Scheme Bilks Retirees and Contributes to Neighborhood BlightFriday, October 25, 2013
In a city with plenty of financial woes, a big Detroit property firm has been accused of operating a multi-million dollar international Ponzi scheme. The firm, Metro Property Group, was the largest buyer of distressed homes in Detroit. It would grab up hundreds of rundown houses a year at foreclosure auctions and sell them for more than $40,000 each to international buyers. The overseas investors were lured by promises of 16-18% annual returns on houses occupied by tenants paying up to $1,050 a month. The houses were advertised as “fully remodeled and habitable” when, in reality, they were almost worthless.
The new homeowners would pay Metro Property to maintain the property and collect rent. The investors would then get billed for evictions that never happened, fined for housing violations and given estimates for exorbitant repairs. A group of overseas retirees that invested in these properties is suing the real estate group alleging racketeering and investment fraud. Just another reason not to buy an investment property sight unseen.