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YARMOUTH — As component of the personal bankruptcy proceedings of Yarmouth-centered Levee Breaks Expenditure Group LLC, three properties will be abandoned, just one property has been offered and 4 many others are up for sale.
LBIG filed for Chapter 7 bankruptcy Oct. 22 a week right after the condition Securities Division submitted a civil administrative complaint against LBIG, fashioned by Brian Serpone of Yarmouth in 2015, and Dennis Serpone, Brian’s uncle, for what it alleged were being violations of Massachusetts General Law and willful violation of a consent get they experienced entered into with the condition in Could 2020.
Brian Serpone is mentioned as the manager and resident agent on the Secretary of the Commonwealth’s Corporation Division web site for Levee Breaks. LBIG used investor cash to order Cape qualities, remodel them and promote them or hire them at income.
LBIG was not registered with the state’s Securities Division, as required by Massachusetts legislation, and the promissory notes they offered traders have been unregistered securities, in accordance to state information.
Dennis Serpone experienced operate afoul of the state Securities Division ahead of. In 1998, his registration as a broker-vendor agent was terminated following regulatory motion, according to data.
What is becoming abandoned?
U.S. Personal bankruptcy Judge Frank J. Bailey on Jan. 12 authorised trustee David Madoff’s motion for the authority to abandon two houses in Yarmouth and one lot in Dennis Port.
The choice did not arrive devoid of controversy. Three lenders objected to the motion to abandon the properties, boasting the values employed by the broker employed for the situation were small. The decide overruled the objections.
The three properties to be abandoned are 28 Seminole Drive in Yarmouth Port, 148 Wendward Way in West Yarmouth and 24 Indian Path in Dennis Port.
The Seminole Drive household is assessed at $438,800, according to Yarmouth town evaluating documents. LBIG acquired the 2,164-square-foot property in Could 2018 for $215,000. The 3-bed room, two-tub home on .35 acres was created in 1975 and transforming operate on it remains unfinished. Porch railings are lacking, as is a next floor window.
A 960-sq.-foot ranch sits on .44 acres on Wendward Way. The modest house with an unfinished basement is assessed at $285,400, in accordance to examining data. LBIG purchased the property, which was developed in 1960 and has three bedrooms and just one rest room, in November 2018 for $192,500.
Remodeling of the home stopped after the city issued a stop-do the job order in 2019 because work currently being completed with out permits, according to Yarmouth Deputy Creating Commissioner Tim Sears.
A now-vacant .3-acre whole lot at 24 Indian Trail in Dennis Port used to have a 636-sq.-foot property. Purchased by LBIG in 2019 for $185,000, the house had been assessed at $126,000.
Controversy above worth of houses
Denise Benjamin, just one of the 77 creditors and a Levee Breaks investor stated in the claims registry for the bankruptcy proceedings.
The trustee’s operate is to act as a fiduciary for the unsecured creditors, and get as a great deal money from the sale of property as possible. If a property is ineffective or value fewer than the home loan, it is of no use to the individual bankruptcy estate, said University of Massachusetts regulation faculty Professor Emeritus Michael Hillinger. In that case, the trustee can abandon it to the mortgage holder.
Benjamin said the values of the residences and houses were being underestimated by the broker hired by the personal bankruptcy trustee. In this scenario, it was Samantha Steward of Compass Realty, who was a lover with Brian Serpone in Team Serpone Steward LLC in 2018. That limited legal responsibility firm was dissolved by courtroom purchase by the Secretary of the Commonwealth in 2021, according to point out information.
Employing figures from Zillow and Realtor.com, Benjamin said the believed valuation of those people properties were greater than the broker’s viewpoints of worth. Bailey disagreed.
In a Jan. 17 determination, Bailey wrote, “Based on the Court’s encounter with these websites (Zillow and Real estate agent.com), I discover that people on-line valuations are frequently unreliable.” Bailey added that Madoff was working out his organization judgment effectively.
Madoff stated the homes had been deserted for the reason that the sum owed to the home loan holders was greater than the volume he would have gotten from the sale of the properties.
“If there is not likely to be a advantage to the bankruptcy estate, the Trustee’s job is to abandon the homes so they don’t incur expenses that we have to pay out for,” he stated.
Madoff explained LBIG and Brian Serpone wouldn’t acquire any advantage from the abandonment of the qualities.
Madoff said the prior company relationship between Steward and Brian Serpone was disclosed to the court docket. She was retained as broker after court docket approval.
“I felt that that connection didn’t preclude her from symbolizing us,” Madoff reported.
But Benjamin claimed that the primary estimated value for one particular assets was so reduced that a bidding war ensued during a individual bankruptcy listening to, proof that the valuations had been low.
The unique sale price tag for 99 Berry Ave. in West Yarmouth was set at $475,000. At the court docket hearing for the sale, counteroffers lifted the ultimate sale price to $543,000.
“That bidding war was evidence that these valuations are undervalued,” Benjamin said.
Homes staying bought
Madoff stated five qualities are in various stages of being marketed. The sale of 99 Berry Ave. has closed. Other properties for sale include 21G Fruean Ave. in South Yarmouth, $350,000 55 Bayberry Road in West Yarmouth, $560,000 3 Jerusha Lane, West Yarmouth, $543,000 and 14 Egg Harbor in West Yarmouth, $550,000.
Trustees must file motions to approve the income of properties in bankruptcy proceedings, and at each and every listening to, counteroffers can be made.
Along with liquidating the homes belonging to LBIG, Madoff will need to review the claims submitted by the creditors as effectively as the schedules provided by LBIG.
There have been $4.5 million in whole claims filed, of which $1.4 million are secured claims or mortgages, Madoff claimed. But Madoff will review just about every claim to ascertain if the data are accurate.
Madoff will eventually hire an accountant to review the books and information of the business.
“There was a large amount of income invested and a ton of cash not accounted for,” Madoff explained. “There have been a large amount of strategies by men and women as to where by the funds went, so we will start to glimpse at that.”
Madoff will ultimately inquire the courtroom for the authority to make distributions to the lenders.
Benjamin said she is worried she’ll get just pennies on her financial commitment bucks.
Call Denise Coffey at [email protected] Observe her on Twitter: @DeniseCoffeyCCT.