who took their money and that they had a deal with him and he was taking advantage of them,” Loftis said. “The reality is that the contracts don’t allow that. They didn’t sign anything that allowed their money to be used for someone else.”
Loftis is currently representing nearly 20 iFLIP investors in an amended fraud lawsuit against Roc360, the lender behind these high-interest business loans.
“This is a big New York venture capital firm taking advantage of the little people in Chicago,” Loftis said. “I think from the perspective of people in New York, it’s a group of African-Americans doing business on the South Side of Chicago that’s easy to take risks with.”
Loftis says Roc 360 committed fraud by repeatedly charging its customers 25% late fees. Loftis says it ultimately comes down to how Roc 360 interprets a word in the loan agreements. And that word? Borrower.
WHO IS THE “BORROWER”?
“The reality is that the ‘borrower’ under the contract is an LLC. That one company, my client,” Loftis said. “And yes, if my client had multiple loans, they could be commingled together. He did not agree to have his loans commingled with those of other companies and other investors.”
Loftis said Bey was not a member of any of his clients’ LLCs. The lawsuit accuses Roc 360 of justifying the fees “by claiming that a default by the guarantor, Mr. Bey, enabled the cross-collateralization of other loans he guaranteed.”
Loftis claims that Bey never defaulted on his loans.
“The reality is that the agreements don’t allow this. The people at Roc 360 lied to them,” Loftis said.
Loftis said Bey, like the amateur investors, was not sophisticated enough to understand what was happening or stop it. Loftis said the only one who profited from the deals was Roc 360.
“(The investors) go to Mr. Bey and talk to each other and say, ‘Oh dear, we must be in trouble because the big boys in New York, the lenders in New York, all say we agreed to this.’ That’s not true,” Loftis said. “Nobody is materially benefiting from this whole fiasco other than the lender.”
Investors said Bey eventually moved to Atlanta and stopped answering their calls.
Bey is still named in the amended complaint. Loftis said Bey owed a fiduciary duty to the investors he recruited and failed to protect them.
Neither Bey nor his lawyer commented on this report.
THE BARACK OBAMA PRESIDENTIAL CENTER
The lawsuit also accuses Roc 360 of intentionally forcing investors into foreclosure in order to “ultimately seizing the land surrounding the future home of the Obama Library.”
“They were targeted because of who they were and where they came from. These were people we could get away with for a while,” Loftis said.
“They wonder why homeownership is not accessible to low-income families and working families because we allow businesses to do what they have actually done,” said 20th District Councilwoman Jeannette Taylor.
Taylor’s district has also seen an increase in real estate prices and housing construction since the plans for the Barack Obama Presidential Center were announced.
The center will be located on a 19.3-acre site in Jackson Park near Woodlawn and is scheduled to be completed by 2026.
“Because they want access to the American dream, we allow a company like this to destroy their families. Do you know how hard it’s going to be to recover from this?” Taylor said.
A lawyer for Roc 360 gave the following statement to NBC Chicago:
“Roc 360 will respond to the lawsuit in due course and vigorously defend its position. To the extent that plaintiffs have cause to sue, it appears to relate to the other named defendants. Roc 360 has acted in good faith at all times and fully complied with the terms of the business loan documents signed by borrowers. Roc 360 does not and never has finance consumer loans – all of its loans are to businesses. Each borrower signs a business purpose affidavit. The plaintiffs in the present lawsuit were represented by counsel and should have known the terms of the loans they were agreeing to. Roc 360’s fees were fully disclosed in the closing statement and plaintiffs were not obligated to continue the loan. Roc 360’s fees are fully consistent with industry norms. Contrary to plaintiffs’ contention in paragraphs 53 and 54 and elsewhere in the complaint, the loan documents (the promissory note and the guarantee) expressly permitted cross-collateralization and cross-default of loans. Roc 360 is a large nationwide lender that has originated over 30,000 loans in the last 10 years, helped revitalize communities in the Chicago area and across the country, and provided jobs to hundreds of people, including an office in Lisle, IL.”
