Monday, April 11, 2005

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Attorney General Abbott Sues To Stop Housing Scam That Targeted Dallas-Area Hispanic Consumers

DALLAS – Texas Attorney General Greg Abbott today announced legal action to shut down a housing scam that allegedly defrauded primarily Hispanic consumers out of tens of thousands of dollars. The lawsuit, filed under the Texas Deceptive Trade Practices Act (DTPA), accuses Dallas-based FCI Equities and several individuals of participating in a scheme that involved the sale of homes without valid property titles.

Also named in the lawsuit is Jose Menjarez, a Dallas man who allegedly posed as an attorney to offer legal services to victims of the housing scam.

State's lawsuit against FCI Equities & individuals (Click to open)


Informal handwritten notes used for real estate transactions
(Click to enlarge)

“It is shameful that scam artists would prey on consumers’ dreams of putting down roots in Texas by exploiting their lack of knowledge about the home-buying process,” Attorney General Abbott said. “Housing scams like this are a flagrant violation of the law, and I am determined to shut them down.”

The Attorney General’s lawsuit says FCI Equities and other defendants told primarily Hispanic consumers they could buy homes in the Dallas area between $20,000 and $40,000. The scam was allegedly carried out under the direction of Freddrick Ray Cartwright, who has addresses in Dallas and Mansfield, and fronted by Jose Demetrio Murrugarra of Dallas.

Murrugarra allegedly met most of the victims through a small Mexican restaurant he owns. He convinced the consumers he or other defendants owned all the properties being offered and would produce a valid title when the sale was complete. Sales were often carried out quickly using handwritten agreements. The homes, most of which were in the Oak Cliff area of Dallas, were generally paid for in cash.

After consumers bought the homes, they discovered their titles were not valid because the homes were in foreclosure, had been condemned, or had liens for substantial unsatisfied debts that were often in excess of the properties’ market value. As a result, consumers were evicted from homes they thought they had legitimately purchased. The lawsuit alleges Cartwright, Murrugarra and other participants in the scam knew the titles were not valid when they sold the properties.

When consumers confronted Murrugarra or Cartwright about the faulty titles and demanded refunds, the defendants either dismissed their concerns or falsely promised to provide a good title. The defendants never provided a refund to any of the consumers.

Furthermore, the Attorney General accuses Jose Menjarez of practicing law without a license. While the lawsuit does not allege his direct involvement in the FCI Equities scam, it does accuse Menjarez of exploiting victims of the scam by offering to handle legal cases against Murrugarra and other defendants through his group, Centro de Asesoría y Liderazgo Latino Americano (Latin American Assistance and Leadership Center). Menjarez allegedly charged $700 per consumer to draft legal affidavits related to the real estate scam and appear in court with consumers who were trying to prevent foreclosure on the properties.

At a news conference to announce the lawsuit, Attorney General Abbott was joined by Ferman Cuadros, who paid Murrugarra $25,000 for an Oak Cliff home in 2004. After Mr. Cuadros had spent another $10,000 to $12,000 to remodel and repair the home, he received an eviction notice because the property had been condemned by the City of Dallas. Mr. Cuadros complained to Murrugarra but was unable to get a refund or any other form of restitution.


Ferman Cuadros paid $25,000 for this Ewing Ave. house
(Click for large image)

Mr. Cuadros said he was then approached by Menjarez, who represented himself as an attorney and offered to handle his case against Murrugarra for $700. Mr. Cuadros instead went to the Attorney General.

Other defendants named in the suit as participants in the housing scam are Bettie Sue Bailey, who has a Duncanville business address; Francis Carroll of Dallas; and R.I.C.H. Business and Building Systems of Dallas. The Attorney General is seeking injunctions against the housing scam defendants and Menjarez, as well as restitution and the maximum penalty of $20,000 per violation of the DTPA.

Consumers who believe they have been the victims of a scam should report it to the Office of the Attorney General at 1-800-252-8011.