Iowa CCI wins campaign against corrupt real estate company, forces bankruptcy

The Des Moines Citizens for Community Improvement’s fight against the Wolford Group began in December 2002 when Doreen Johnson approached the organization regarding her real estate contract with the largest contract real estate seller group in Iowa, the Wolford Group.  

She told her story of how she had been misled into signing an “interest only contract” with a five-year balloon payment. In April 2001, she had made a $22,900 down payment on a property Wolford sold to her for $72,900.  She also put $7,000 worth of home improvements into the property.  As a result, she owed Wolford $50,000 after her down payment and would still owe $50,000 when her balloon payment came due in June 2006.  In January 2003, CCI hired an independent appraiser who appraised the property to be worth only $45,000- almost $30,000 less than she paid. 

When Ms. Johnson first contacted CCI, she could probably not have imagined that meeting would lead to the Wolford Group filing for bankruptcy less than two years later in response to a lawsuit filed by the Iowa Attorney General.

After Ms. Johnson’s complaint, Des Moines CCI invited representatives of the Wolford Group to a public negotiation meeting, minus the press, on Feb. 6.  The Wolford Group chose not to attend, but more than 70 members of the community did. 

On Feb. 27, CCI held a second public meeting where three families, including Johnson’s, shared their stories about Wolford’s misleading and deceptive business practices.  About 50 residents, who attended the meeting, signed a letter asking for Wolford’s expulsion from the Better Business Bureau.  The Des Moines Register, Iowa’s largest daily newspaper, began regularly covering the issue.

On Feb. 17, approximately 30 CCI members paid a visit to owner Rod Wolford Jr.'s house and the Wolford Group office where they educated Wolford’s neighbors on Wolford’s misleading practices by handing our flyers. Approximately two months later, about nine CCI members and staff circulated flyers to people arriving for the Better Business Bureau’s Scam Jam at the Polk County Convention Center.  The flyer asked participants to encourage the BBB to remove the Wolford Group. On May 23rd, the BBB formally revoked Wolford’s membership for noncompliance with membership standards. 

The path to legal action

Another part of the CCI fight was to take legal action against the company. As part of this strategy, on April 3, four CCI member-families, including Johnson, told their stories to representatives of the Polk County Attorney’s Office and the Iowa Attorney General’ Tom Miller. 

CCI member Jenny Ripple, who along with her husband, “sold” their home to the Wolford Group in July of 2001 partly because of Wolford’s membership in the BBB was one of the people who told their stories at the meeting.

“Hopefully this revocation will prevent other potential Wolford customers from being assured that they won’t be misled and deceived like we were,” Ripple said.
In part due to the numerous complaints filed by CCI members, Miller began a formal investigation of the Wolford Group in late May 2003 with a request for documents.

On June 4, Wolford was found guilty of a criminal offense for not filing Ms. Johnson’s real estate contract with the Polk County Recorder within the allotted time.  The company was fined $1,410. 

In June and July, the Wolford Group sent out two separate letters to hundreds of customers attempting to intimidate them from working with CCI.  The letters were full of lies about CCI and the Des Moines Register.  The letters stated that the customers were risking losing their homes and accused CCI of trying to take control of the Wolford Group.

On Aug. 14, representatives of the CCI Contract Sales Task Force met with David Winterfeld, owner of Metropolitan Mortgage, the mortgage broker to whom Wolford was sending his customers to obtain traditional financing. 

The meeting was also attended by representatives of the Iowa Attorney General’s Office and the Iowa Finance Bureau.  Winterfeld told of the Wolford Group’s numerous unethical business practices and presented documents that showed how much the checks were that he sent to the Wolford Group and when they were sent.

Less than a week later, Winterfeld sent Rod Wolford Sr. a letter informing him that Metropolitan Mortgage was ending its business relationship with the Wolford Group and encouraging Wolford to meet with the CCI Contract Sales Task Force.  Later that evening and for the next three business days, Winterfeld met with the Attorney General’s Office and provided them with invaluable information for their investigation of the Wolford Group.

On Aug. 20, the Iowa Attorney General’s Office filed a consumer fraud lawsuit against the Wolford Group, Inc., the Wolford Corporation, Rod Wolford Sr., and Rod Wolford Jr.  The suit alleged many of the misleading and deceptive practices that CCI had been discussing all along.  The same day, the court froze Wolford’s assets. 

The lawsuit allows for the restoration of money to customers entitled to reimbursement. 
On Aug. 21, more than 50 dissatisfied Wolford Group customers, past and present, attended a CCI meeting to discuss next steps.  Attendees signed a letter to Polk County Attorney John Sarcone encouraging him to file criminal charges against the Wolford Group for the Wolford’s misleading and deceptive business practices.  On Sept. 5, the court appointed Holmes Foster receiver for the Wolford Group to control its assets and manage business affairs for the company.               

On Sep. 15, more than 70 Wolford Group customers gathered at the CCI office for a meeting.  Present was Assistant Attorney General Bill Brauch and Holmes Foster, Receiver for the Wolford Group.  In response to questions from CCI, Mr. Foster and Mr. Brauch assured attendees that:

• They would work to resolve families’ issues in such a way that the most people receive the greatest benefit. 
  
• The Sept. 5 Stay Order “prevents foreclosure on any of the properties in which the Wolford Group held an interest.”
  
• The Attorney General is working on sending out a letter to sellers’ mortgage companies explaining the lawsuit.  
  
• The Attorney General’s Office would work hard to advocate on behalf of mistreated Wolford customers. 
  

Both the Attorney General’s Office and Mr. Foster would meet with the CCI Contract Sales Task Force again in approximately 4 weeks to update the CCI Contract Sales Task Force.

On Sept. 29, Holmes Foster the receiver filed for bankruptcy on behalf of the Wolford Group. That week, the Wolford Group story was highlighted in the Des Moines Register with three front page articles (“Federal action forces Wolford into bankruptcy,” “Wolford creditors scramble to get their money back,” “Wolfords may be tied to new deal, D.M. Fraud suspects linked to 2nd home-buying venture”) and an editorial, “Explore criminal charges, too, Iowa should seek to deter contract sellers who prey on the poor.”

As the campaign winds to a close, CCI is continuing to work closely with the bankruptcy trustee, Holmes Foster, and the Attorney General’s Office to see that its members get their properties returned or are able to stay in the house they “bought” from Wolford.  A proposed plan is being explored that would have the remaining contracts bought out by a bank or consortium of banks thus allowing buyers to continue purchasing the property on contract until they are able to obtain financing through a traditional mortgage.